Director-General PenCom Mrs. Chinelo Anohu-Amazu
Years after serving their fatherland, scores of federal pensioners are finding it difficult to access their retirement benefits. Omobola Tolu-Kusimo writes on the sufferings and pains of the affected retirees.
Thousands of Federal Government pensioners from the old pension scheme – Defined Benefits Scheme (DBS) – and new scheme – Contributory Pension Scheme (CPS) have their fate hanging in the balance.
The retirees are in a dilemma as they could not access their benefits.
The continued delay in the remittance of monthly contributions to employees’ Retirement Savings Accounts (RSAs), under the CPS and the payment of their accrued rights, under the DBS by employers has complicated their situation.
Rather than enjoy retirement after serving their fatherland, many of the pensioners live in pain and misery, leading to different ailments, diseases and even deaths.
Under the old scheme, some pensioners from the civil service, police, Nigerian Customs Service, Nigerian Immigration Service and Nigerian Prison Service, parastatals and universities among other federal agencies, are yet to get their pension, years after disengaging from service.
Some police pensioners are yet to receive any form of pension benefit and gratuities more than 12 years after retirement.
Frustrated, the affected retired officers have cried out even as the Pension Transitional Arrangement Directorate (PTAD) said it has, since its establishment in August 2013, been trying to find solutions to the problems affecting pensioners from the DBS.
The two sets of retirees being owed under the CPS are caught in the quagmire. In the first set are former federal employees who have not received their pension benefits due to non-transfer of their accrued rights by their employer.
Sources told The Nation that about 100 retirees of the Federal Inland Revenue Service (FIRS) have not received their benefits since 2013.
Others are those whose monthly contributions, though deducted, have not been remitted by the Federal Government.
According Misbau Yola, the immediate past chairman of the Pension Fund Operators Association of Nigeria (PenOp), both categories of pension liabilities stood at about N100 billion as of the last count.
The employer’s action contravenes the Pension Reform Act 2014 which was repealed by the Pension Reform Act (PRA) 2014.
Based on the PRA 2014, all accrued pension rights must be paid through the issuance of Federal Government Retirement Benefits Bonds into retirees (RSAs), domiciled with their respective Pension Fund Administrators (PFAs).
The Nation could not ascertain if the pension liabilities were captured by the Ministry of Finance in the Appropriation Act of the outgoing year.
Other questions that have been raised include why the liabilities remain outstanding and how the administration of President Mohammadu Buhari plans to settle the debts.
Some government officials, saddled with pension matters have raised eyebrows, saying the delay in the payment of the accrued rights by government should not hinder the remittance of contributions to the PFAs.
They argue that the law should be revised to allow payment of existing contributions with the PFAs to retirees while the accrued rights should be when funds are available.
What the law says
Transfer of entitlement from DBS into CPS Section 15 (1) of the PRA, 2014, states that as from June 25, 2004, being the commencement of the Pension Reform Act, 2004, the accrued pension right to retirement benefits of any employee who is already under any pension scheme existing before the commencement of that Act and has over three years to retire shall:
In the case of employees of the public service of the federation where the scheme is unfunded, be recognised in the form of an amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds by the Debt Management Office in favor of the employees and the bond issued under this subsection shall be redeemed upon the retirement of the employee and the amount so redeemed shall be added to the balance of the retirement savings account of the employee.
In the case of employees of the Federal Capital Territory where the scheme is unfunded, be recognised in the form of an amount acknowledged through the issuance of a bond to be known as Federal Capital Territory Retirement Benefits Bonds, in favour of the employees and the bond issued under this subsection shall be redeemed upon retirement of the employee in accordance with section 39 of this Bill and the amount so redeemed shall be added to the balance in the RSA of the employee and applied in accordance with the provisions of section 7 of this Bill.
In the case of the employees of the Public Service of the Federation, Federal Capital Territory or in the Private Sector, where the scheme is funded, credit the Retirement Savings Accounts of the employees with any funds to which each employee is entitled and in the event of an insufficiency of funds to meet this liability the shortfall shall immediately become a debt of the relevant employer and shall have priority over any other claim.
The pension reform
The public sector scheme is unsustainable due to lack of adequate and timely budgetary provisions and upward adjustments in salaries and pensions.
There have been demographic shifts due to rising life expectancies, which has become a phenomenon affecting the family support ratio.
Besides, pension administration has been largely weak, inefficient, less transparent and cumbersome. The private sector schemes, which are largely akin to the Provident Fund Schemes, have been characterised by very low coverage and compliance ratio due to lack of effective regulation and supervision.
This often results to a complete paradigm shift from the DBS as operated by both the public and private sectors to the CPS. Accordingly, the Federal Government enacted the Pension Reform Act 2004, which established the CPS and the National Pension Commission (PenCom).
The Commission has been empowered by the PRA 2004 to superintend on all pension matters, including supervision and regulation of the CPS and the DBS as well as the administrative structures established pursuant to the provisions of the PRA 2004.
Ten years after the implementation of the PRA 2004, the PRA 2014 was enacted on July 1, last year.
To the PenCom’s Director-General Chinelo Anohu-Amazu, the payment of retirement benefits under the CPS to retirees as well as death claims to beneficiaries is regular.
In an appraisal of the pension reform since 2004, Mrs. Anohu-Amazu, identified the delays being experienced in the settlement of accrued benefits federal pensioners and deceased employees as the only glitches.
She blamed the glitches on the funding of the Retirement Benefits Bond Redemption Fund by the Federal Government, especially in 2012, 2014 and this year.
