The Federal government has approved N34bn for payment of pension arrears and death benefits.
A statement by PenCom said that the approval followed the recommendation of the Cocoordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, on the submission made by the National Pension Commission to the government.
It stated, “PenCom would like to inform retired employees enrolled with the commission, including the next of kin of deceased employees that have documented with the Pension Fund Administrators and documents submitted to the commission but have not been paid their entitlements that the President of Nigeria, Dr. Goodluck Jonathan, has approved the release of N34bn to offset the outstanding accrued rights of retirees and death benefits of deceased employees of Federal Government under the Contributory Pension Scheme.”
According to PenCom, the Federal Government has consistently been setting aside five per cent of its total monthly wage bill into the Retirement Bond Redemption Account with the Central Bank of Nigeria for the settlement of the accrued pension rights of its employees since the commencement of the Contributory Pension Scheme as required by the Pension Reform Act, 2004.
It, however, added that the account had been overstretched in recent years with the upsurge of retirements from the Federal Civil Service due to the tenure policy, voluntary retirements and unredeemed death benefit claims.
This, it said, had resulted in a backlog of arrears that could not be accommodated as a result of paucity of funds in the account.
“This special positive intervention by Mr. President, therefore, would go a long way in settling those outstanding payments to those categories of beneficiaries and alleviating their sufferings,” PenCom stated.
The commission appreciated the concern of the President, as demonstrated by prompt approval of the fund to settle the arrears.
PenCom stated, “Our appreciation also goes to the coordinating minister for the economy and minister of finance for her continued support to pension reform and commitment in addressing the plight of the retirees.”
The commission urged the affected individuals to contact their PFAs for the payment of their benefits.
During a public hearing before the Senate Committee On Pension early this year, PenCom highlighted major areas needing attention as funding the Federal Government retirees; low level of monthly pensions; and periodic pension review.
Based on a valuation conducted by a firm of actuaries engaged by the commission, PenCom recommended that the government needed to pay into the RBBRF account, five yearly rates of 13 per cent, 11 per cent, 10.5 per cent, 8.5 per cent and 5.12 per cent of its total wage bill from 2012 to 2035, as against a fixed rate of five per cent per annum, said to be grossly inadequate.
It said that this would adequately cover the accrued benefits of Federal Government retirees up to 2039 when such liabilities were expected to be extinguished.
On the low level of monthly pensions, the commission made recommendations in respect of the two categories of retirees. PenCom observed that the category of employees retiring within the first 10 years of the implementation of the CPS were unable to accumulate sufficient balances in their Retirement Savings Accounts to procure pensions equivalent to 50 per cent of their final emoluments as stipulated by Section 4(1) of the PRA 2004.