Connect with us

Economy

FG Flouts Pension Law, Remits Low Amounts to Workers’ Accounts

Published

on

Pensioners
  • FG Flouts Pension Law, Remits Low Amounts to Workers’ Accounts

Stakeholders have asked the Federal Government to pay the three per cent pension shortfall which it has not remitted into workers’ Retirement Savings Accounts in the past five years in flagrant disregard of its own pension law, NIKE POPOOLA reported.

Five years after the Pension Reform Act stipulated that the pension contributions of workers should be increased from 15 per cent to 18 per cent, many private firms have complied with the new Act, while the Federal Government has yet to do so.

Persistent complaints of low monthly stipends by workers, who retired under the Contributory Pension Scheme, led the operators in the sector to push for an upward review of the remittances into the workers’ Retirement Savings Accounts.

When the Contributory Pension Scheme was introduced in 2004, the law established a contributory scheme in which the workers and employers contributed 7.5 per cent each of the monthly emoluments into the workers’ RSAs with their respective Pension Fund Administrators.

However, many workers who retired were paid ridiculously low pensions, which in some cases were less than 10 per cent of the last salaries they earned while in paid employment.

Based on the provision that the pension law should be reviewed every 10 years, the Pension Reform Act was on July 1, 2014 amended. The amendment, therefore, made it mandatory for all employers under the Contributory Pension Scheme to raise workers’ pension remittance to 18 per cent.

According to the amended law, eight per cent of the workers’ monthly salaries should be the employees’ contribution, while the employers should contribute the remaining 10 per cent.

The contributions, which are kept by the Pension Fund Custodians, are administered and invested by the PFAs.

The essence is to ensure that the funds continue to increase until the workers retired, which will further translate into higher returns on investments and give retirees higher monthly stipends.

But while most private sector employers have complied, the Federal Government has continued to remit the old amount of 15 per cent into the workers’ RSAs five years after.

Findings also revealed that the Federal Government owed remittances of some parastatals for many months.

The implication of this, according to experts, is that many workers will still retiree with low savings or retire into penury.

Experts also said that the non-remittance of the monthly deductions into the workers’ RSAs for many months, together with the shortfall in remittances, would further deprive the workers the opportunity of earning returns on the monies that would have been invested by their PFAs.

Recently, the Senate approved the N30, 000 minimum wage for workers and urged the Federal Government to immediately commence the implementation.

The federal workers are also expecting the government to implement the 18 per cent pension remittance into their RSAs under the new minimum wage dispensation.

After the amendment of the PRA, PenCom stated, “These modest milestones notwithstanding, the implementation of the PRA 2004 was not bereft of challenges. Indeed, some issues were noted in the course of the implementation since the PRA 2004 and this underscored the imperative for a comprehensive review of the PRA in order to consolidate on the pension reform.

“The re-enactment of the PRA in July 2014 provided a sound basis to guide the second decade of the Nigerian Pension Reform. The PRA 2014 sought to ensure that more tangible benefits accrue to retirees towards a more blissful retirement. Some of the major developments introduced by the new law include an increase in monthly pension contributions to 18 per cent from the previous 15 per cent, in order to ensure that retirement benefits are enhanced under the CPS for the benefit of contributors.”

The acting Director-General, PenCom, Aisha Dahir-Umar, said one of the salient objectives of the Pension Reform Act 2014 was to make pension administration transparent and seamless.

She said the commission had been prosecuting recalcitrant employers who failed to remit their employees’ pension contribution into their RSAs.

“Through this initiative, the sum of N15.31bn, representing the principal contribution of N7.85bn and penalty N7.46bn, has been recovered from defaulting employers.”

While private sector employers were being clamped down upon, the United Labour Congress lampooned the Federal Government for flouting its own laws by failing to make 18 per cent remittances into workers’ RSAs.

The President of ULC, Joseph Ajaero, said the pension scheme was fraudulent and was not meant to serve the interest of the workers.

He said, “Despite the fact that the Federal Government has not been remitting the 18 per cent in the past five years, the Federal Government is borrowing from the funds to finance some of its programmes. There will be a time when there will be no money to pay retiring members of staff. That one will be soon.

“And because of the attitude of the Federal Government, most private employers, including those in the power sector, have not been remitting for even two years or more because the Federal Government was supposed to be both a player and a regulator. So, if they are not playing their own role, it will be difficult for them to regulate the industry.

