The Nation Newspaper

Tag: Pension Reform Act

  • Fed Govt, states yet to comply with 18% pension increase

    Five years after the Pension Reform Act (PRA) 2014 mandated employers in the public and private sector to increase pension contribution rate to 18 per cent, the federal and state governments are yet to comply with the law, Pension Fund Operators Association of Nigeria (PenOp) said yesterday.

    Speaking during its quarterly press briefing in Lagos, its President, Mrs Aderonke Adedeji said the public sector is still contributing 15 per cent, representing 7.5 per cent employer contribution and 7.5 employee contribution as against 18 per cent stipulated by the PRA 2014.

    Mrs Aderonke who is also the Managing Director of Leadway Pension Limited said this is unlike the private sector where there is more compliance by contributing the stipulated 18 per cent monthly.

    She said under the defunct PRA 2004, the rate of pension contribution for employees was a minimum of 15 per cent of monthly pay.

    This, she said, is shared into two – 7.5 per cent each to be paid by the employer and the employee.

    These, she said had been reviewed upward by Section 4(1) of the PRA 2014, to a minimum of 10 per cent for the employer and minimum of eight per cent for the employee, thereby making it 18 per cent of an employee’s monthly emolument.

    She said: “The public sector has not yet complied. The still pays 7.5 employee and 7.5 per cent employer contribution. But we see compliance from the private sector at a higher level than the public sector.

    “The industry has continued to grow. The total pension assets under the Contributory Pension Scheme (CPS) are about N8.7 trillion as at March and we have 8.5 million customers. Acceptance of the scheme has continued as fast as we saw during the commencement of the scheme. There has been some growth and we will like to believe that this will continue.”

    The Managing Director, Police PFA, Dr. Hamza Sule Wuro however added that the Federal Government and private sector employers are employing new workers daily and PFAs are opening pension account for the employees.

    “For instance, the Federal Government employed 10,000 policemen last year and they opened new accounts with different PFAs.”

  • Employers violating pension reform Act, says Wabba

    •’Ogun owes N100b pension contributions’

    The Federal Government and other employers in the country are violating the Pension Reform Act (PRA) 2014, the President, Nigeria Labour Congress (NLC), Ayuba Wabba has said.

    Wabba spoke during a pension session held by the House of Representatives Ad-Hoc Committee in Abuja.

    He said employers, including the Federal Government, are violating the Act by deducting pension contribution from employees’ salary and not remitting same to their pension managers.

    The PRA 2004 as repealed by the PRA 2014 states that an employer is under obligation to remit pension contributions to Pension Fund Custodians (PFCs) through Pension Fund Administrators (PFAs) within seven days after payment of salaries; otherwise, in addition to making the remittance, the employer shall be liable to a penalty which shall not be less than two per cent of the total contributions that remain unpaid for each month or part of each month that the default continues.

    The PRA 2014 revised the rate of pension contribution from 7.5 per cent contributed equally by the employer and employee under the old law, to eight per cent for the employee and 10 per cent for the employer; bringing the minimum total contributions for both parties to 18 per cent compared to 15 per cent previously. As contained in the 2004 legislation, an employer may choose to make the total mandatory contributions without making deductions from the salary of the employee; however, total remittance for any employer who chooses to remit without recourse to the employee must not be less than 20 per cent of the monthly emolument of the employee.

    Monthly emolument is defined to mean total emolument as contained in the employee’s contract of employment, but shall not be less than the total sum of basic salary, housing and transport allowance.

    Wabba urged the commission to take steps, including collecting interest where such situations are found.

    He said: ‘’About the issue of violation. Yes, there has been violations. But the violators are employers that deduct pension from their employee and don’t remit pension to their (PFAs).

    “In Ogun today, we have about N100 billion that has been deducted by the state government and not remitted to Pension Fund Administrator (PFA). So clearly, there is a violation of the provision of the pension Act. Any employer who is not remitting both employer or employee contribution is a violation and therefore we want a very stringent measure to be taken including taking of interest where such situations are found.

    Speaking on safety of the N8.63 trillion pension fund assets, he said: “I will like people to know that the pension funds belong to somebody who is a worker today who is expecting that the money should be invested carefully in business that will be yielding interest for them.

    “However, the National Pension Commission (PenCom) has the responsibility of protecting the trillions of naira that belongs to the pensioners. The commission must ensure that these funds are safe and remitted as and when due”, he added.

  • FAQs on contributory scheme

    When was the Pension Reform Act (PRA) enacted?

    The PRA was enacted in June, 2004. Having implemented the PRA for a decade,a review was conducted with a view to improving various provisions based on practical experiences. Consequently, it was repealed and re-enacted in July, 2014 as the Pension Reform Act of 2014.

    What is Contributory Pension Scheme (CPS)?

    The CPS is an arrangement where both the employer and the employee contribute towards the payment of the employee’s pension at retirement. It is fully funded through the monthly pension contributions that are remitted into an employee’s Retirement Savings Account (RSA) managed by the Pension Fund Administrator (PFA).

    What is the main objective of CPS?

    The main objective of the CPS is to ensure that every person that worked in either the public or private sectors in Nigeria including the self-employed persons receives his/her retirement benefits as and when due.

    Who is covered by the CPS?

    The CPS covers all employees in the public service of the Federation, public service of the Federal Capital Territory, states and local government areas, the private sector and the self-employed persons (Informal Sector).

    Who is exempted from the CPS?

    Judicial officers, members of the Armed Forces, the Intelligence and Secret Services of the Federation, existing retirees prior to June, 2004 and employees who had three years or less to retire as at June, 2004.

    What is a Retirement Savings Account (RSA)?

    A Retirement Savings Account (RSA) is an account opened by an employee with a PFA of his or her choice into which all pension contributions and returns on investment are remitted. It is also from the RSA that retirement and death benefits are paid.

  • Police retirees appeal to NASS to fast-track amendment of Pension Laws

    Police retirees appeal to NASS to fast-track amendment of Pension Laws

    The Association of Retired Police officers of Nigeria ( ARPON ), Kano State Chapter, has appealed to the National Assembly to fast-track the amendment of the Pension Reform Act 2014.

    The Secretary of the association, Saidu Garba, made the appeal on Thursday in an interview with the News Agency of Nigeria (NAN) in Kano.

    He said that the amendment would pave way for the exclusion of its members from the Contributory Pension Scheme.

    Garba said it was the desire of the association across the three states of Kano, Katsina, and Jigawa who are members of the chapters, for the Federal Government to revert to the previous Police Pension Scheme.

    “We are using this medium to express our willingness and desire as police pensioners under this scheme, to be excluded from the Contributory Pension Scheme,’’ he said.

    He added that some of the retired senior police officers received pension far below their entitlement.

    “The much-anticipated benefit of the contributory pension scheme we are operating now has turned out to be a mirage,’’ he said.

    He commended members of the House of Representatives for their efforts towards amending the Pension Reform Act 2014, which he said had passed through the second reading.

    “We are appealing to them to also speed up the passage of the Bill so that we can begin to enjoy the real benefits that we were denied by the operators of the private pension organisations,’’ he said.