Fed Govt Unpaid ex-employees Can’t Access 25% Pension

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  • Fed Govt Unpaid ex-employees Can’t Access 25% Pension

Federal Government employees under the Contributory Pension Fund (CPS), who lost their jobs before 50, have not been able to access 25 per cent of their pension benefits.

Investigation has revealed that the government is yet to pay their accrued pension rights into their Retirement Savings Account (RSA) managed by Pension Fund Administrators (PFAs).

The accrued rights unpaid by the government makes the 25 per cent fund inaccessible for the workers, contrary to the provision in the Pension Reform Act (PRA), as repealed by the PRA 2014. Similarly, it makes it impossible for retirees to access their fund after retirement, years after retirement.

While employees in the private sector who lose their jobs are able to access 25 per cent of their fund, those in the public sector are unable to do so.

Section 7, subsection 5, of the Act states that without prejudice to subsection (1) of this section, any employee who disengages, or is disengaged from employment before 50 and is unable to secure another employment within four months of such disengagement, may make withdrawal from his retirement savings account.

Accrued rights on the other hand, is the debt owed by the government to the workers as pension benefits before the commencement of the CPS in June 2007.

Section 15 ( 1 ) states: “From 25 June, 2004, being the commencement of the Pension Reform Act, 2004, the accrued pension right to retirement benefits of any employee who is already under any pension scheme existing before the commencement of that Act and has over three years to retire, shall in the case of employees of the public service of the Federation where the scheme is unfunded, be recognised in the form of an amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds by the Debt Management Office in favour of the employees and the bond issued under this subsection, shall be redeemed upon the retirement of the employee in accordance with section 39 of this Bill and the amount so redeemed shall be added to the balance of the retirement savings account of the employee and applied in accordance with the provisions of Section 7 of this Bill.

“Where there is such a debt, the employer shall immediately issue a written acknowledgement of the debt to the relevant employee and take steps to meet the shortfall, and such debt shall not be affected by the provisions of any limitation law in force for the time being. The employer shall notify the Commission of any written acknowledgment that arises under paragraph (c) of subsection (I) of this section and any steps taken or planned to meet the shortfall.

“The accrued pension rights and entitlements of employees of the public service of the Federation as provided for under subsection (1) of this section, shall be reviewed by the Federal Government from time to time in line with the provisions of section 173 (3) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), provided that the variation so derived from the salary reviews shall be provided by the Federal Government and credited directly into retirement savings account of individual retiree”, the Act read.

One of the affected out of job persons, 45 year old Adebayo Aderibigbe who spoke with The Nation lamented his ordeal. He said he needs the money to be able to start a trade.

He stated that his PFA, ARM Pension told him they cannot pay him 25 per cent out of his pension because they have to wait for the federal government to pay his accrued right to pension account before they can pay.

He said: “I told them to pay me from the money remitted as my contributions that was deducted from my salary when I was working, but they said no.

“I and my family have been suffering. I cannot pay my children’s school fees nor feed them, yet I have money locked up with my PFA because government has refused to pay my accrued right. I do not understand why I have to be left to wallow in abject poverty when I have money somewhere. This us unbelievable.

“I am appealing to the government to pay me my money.

Head, Corporate Communications, Peter Aghahowa said the commission was aware of this shortcoming and had been working to correct the anomaly.

“We have been on the accrued right issue for Federal Government workers for some time.

“By law, accrued right and pension need to be consolidated. The Commission is inhibited to abide by the law but we are working to address it. But ideally, this is one of the issues that are inhibiting the progress of the CPS,” he said.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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