According to her, the Federal Government has not released monthly mandates for the payment of accrued rights for September to December 2014 and April to August this year. The PenCom chief put the outstanding portfolio at N35.30 billion.
She said: “The accrued benefits of 8,193 retirees and death benefits of 4,847 deceased employees amounting to N48.39 billion were processed for the period February to August 2015, but were yet to be settled by the FGN. This clearly shows that even if the total outstanding monthly mandates were release, there would still be a shortfall of N13.09 billion.
“In addition, the total mandate for September to December 2015 was N20.08 billion while the total accrued benefits for the period stood at N23.12 billion, which left a shortfall of N3.04 billion.
“Thus, even if all the mandates for the period September 2014 to August 2015 were released, there will still be underfunded to the tune of N16.13 billion.
“The sum of N483.33 billion has been released into the Retirement Benefits Bonds Redemption Fund Account by the FGN, which was invested by the Central Bank of Nigeria and yielded N7.71 billion between 2006 and March 2015. Consequently, the sum of N490.09 was paid as accrued pension rights to 81,764 retirees and 15,244 deceased employees from inception to March 2015”, she noted.
The former Chairman, Pension Fund Operators Association of Nigeria (PenOp), Misbau Yola said the accrued pension rights and employees outstanding contribution rights have grown to about N100 billion.
According to Yola, the last payment made on accrued rights was in February, pointing out the importance of settling all outstanding rights to avoid erosion of confidence in the CPS.
He said: “The fiscal challenge being encountered by the Federal Government has affected its pension contribution and remittances. The government is trying as it has paid its remittances of contributions on its employees up to July.
“There are few challenges with the accrued rights but we have been told that it would be paid soon. The last was paid in February, 2015. These are issues that affect the confidence in the system.
“We are aware that the executive members of the PenCom visited President Muhammadu Buhari and raised the issue of the accrued rights and the president promised the accrued rights would be paid soon. The accrued rights and outstanding contribution rights is about N100 billion.”
Federal Government pension contributions
The Federal Government contributions are deducted at source by the Accountant-General of the Federation (AGF) and remitted into a contribution account in the Central Bank of Nigeria (CBN).
However, for Ministries, Departments and Agencies (MDAs), under the Integrated Personnel Payroll and Information System (IPPIS), the AGF makes direct remittance of the monthly contributions of their employees.
Besides, the Federal Government has acknowledged the pension liability for the past services rendered by its employees prior to the enactment of the PRA 2004.
The liability is being funded by the government through a revolving fund for which it opened a Retirement Bond Redemption Fund Account that is being managed by the CBN.
The Act provides that the Federal Government remits at least five per cent of its monthly wage bill into the dedicated account for the payment of the accrued pension rights.
FIRS, ex-workers row over pension
Two years after they were compulsorily disengaged, pensioners of the Federal Inland Revenue Service (FIRS) have cried out over the non-payment of their pension benefits.
They claimed their benefits have not been remitted since their retirement in 2013.
Mrs Daisi Awala, said the last remittance to her RSA with the PFA was done in July 2013. She worked for 29 years at the FIRS.
Mrs. Awala, who is also leading other retirees in the quest to have their benefits paid, identified herself as a single parent with three children, who are varsity students.
According to her, the youngest son was withdrawn from school when she could no longer muster the financial muscle to sponsor the three.
Her words: “We have completed our verification with PenCom but they told us to wait until our employer, in this instance, the Federal Government redeems our retirement benefit bonds.
“There are 64 of us that are organized while others are scattered around the country. Some of us are expecting between four to eight million naira. We were compulsorily retired by FIRS in 2013 against our wish.
“We did the registration with PenCom on May 14, 2014 in Lagos. The Commission promised us that we would start receiving our pension from November. They later told us they would start in March this year but up till now, we have not received anything.
“We have being visiting our PFAs and PenCom office in Lagos. PenCom told us that they are expecting Federal Government to pay our accrued rights and that without it, the PFAs cannot pay our pension benefits.
“PenCom said as soon as they receive it, they will distribute it to our various PFAs. We have gotten our Retirement Savings Account statement from our PFAs regarding what we have contributed so far. We are appealing to President Buhari to help us because we are suffering and some our our fellow retirees are dying.”
Another retiree, Awsu Segun, who worked for 17 years, said the last remittance to his RSA account was in January 2014. He has also not received his retirement benefit.
Mrs. Rashidat Awobitan served for 22 years before she was retired. She said the non-payment of her pension was affecting her.
She said: “I have spent all the little money that I saved while I was in active service and no longer have money to sponsor my children’s education and take care of myself.”
Another pensioner, who identified himself as Mr. Dolapo, said it has since become difficult for him to survive.
“Even the 2004 Pension Law states that if an employee loses his job and cannot find another job after six months, he is entitled to 25 per cent of his pension contribution,” another retiree, Mr. Segun, said.
“Why should the Federal Government put us through this suffering since 2013,” he lamented.
But, FIRS’ Director of Communication & Servicomm, Emmanuel Obeta said: “The FIRS have paid outstanding exit benefits for staff that exited in 2013 because they were disengaged on account of not having the minimum qualifications.
“They were paid reward for outstanding performance, repatriation allowance, staff welfare (BOT) and one year consolidated salary.
“Pension on the other hand is contributory and the payment is by Pencom and the respective PFAs. The accrued rights that they claim is delaying their pension is to be paid the Federal Government and not FIRS anymore.
“The retirees cannot say FRIS owes them because the terminal benefit is one and pension is second. We have paid all terminal benefits and it is left to PenCom to ensure that their retirement benefit is paid.”