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The Contributory Pension Scheme for public and private sectors was established under the Pension Reform Act 2004, which was repealed and replaced with the Pension Reform Act 2014, in 2014.  Section 4 of the Act, provides for a mandatory minimum contribution of 10% and 8% of employee’s monthly emolument by the employer and employee, respectively.

Each employee is required to open a Retirement Savings Account (RSA), into which the contributions are to be paid, with a Pension Fund Administrator (PFA), licensed by the National Pension Commission (PenCom), established under section 17 of the Act, to regulate and supervise pension schemes in the country. The PFA is to manage and invest the fund in the RSA, from where a contributor will draw benefits on retirement, in line with the provisions of the Act.

Ostensibly to unlock the potential that lies with the pension sector of the economy in the country, the theme of this year’s workshop organised for Journalists at Le Meridien Ibom Hotel and Resort in Uyo, Akwa Ibom State is: ‘Contributory Pension Scheme: Achievements and Challenges”.

The third and final paper, which dwelt on the “Service Delivery under the Contributory Pension Scheme” was presented by Mrs. Aderonke Adedeji, President of the Pension Fund Operators Association of Nigeria, (PenOp).

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Mrs. Aisha Dahir-Umar, Acting Director-General, National Pension Commission, in her remark disclosed that the number of contributors had grown by 390,000 as it increased from 7.50 million as at 31st March 2017 to 7.89 million as at December 31, 2017, and then to 7.90 million as at February 28, 2018.

Dahir-Umar, who was represented by Sani Mohammed, Secretary/Legal adviser of PenCom, said the Commission is intensifying efforts at ensuring the provision of necessary infrastructure for the launching of the Micro Pension Scheme in line with the Commission’s strategic objective of expanding coverage of the CPS to the under-served sectors.

She noted that the development is a major kernel of the strategy for expanding coverage of the Contributory Pension Scheme, assuring that the guidelines for the Micro Pension Scheme are being finalised preparatory to the commencement of the scheme.

She also disclosed that the net assets value of the pension assets of the Contributory Pension fund was N7.779 trillion as at February 28, 2018, representing an increase of N270 billion up from the value of N7.52 trillion as at December 31, 2017, saying that the increase is attributed to new contributions received, interest and coupon from fixed income securities and net realised and unrealised gains on equities and mutual fund investments.

In order to enhance the monthly pension of retirees in the Contributory Pension Scheme, Dahir-Umar disclosed that the Commission initiated the Pension Enhancement Programme, saying that it was discovered that the returns being generated by the PFAs on the balances of the RSAs of a majority of retirees could be used to enhance their monthly pensions.

Consequently, the Commission sought for and obtained the approval of the Secretary to the Government of the Federation to implement the pension enhancement, which resulted in increased monthly pensions for most retirees receiving pension under the Programmed Withdrawal arrangement.

“Accordingly, the PFAs have commenced the enhancement of pensions of all retirees under Programmed Withdrawal with effect from December 2017”, she said.    

She specifically added: “The implementation of the pension enhancement is one of the significant milestones attained since the commencement of the CPS. It confirms that the CPS has workable internal mechanisms to respond to legitimate demands of retirees as they seek a reasonable retirement income. The Commission intends to sustain this periodic review exercise in line with relevant provisions of the law.”




Another milestone recorded by the commission as revealed by the Director General at the workshop is the enhancement of the monthly pension of retirees in Contributory Pension Scheme.

She said: “In order to enhance the monthly pension of retirees in the Contributory Pension Scheme, the Commission initiated the Pension Enhancement Programme.  It was discovered that the returns being generated by the PFAs on the balances of the RSAs of the majority of retirees could be used to enhance their monthly pensions.

“Consequently, the Commission sought for and obtained the approval of the Secretary to the Government of the Federation to implement the pension enhancement, which resulted in increased monthly pensions for most retirees receiving pension under the Programmed Withdrawal arrangement. Accordingly, the PFAs have commenced the enhancement of pensions of all retirees under Programmed Withdrawal with effect from December 2017.    

“The implementation of the pension enhancement is one of the significant milestones attained since the commencement of the CPS. It confirms that the CPS has workable internal mechanisms to respond to legitimate demands of retirees as they seek a reasonable retirement income. The Commission intends to sustain this periodic review exercise in line with relevant provisions of the law”.

Invariably explaining how the commission has in the recent times been unlocking the potentials that are inherent in the sector, Dahir Umar said, the Commission issued a Circular on Withdrawals from Voluntary     Contributions (VC) in November 2017.

She pointed out that: “The Circular was necessitated by the observed incidences of high rates of withdrawals from VCs by contributors, which appeared to negate the main purpose of using such contributions to augment pensions at retirement. In addition, the Commission seeks to ensure strict adherence to Anti-Money Laundering provisions and relevant taxes laws. The main thrust of the Circular is that 50% of the VCs can be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal. Furthermore, the remaining 50% of VC shall be domiciled for augmenting pensions upon retirement”.

She explained that the Commission served as a member of an Inter-Ministerial Committee, which was chaired by the Honourable Minister of Finance, saying the committee was set up by Mr. President to determine the total pension liabilities of the Federal Government under both the CPS and the Defined Benefits Scheme, and advise the Government on the amount required to be provided in the budget to defray the pension obligation.

 “The Commission has determined the total pension liability owed to the Contributory Pension retirees due to both the 15% and 33% pension increases of 2007 and 2014 respectively. In addition, the outstanding accrued rights of Federal Government employees who retired in 2017 as well as the amount due to those retiring in 2018, have been submitted to the Federal Government for appropriation in the 2018 budget. Based on the positive disposition of the Federal Government towards settling outstanding pension liabilities, as evidenced by the release of N54 billion in April 2017, it is expected that these liabilities will soon be cleared”, she said.

Originally published in Independent

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