Retirees to earn N14,400 as minimum monthly pension

For the first time in the administration of pension schemes in the country, retirees will be entitled to a minimum pension payment of N14,400 monthly just the way Federal Government workers are entitled to a minimum wage, investigation has revealed. Source at the National Pension Commission, who disclosed this to our correspondent on Wednesday, said both public and private sector workers, who are categorised as being in the formal setup under the Contributory Pension Scheme and who have contributed for a minimum of 15 years into their Retirement Savings Accounts would enjoy the minimum pension stipend. Pension Fund Operators have sent their inputs into a draft guideline on the subject matter to the National Pension Commission for appropriate action. The draft guideline states that informal sector and casual workers must have contributed to their RSAs for 120 and 135 months respectively before they can enjoy this privilege. The initiative, according to the operators, will bring an end to the situation where retirees are paid abysmally low pensions or when the balances in their Retirement Savings Accounts are very small, which makes them unable to receive pension stipends. Presently, the CPS and the old defined benefit pension are the two schemes in existence in the country. Pensioners under the defined benefit scheme have for long been agitating for minimum pension stipend because many of them earn ridiculously low amounts of less than N500 per month. Under the CPS, the Pension Fund Administrators pay pensioners based on the balance in their RSAs as of point of retirement, but they always return total contributions to the workers if the balance is less than N550,000, thus denying them monthly pensions. The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarekhide Longe, confirmed to our correspondent that the operators had actually come up with a proposal on the minimum pension stipend and were working on its sustainability. “The draft proposes minimum pension guarantee of 80 per cent of the minimum wage, which is about N14,400. It also explains important facts on how it will be funded, investment of the funds, and how to verify pensioners on the payroll who are still alive, but all these are proposals that have not been cleared yet,” he said. Longe noted that the informal sector had not yet been officially introduced to the CPS. According to him, the PFAs need to put in place administrative efforts to verify dead pensioners so as to halt their payment and prevent other salient problems that could emerge from such. He also said some other critical issues had to be addressed in the draft guideline before it would be finalised as a law. The National Pension Commission is expected to establish and maintain a fund to be known as the Pension Protection Fund in respect of the guarantee minimum pension. Funding of the minimum guaranteed pension will be partly obtained from an annual subvention of one per cent of the total monthly wage bill payable to employees in the public service of the federation and returns from pension fund investments. It will also be funded from the Annual Pension Protection Levy paid by PenCom and all licensed pension operators at a rate to be determined by the commission from time to time. “We have finished work on the framework for the implementation of the minimum pension guarantee, which will give retirees with low RSA balance minimum pension for life,” a source at PenCom told our correspondent. The Managing Director, NLPC Pension Fund Administrators Limited, Mr. Wale Kolawole, noted that under the Pension Reform Act, 2014, it was mandatory for employers with at least three workers to open RSAs for them. “Once you start working, you should be thinking of having a blissful post-working life because the younger you start planning for retirement by opening a pension account, the better,” Kolawole said.