The failure of the Federal Government to pay its own share into the Pension Protection Fund after the Pension Fund Administrators started their own payment prevented the implementation of the N14,400 minimum pensions for workers under the Contributory Pension Scheme, findings have revealed.
Some operators said while they have been urging the government to pay its share of the contributions since 2017, the government’s mounting debt liability and increasing appetite to take more loans could continue to hinder its ability to pay.
According to them, “What we do with that one, for the time being, is that those who have limited savings in their accounts and have exhausted their balances, we still continue to pay them from the Pension Protection Fund which is a kind of temporary arrangement before the minimum pension starts.
An operator in one of the PFAs who would not want to be quoted said, “Some of the retirees exhausted all the savings in their RSAs because they did not have much and their monthly payments would have stopped if we have not been paying them with the Pension Protection Fund.
“Some of them were not paid their accrued rights by the Federal Government while some contributed only for a few years before they retired which made their savings to finish.
“We had to put in place the interim arrangement to be paying them even when we cannot start the payment of the N14,400 now.”
It would be recalled that after the Pension Reform Act 2014 started, the PFAs and the National Pension Commission drafted guidelines to commence N14,400 minimum pensions for retirees.
This law aimed to bring an end to situations where workers retired with low balances in their Retirement Savings Accounts which made them un-pensionable, or when the savings in their RSAs got exhausted which could stop their monthly stipends.
The PRA 2014 provided that PenCom should establish and maintain a fund to be known as the Pension Protection Fund in respect of the guaranteed minimum pension.
According to the Act, funding of the minimum guaranteed pension would 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 would 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.
The draft guideline which was awaiting approval stated that informal sector workers and casual workers must have contributed for 120 and 135 months respectively before they could enjoy the privilege.