“Non-remittance of the pension fund is a criminal offence. The worker is supposed to pay his own percentage and the employer is supposed to pay his own percentage and deduct at source from the worker and remit. There is a need to find out whether the Federal Government has been deducting from workers, which you know it is a criminal offence. In that case, if the Federal Government is defaulting, who is in charge of equally prosecuting the Federal Government?”

On compliance with the 18 per cent remittance, he said, “They should not just remit the five years arrears, they should remit it with the new percentage and interest because this money, while it is there, is supposed to attract some interest and it should be remitted along with the interest of the five years.”

A former President, Trade Union Congress, Peter Esele, also said the Federal Government must not be seen to be violating its own laws.

He said, “The government should respect the law and set a good example for the private sector to follow. The onus is also on the labour union to remind the Federal Government over and over again. Whether it is N30, 000 minimum wage or whatever, it is by the law that the Federal Government should implement the 18 per cent.

“The central labour movements should spearhead it to make the Federal Government own up to its responsibility.”

While commenting on the three per cent shortfall of five years, he said, “They have to pay back the three per cent shortfall. There is no ignorance before the law.”

An Actuarial Scientist and Chartered Insurer, Dr Pius Apere, said the increase in employer’s compulsory contribution rates from 7.5 per cent to 10 per cent was contained in Section 4 (1) (a) of PRA 2014.

He said, “The main objective of the PRA 2014 is to establish uniform rules, regulations and standards for the administration and payments of retirement benefits as and when due.

The Chairman, Trade Union Congress, Ogun State, Olubunmi Fajobi, said it was unfortunate that the government was not obeying its own laws.

He said, “The laws were made and signed into law by the government and for five years now, the government is still acting flagrantly against the provisions of the laws. But you understand that the challenges around the CPS are more than what is being deducted, where deductions were made and remittances were not made correspondingly.

“The first thing that should be paramount is complying with the law, irrespective of the minimum wage. The government should first obey its own laws.

“I am also saying that all the states that are in default of the CPS, as a matter of urgency, should look for ways out of this. It is a logjam that creates jeopardy to the future of the workers and the government should show concern. Where people return to penury, what will become the state of the citizens of the country?”

On the non-compliance with the 18 per cent remittance, he said, “It should be taken as arrears since the law has been amended; it is as good as saying the government is in arrears.”

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 experience in the global financial markets.

Economy

NNPC To Resume Oil Exploration In Sokoto Basin

Published

on

NNPC

The Nigerian National Petroleum Corporation on Thursday announced plans to resume active oil exploration in Sokoto Basin.

A statement issued in Abuja on Thursday by NNPC spokesperson, Kennie Obateru, said the corporation’s Group Managing Director, Mele Kyari, said exploration for crude would resume in the Sokoto Basin.

The statement read in part, “Kyari also hinted of plans for the corporation to resume active exploration activities in the Sokoto Basin.”

The NNPC boss disclosed this while receiving the Governor of Kebbi State, Atiku Bagudu, who paid Kyari a courtesy visit in his office on Thursday.

In October 2019, the President, Major General Muhammadu Buhari (retd.), had during the spud-in ceremony of Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North-East, said the government would explore for oil and gas in the frontier basins across the country.

He outlined the basins to include the Benue Trough, Chad Basin, Sokoto and Bida Basins.

Buhari had also stated that attention would be given to the Dahomey and Anambra Basins which had already witnessed oil and gas discoveries.

Kyari restated NNPC’s commitment to the partnership with Kebbi State for the production of biofuels, describing the project as viable and in tandem with the global transition to renewable energy.

He said the rice production programme in the state was a definite boost to the biofuels project.

Kyari said the linkage of the agricultural sector with the energy sector would facilitate economic growth and bring prosperity to the citizens.

He was quoted as saying, “We will go ahead and renew the Memorandum of Understanding and bring in any necessary amendment that is required to make this business run faster.”

The Kebbi State governor expressed appreciation to the NNPC for its cooperation on the biofuel project.

Bagudu said the cassava programme was well on course but the same could not be said of the sugarcane programme as the targeted milestone was yet to be attained.

Kebbi state is one of the states that the NNPC is in partnership with for the development of renewable energy.

Continue Reading

Economy

Nigeria To Benefit As G-20 Approves Extension Of Debt Relief Till December

Published

on

Finance ministers of G-20 countries have approved an extension of debt relief for the world’s poorest nations till December 2021.

David Malpass, World Bank president, made the announcement at the virtual spring meeting, on Wednesday.

