A fraction of pensioners under the Contributory Pension Scheme, CPS, are facing some challenges following stoppage of their monthly stipends some years after they retired.
It was learnt that the affected Pensioners exhausted the money in their Retirement Savings Accounts, RSA, because they did not have enough pension savings as of the time they retired.
Although, the National Pension Commission, PENCOM, is said to be making arrangements to re-enrol the affected pensioners whose Pension Fund Administrators, PFA’s delisted from the payroll for exhausting their RSA balances, and restart payment using the funds in the Pension Protection Levy, which is also seen as unsustainable.
In a circular to the PFAs in October on, “The addendum to the framework on pension enhancement for existing retirees on programmed withdrawal under the CPS,” PenCom urged the PFAs to continue to pay retirees who had no more money for pensions in their Retirement Savings Account.
It stated, “Following the implementation of the framework on the pension enhancement for existing retirees on programmed withdrawal under the Contributory Pension Scheme, pursuant to sections 82(2) and (3c) of the PRA 2014, it has become necessary to issue clarifications as an addendum to the framework as follows:
“Pension Fund Administrators are hereby notified to continue paying pension to retirees that have fully exhausted their RSAs from the provision made for Pension Protection Levy pending the implementation of the Minimum Pension Guarantee.
“This clarification is made to replace the provision of section 5.23 of the framework on Pension Enhancement for existing retirees on Programmed Withdrawal under the Contributory Pension Scheme.”
Retirees under the CPS have openly expressed frustration over the low monthly stipends paid them, which is usually determined by the amount they are able to save before retirement.
The Pension Reform Act 2014 provides that PenCom should establish and maintain a fund to be known as the Pension Protection Fund in respect of the guaranteed minimum pension.
According to the Act, funding of the minimum guaranteed pension will be partly obtained from an annual subvention of one per cent of the total monthly wage bill payable to employees in the public service of the federation and returns from pension fund investments.
It should also be funded from the annual Pension Protection Levy paid by PenCom and all licensed pension operators at a rate to be determined by the commission from time to time.
So far, the Federal Government has yet to make any contribution into the fund.