Posted by Bukola Adetoye | 23 October 2017 | 1,612 times
Some retirees under the Contributory Pension Scheme (CPS) have yet to receive gratuity due to unfunded Defined Benefit Scheme (DBS) backlog owed by the Federal Government.
The Acting Director-General of the National Pension Commission (PenCom), Mrs Aisha Dahir-Umar, made this known in an interview with the News Agency of Nigeria (NAN) in Lagos.
Dahir-Umar said that gratuities to pensions would be low if the commission paid only CPS.
The Director-General said the affected retirees had been in service before the enactment of CPS Pension Reform Act, 2004.
According to Dahir-Umar, the Pension Transitional Arrangement Directorate (PTAD) has been fully established to handle the Federal Government retirees exempted from CPS based on regulation and supervision of PenCom.
She said that the Federal Government under the DBS activated pay-as-you-go method for pension and gratuity on percentages of defined pensionable items.
“However, the DBS faced the problem of huge pension liabilities arising from inadequate and untimely budgetary provisions and increases in salaries and pensions.
“Pension administration was largely weak, inefficient, less transparent and cumbersome, and marred with corrupt practices,” she said.
The PenCom boss said that until recently, the Federal Government could not unburden DBS Accrued Rights because of huge unfunded pension liabilities inherited by the present administration.
“The Federal Government is overburdened with payment of pensions as illustrated by 2016 Appropriation Act which made a provision of N200.17 billion as total pension and gratuity allocation.
“The allocation is still insufficient to fund the liabilities.
“For instance the PTAD’s budget proposal indicated a total annual pension liability of N388.32 billion out of which N255.89 billion constituted unfunded liability inherited by PTAD.
“This was due to outstanding payment of 33 per cent arrears to pensioners under DBS.
“The directorate indicated that there had been no provision for liabilities in the past that now form core part of its pension obligation,” she said.
She noted that the Federal Government took measures to tackle the issue and provided predictable retirement income for employees in public and private sector.
“The measure culminated in the enactment of the Pension Reform Act (PRA) of 2004.
“The PRA was consequently amended by the National Assembly in 2011 and further repealed and replaced by the 2014 PRA.
“The 2004 PRA enhanced the benefits accruable to the contributor on retirement.
“It also enhanced the protection of pension assets and unlocked the opportunities for deployment of pension assets for national development,” she said.
Dahir-Umar said that the Act had enabled PenCom to record progress by building 21 Pension Fund Administrators (PFAs), four pension custodians and seven closed pension custodians.
“The number of registered contributors grew to 7.4 million as at March 2017, which represented 7.45 per cent of the total labour force in the country and 3.95 per cent of total population.
“The total pension fund asset hit N6.62 trillion as at March 2017 with an average monthly contribution of about N30 billion.
“The total pension assets were equivalent to about six per cent of the Nigerian rebased Gross Domestic Product (GDP).”
She added that more than 184,979 workers had retired under CPS and currently receiving pensions regularly.
The PenCom boss noted that the Federal Government released N54 billion in April which had been used to pay part of the arrears.
According to her, retirees from January 2016 to October 2016 have been paid gratuity and are receiving regular monthly pensions.
Dahir-Umar said that the Federal Government would soon release funds to pay the next batch of retirees.
“President Muhammadu Buhari should be commended for settling the accrued pension rights for that period.
“Despite competing demands for available cash, President Buhari has always expressed concern about the plight of workers and pensioners.” (NAN)
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