TheCable had earlier reported that the G-20 countries will meet this week to consider an extension of the debt freeze.

The G-20, is a group of finance ministers and central bank governors from 19 of the world’s largest economies, including those of many developing nations, along with the European Union.

G-20 countries had established a debt service suspension initiative (DSSI) which took effect in May 2020.

Nigeria had benefited from the initiative which delivered about $5 billion in relief to more than 40 eligible countries.

The suspension period which was originally set to end on December 31, 2020 was extended to June 2021.

Malpass said the extension to December 2021 will boost economic recovery and promote job creation in low income countries.

He urged countries to be transparent in their approach to the debt service payment extension.

“On debt, we welcome a decision by the G20 to extend the DSSI through 2021. The World Bank is also working closely with the IMF to support the implementation of the G20 Common Framework,” he said.

“In both these debt efforts, greater transparency is an important element: I urge all G20 countries to disclose the terms of their financing contracts, including rescheduling, and to support the World Bank’s efforts to reconcile borrower’s debt data more fully with that of creditors.

“Participation by commercial creditors and fuller participation by official bilateral creditors will be vital. I urge all G20 countries to instruct and create incentives for all their public bilateral creditors to participate in debt relief efforts, including national policy banks. I also urge G20 countries to act decisively to incentivize the private creditors under their jurisdiction to participate fully in sovereign debt relief efforts for low-income countries.

“Debt relief efforts are providing some welcome fiscal space, but IDA countries need major new resources too, including grants and highly concessional resources. From April to December 2020, the first DSSI period, our net transfers to IDA and LDC countries were close to $17 billion, of which $5.8 billion were on grant terms.

“Our new commitments were almost $30 billion, making IDA19 the single largest source of concessional resources for the poorest countries and the key multilateral platform for support. To recover from COVID, much more is needed, and we welcome the G20’s support for advancing IDA20 by one year.”

Continue Reading

Economy

IMF / Fiscal Monitor Report April 2021 Forecast

Published

on

IMF 1

Unprecedented fiscal support by governments during the pandemic has prevented more severe economic contractions and larger job losses, but risks remain of long-term scarring the International Monetary Fund says in its Fiscal Monitor report released on Wednesday (April 7) in Washington, DC.

Meanwhile, such support, along with drops in revenues, has raised government deficits and debt to unprecedented levels across all country income groups, said Vitor Gaspar, Director of the Fiscal Affairs Department at the IMF.

The first lesson one year into COVID-19 is that fiscal policy can act timely and decisively. The fiscal policy response was unprecedented in speed and size looking across countries. We also learned that countries with easier access to finance or stronger buffers were able to give more fiscal support. They’re also projected to recover faster,” said Gaspar.

Average overall deficits as a share of GDP in 2020 reached 11.7 percent for advanced economies, 9.8 percent for emerging market economies, and 5.5 percent for low-income developing countries. Countries’ ability to scale up spending has diverged.

“So, what have we learned? We’ve learned that fiscal policy is powerful and that sound public finances are crucial in order to enable that power to be used to the fullest,” stressed Gaspar.

Gaspar urged policy makers to balance the risks from large and growing public and private debt with the risks from premature withdrawal of fiscal support, which could slow the recovery.

“In the spring 2021, we emphasize differentiation across countries. Moreover, COVID-19 is fast evolving, as are the consequences from COVID-19. The fiscal policy must stay agile and flexible to respond to this fast-evolving situation.” Said Gaspar.

He also warned that the targeting of measures must be improved and tailored to countries’ administrative capacity so that fiscal support can be maintained for the duration of the crisis—considering an uncertain and uneven recovery

“Moreover, countries are very different in their structures, in their institutions, in their financial capacity and much else. Therefore, policies and policy advice have to be tailored to fit.” Said Gaspar

Gaspar concluded his remarks by emphasizing that global vaccination is urgently needed, and that global inoculation would pay for itself with stronger employment and economic activity, leading to increased tax revenues and sizable savings in fiscal support.

“A fair shot, a vaccination for everybody in the world may well be the highest return global investment ever. But the Fiscal Monitor also emphasizes the importance of giving a fair shot at life success for everyone. It documents that preexisting inequalities made COVID-19 worse and that COVID-19 in turn made inequalities worse. There is here a vicious cycle that threatens trust and social cohesion. Therefore, we recommend stronger redistributive policies and universal access to basic public services like health, education, and social security,” said Gaspar.

Continue Reading

Trending