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| Pensioners during a verification exercise. |
According to the latest report of the National Pension Commission on Parastatal Pensioners’ Verification Exercise, which was obtained by our correspondent on Friday, N20.6bn of the total claim has been paid out to the beneficiaries by the Office of the Accountant General of the Federation.
In the report, PenCom stated, “The commission concluded the PPVE1 and issued the final report to the Budget Office of the Federation. During the exercise, 29,873 and 2,113 pensioners and the next-of-kin of deceased pensioners were enrolled respectively.”
It added that the total pension liabilities due to pensioners and next of kin enrolled during the exercise was N33.76bn.
Also, under the Contributory Pension Scheme, the commission said that it approved 1,504 requests for payment as death benefits to the next of kin of deceased employees in both the public and private sectors.
It noted that the total death benefits paid stood at N3.6bn, with N850.22m representing proceeds of Group Life Insurance Policy.
The report showed that the public sector accounted for the highest proportion of death benefit claims, which was 98.87 per cent of the total claims.
PenCom also noted that while some pensioners under the CPS opted for programmed withdrawal, others settled for annuity as they retired.
The figures showed that a larger number of the retirees went for programmed withdrawal than annuity.
According to the Managing Director, African Alliance Insurance Plc, Mr. Alphonse Okpor, the pension scheme ensures that all the balance in the Retirement Savings Account is not given to the pensioner at retirement. The retiree is only allowed to use the money to take either the annuity or programmed withdrawal.
He explained that it was meant to guide against wasteful spending or squandering of the gratuity if paid in bulk.
The insurer, who explained that annuity implied an annual income, said, “The idea is that when you retire, you buy annuity policy that will guarantee income for the person until death comes just as if they are working.”
The Deputy General Manager, Technical and Services, AIICO Pension Managers Limited, Mr. Patrick Onos, explained further that the programmed withdrawal was being managed by the PFAs, while insurance firms handle annuity.
According to him, there comes a separation between a retiree and his PFA if he opts for annuity because the balance in his RSA will be transferred to an insurance firm.
The PFA operator also confirmed that in his firm, more retirees had opted for the programmed withdrawal than the annuity.
He said, “According to how the programmed withdrawal is fashioned, it is guaranteed for a minimum of 10 years but it can go further than that. How far it can go depends on the balance in his RSA account. The payment is a function of the balance in the RSA account. Once the balance is exhausted, that ends the programmed withdrawal agreement.”
The National Provident Fund was established by the Act of Parliament in 1961, under the old pension scheme, to regulate the private sector pensions.
It ensured a monthly contribution from the basic salary of workers by both the employee and the employer.
The NPF was later converted to a limited social insurance scheme and administered by the Nigeria Social Insurance Trust Fund in 1993.
The Pension Act of 1979, and the NSITF, which administered the old scheme, subjected pensioners to difficult situation as they faced accumulated pensions, which was exacerbated with long queue for days to claim their entitlements. Many retirees died during the hardship.
It was learnt that this scheme was not funded, leading to mounting pension liabilities that became unsustainable.
The reported non-existence of pension schemes in many sectors, coupled with difficulty in accessing benefits, experts said added to the crisis.
The setback of the scheme led to the repeal of the 1979 Act and subsequent amendment of the NSTF Act of 1993.
The 2004 Pension Reform Act was enacted and it resulted in the creation of a contributory scheme for the payment of retirement benefits of workers in the public service and the private sector.
- The Punch