109,248 Retired Workers Quit Contributory Pension Scheme

  • 109,248 Retired Workers Quit Contributory Pension Scheme

Non-remittance of monthly deductions and lack of payment of salaries have forced 109,248 retired workers to quit the Contributory Pension Scheme.

The retired workers left the scheme as they did not have the required amount for monthly pensions as of the date of retirement.

Employers have been accused of not remitting monthly deductions into workers’ Retirement Savings Accounts (RSAs). Leaving the majority of the workers without at least N550,000 in their RSAs as at the time of retirement.

According to the Pension Reform Act 2014, any worker with less than N550,000 would be allowed to leave the scheme and paid the total amount in their RSA by the Pension Fund Administrator.

PenCom stated in a report, “The commission granted approval for the payment of the entire RSA balances of the categories of retirees whose RSA balances were N550,000 or below and considered insufficient to procure a programmed withdrawal or annuity of a reasonable amount over an expected lifespan.”

“Consequently, 109,284 retirees received en-bloc payments totalling N27.09bn from inception to the end of the second quarter of 2019.”

Joseph Ajaero, the President of United Labour Congress, said apart from employers not remitting monthly deductions, they are also taking contract and casual workers without pension protection.

He said, “those jobs did not have any form of protection and it was more prevalent in sectors without strong unions that would challenge the system.”

However, acting Director-General, PenCom, Aisha Dahir-Umar, said non-remittance of deductions was the reason the commission retained recovery agents.

She said, “The RAs were mandated to review the pension records of the employers assigned by the commission with a view to recovering outstanding pension contributions with penalties.”

She added that the commission had recovered a total of N16.01 billion from inception, N8.22 billion in principal contributions and penalties of N7.79bn.

Mary Moneme, a retiree who retired with less than N1.6 million in her RSA said, “My PFA said if I collected 50 per cent lump sum, it would be paying me about N6,000 per month if I took the programmed withdrawal. The insurance company said it would be paying me about N7,000 with the annuity.

“The PFA said if I took 25 per cent lump sum, it would be paying me about N9, 000 while the insurance company said it would pay about N10, 000.

“What will I be using that kind of monthly stipend to do? I have left my PFA and have not returned there because that monthly stipend is not a living wage.”

As of June 2019, the affected retirees have withdrawn a total sum of N27.09 billion. This includes foreigners returning to their countries.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

Be the first to comment on "109,248 Retired Workers Quit Contributory Pension Scheme"

Leave a comment

Your email address will not be published.