Pension

PenCom secures stay of execution on 50% lump sum, appeals judgement

Acting Director-General, National Pension Commission (PenCom) Mrs. Aisha Dahir-Umar

Leave a comment and share

Chuks Udo Okonta with agency report

The National Pension Commission (PenCom) has secured a stay of execution and appealed the judgement given by Justice Oyebiola Oyewumi of the National Industrial Court, Abuja Judicial Division which ordered ARM Pension Managers one of the nation’s Pension Fund Administrators (PFAs) to pay a retiree, Maroof Giwa, at least 50 per cent lump sum of his pension.

PenCom’s spokesman, Peter Aghahowa, who said this in a telephone interview, told Inspenonline that having secured the stay of execution, the commission has gone ahead to appeal the judgement.

According to the Pension Reform Act (PRA) 2014, Pension managers at the moment use four perimeters to determine lump sum. They include: Retirement Saving Acount balance as at the time of retirement; worker last salary; age and sex. These variable often amount to what is taken to be 25 per cent, which may not be so.

PM News reported that Justice Oyewumi has said the norm be broken for Giwa, considering his age, and the life expectancy of male Nigerians as projected by World Health Organisation.

The Court held that 25 per cent lump sum calculated by the Arm Pension Managers as claimant’s pension is unlawful.

He said that the 25 per cent withdrawal as clearly stated in the Pension Reform Act is in respect of a retiree who voluntarily retired at age 50.

The provision, she said is not applicable to Giwa.

Maroof Giwa had approached Arm Pension Managers to apply for pension and withdrawal benefits but the PFA offered to pay 25% of his total retirement savings which he rejected.

He demanded 50 per cent of the total sum.

The claimant claimed that the computation of the lump sum/benefits by the defendant done on the basis of 25 per cent is unknown to the law.

He argued that he cannot be treated like a retiree who retired voluntarily and that he’s 60 years and above and would want to withdraw 50% or 75% of his total pension.

Arm Pension Managers, the defendant in this case, submitted that the claimant has no right and his statement of fact discloses no reasonable cause of action against it.

Its counsel, M. Abdulraheem Esq submitted that the template as provided by the 2nd defendant-National Pensions Commission only guarantees a minimum 25% lump sum payable.

He said paying a higher percentage lump sum (to the maximum of 50%) is dependent on several variables.

He submitted that to allow the claimant argument as per his claims will amount to tinkering with an Act of the National Assembly and it will allow not only the claimant but any other RSA holder determine what should be paid to him or her.

He said doing so would amount to usurping the powers of the 2nd defendant as stipulated by law that the withdrawal of lump sum is an option predicated on the condition that the residue in the RSA would be sufficient to procure funds withdrawals or annuity.

National Pensions Commission Counsel E.O Awa argued that the Act did not make provision for a lump sum of 50 per cent, 65 per cent, 75 per cent or 25 per cent except 25 per cent lump sum on request to any employee that retires before the age of 50 years or disengages from employment.

But Justice Oyewumi held that the age category of the claimant 60 years and above was not in the contemplation of Section 7(2) of the Act that specifically made provision for a 50-year-old retiree to withdraw 25% lump sum.

“This in view of the unambiguous provision of Section 7(1) of the Act, which entitles the claimant to utilise the amount credited to his RSA account by the withdrawal of a lump sum from the total amount credited to his account. The only proviso here is that the balance after the withdrawal of the lump sum shall be enough to procure annuity for life for the retiree.

“A community reading of Section 173 of the Constitution, Section 7(1) of the Act as well as clauses 4.0 and 5.1.1 of the regulation, clearly evinces that there is no specific amount or percentage stipulated as a lump sum that a retiree of claimant’s age(60 years and above) can withdraw.

Secondly, the amount to be withdrawn by a retiree of claimant’s age is to be calculated in view of his life expectancy.

“His right to his pension shall not be altered or withheld to his disadvantage and finally the quarterly withdrawal has to be at his discretion, i.e. he has to opt for it and not at the whims and caprices of the 1st defendant to determine what and how he could withdraw same.

“The W.H.O in 2018, puts the life expectancy of a male Nigerian at 54.7 years, which is approximate to 55 years. This said, the claimant, in this case, has lived beyond the projection of W.H.O. of a life expectancy of a male Nigerian. This in my view displays the inadequacy of man and human frailty, in other words, no one can actually determine when a man will die, except his maker.”

8 Comments

  1. Abubakar Abdullah

    The correct interpretation of the section and subsections in these case has to be properly interpreted by the constitution. Retires are being cheated in real sense.
    The PFAs utilised the funds to their own advantage.

  2. Yagi Haruna (nickname)

    The section and subsections in the Act has to be properly interpreted. The Judge have passed a good judgement.
    The retirees are being cheated by the PFAs.
    The PFAs utilised the funds to their own advantage.

  3. Tajudeen Adediran

    It is essential for retiree to have enough in his / her retirement account, so as to cater for his remaining uncertainty year. Also need to save more during the raining day for tomorrow to be looking good

  4. Bcb Ogbulie

    With this action against the interest of their customers who are workers hoping for a rewarding retirement, would you ever see PENCOM as really established by Government to work for the comforting retirement of Nigerians?
    This is selling out the workers, especially those of them that are good citizens of this rather cursed country!

  5. It is a good thing on what the justice Oyewumi did.
    The penCom full manipulation . See the way they are treating people and using peoples money to grow fat
    The law show should make it compulsory for the penCom to stay on that 50℅ lump sum payment tor all retiree regardless of their age. Thank.

  6. Hello, I would like to receive email notifications of your subsequent posts.

  7. PFAs and PFCs are all trading with dead people’s monies and they are happy to continue doing so. They prefer that a retiree dies without accessing his/her money than to pay 50% of the money to a living retiree. Herein lies the wickedness of corporate entities set up for the benefit of our compatriots.

  8. Mike Babalola

    It is obvious ab-initio that the provision of the act that favours the PFA’s at the expense of the workers who has contributed his/ her sweat via contribution is faulty and capitalistic. Its a rip off and should be amended. The Penvom and PFAs are feeding fat on contributors sweat. The 25% lump sum withdrawal is absolute nonsense. They pay u 25% and retains the balance of 75% which they trade with and pay u pittance that is never enough to your bills on monthly basis while they leave flamboyant life styles The act should be amended urgently.

Leave a Comment

Your email address will not be published. Required fields are marked *

*