Young The National Pension Commission, PenCom, has pleaded with the National Assembly to approve N79, 155,550,000.00 to pay pension increase of 79,961 pensioners on the Defined Contributory Scheme, DCS, from 2004 to 2014.
The commission is also among others, seeking for the lawmakers’ approval of N440, 047,832.00 being the shortfall in the retirement benefits of 24 retired Heads of Civil Service of the Federation and Federal Permanent Secretaries that had earlier enrolled with the Commission and 16 Federal Permanent Secretaries scheduled to retire in 2017.
Director-General of PenCom, Mrs. Chinelo Anohu-Amazu, in a memorandum to the Senate Committee on Establishment and Public Service at the Budget Defence Session on 2017 Budget Estimates for Appropriation.
Giving details of the commission’s budget proposal, the Director-General explained that there was the need to ensure adequate budgetary provision for the payment of retirement benefits of every Federal Government of Nigeria, FGN, retiree on the Contributory Pension Scheme, CPS, as and when due, including the payment of all outstanding pension arrears and death benefits of deceased FGN employees.
Pension increases According to her, “there is also need to ensure adequate appropriation under the Federal Government’s Recurrent Expenditure to facilitate the implementation of the new 18 percent pension contributions rate; the need to also ensure adequate funding for payment of arrears of the approved 15% pension increases for government retirees on CPS and that it was imperative that the Pension Protection Fund be funded to effect the payment of Minimum Pension Guarantee to all eligible Retirement Savings Account, RSAs and compensation to eligible pensioners for shortfall or financial losses arising from investment activities. Anohu-Amazu, begged the senators to “consider and ensure the appropriation of the following adequate funds to facilitate the Commission’s activities in 2017 especially overhead cost of N99, 923,346.00 and capital subvention of N5, 000,000,000.00, totaling N5, 099,923,346.00.
She requested the lawmakers “to consider and ensure the appropriation of adequate funds to facilitate the payment of the following liabilities of the Federal Government in 2017: The sum of N10, 194,184,608.00 to pay all outstanding accrued benefits for deceased and mandatory retirees of the Federal Government for the periods September to December 2014; The sum of N41, 719,090,082.00 being the shortfall in the 2016 Budget Appropriation; The sum of N31, 372,380,576.00 being the outstanding mandates for 7 and half months in 2016 in order to effect payment of outstanding accrued benefits for deceased and mandatory retirees of the Federal Government.
“The appropriation of the total sum of N113,023,255,000.00 in the 2017 FGN Appropriation Act in favour of the Retirement Benefits Bond Redemption Fund, RBBRF, Account being the Accrued Benefits due to 16,267 retirees/prospective retirees and estimates for deceased employees for year 2017; The appropriation of sufficient funds under the Federal Government’s Recurrent Expenditure in order to facilitate the implementation of the new eighteen percent (18%) pension contributions rate; The sum of N79, 155,550,000.00 for payment of pension increase for the 79,961 employees who retired under the DC Scheme from 2004 to 2014; The sum of N10, 039,161,783.00 being the Federal Government’s statutory contribution to the funding of the Pension protection Fund and the sum of N440, 047,832.00 being the shortfall in the retirement benefits of 24 retired Heads of Civil Service of the Federation and Federal Permanent Secretaries that had earlier enrolled with the Commission and 16 Federal Permanent Secretaries scheduled to retire in 2017.
Monthly emolument The Director General reminded the lawmakers that under the defunct Pension Reform Act, PRA 2004, “the rate of pension contribution for Federal Government employees was a minimum of 15 percent (15%) of monthly emolument of the employee, shared into seven and a half percent (71/2) each for the employer and the employee respectively.
These rates have been reviewed upwards by Section 4(1) of the PRA 2014, to a minimum of ten percent (10%) for the employer and a minimum of eight percent (8%) for the employee thereby making it a minimum of eighteen percent (18%) of an employee’s monthly emolument. The Federal Government is yet to implement the new rate of pension contributions as revised by the PRA 2014.
The Committee may wish to note that Section 82(1) of the PRA 2014 provides for the establishment of the Pension Protection Fund (PPF) which is, amongst others, to be utilised for the funding of the Minimum Pension Guarantee (MPG) to be paid to all Retirement Savings Account (RSA) holders who have contributed for a number of years to a licensed Pension Fund Administrator (PFA)and for the payment of compensation to eligible pensioners for shortfall or financial losses arising from investment activities.
The sources of funding of the PPF includes an annual subvention of 1% of the total monthly wage bill payable to employees in the Public Service of the Federation, which shall be utilised strictly for the funding of the MPG. The 1% of the total monthly wage bill payable to employees in the Public Service of the Federation has been determined as N10, 039,161,783.00. Heads of Civil Service of the Federation and Federal Permanent Secretaries are allowed, by virtue of the PRA 2014, to retire with full benefits. The Act further provides that any shortfall in their Retirement Savings Accounts (RSAs) shall be funded from budgetary allocations by the employer.
Accordingly, the Commission has determined that the annual pension shortfall of 24 retired Heads of Civil Service of the Federation and Federal Permanent Secretaries that had earlier enrolled with the Commission and estimate of the retirement benefits for 16 Federal Permanent Secretaries scheduled to retire in 2017 is N440, 047,832.00.”