Retirees under the Contributory Pension Scheme will from early next year enjoy a minimum pension payment irrespective of the balance in their Retirement Savings Accounts.
This is coming as a result of the economic recession in the nation which makes it difficult for average pensioners to continue living on their little stipend which is usually below N10,000 per month.
Nigeria Union of Pensioners proposed a minimum pension of N25,000 for retirees under the old defined scheme, to which the Federal Government is yet to give a reply to the proposal.
The National President, NUP, Dr. Abel Afolayan, stated,
“It needs to be pointed out that many pensioners under the defined benefits scheme receive less than N10,000 per month. This can never be regarded as a minimum or living pension.
The minimum pension scheme will start up from early next year. The operators are expected to pay three percent management fee to set up the fund.
Also, the National Pension Commission is expected to pay another fee and they have already given out a notice to ensure that the money is put in the budget in 2017 .
Last year, a minimum of N14,400 was proposed for each retiree in the draft guideline on the commencement of the minimum pension for retirees under the CPS by the operators.
The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarekhide Longe, explained the need for the pension operators to make their personal contributions to the fund so as to help start up the payment of the minimum stipend while the Federal Government makes their own contributions.
According to Longe, pension operators will compile the names of people earning below the stipulated minimum pension so as to enable the pension protection fund to augment the amount.
The Pension Reform Act, 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 will be partly obtained from an annual subvention of one percent of the total monthly wage bill payable to employees in the public service of the federation and returns from pension fund investments.
Workers who have contributed 15 percent into their Retirement Savings Account were the ones eligible to enjoy the minimum pension. This was stated in the draft guideline sent to PenCom by the operators.
Furthermore, informal sector and casual workers must have contributed RSAs for 120 and 135 months respectively before they can enjoy the privilege.
This initiative is aimed at making retirees earn fairly according to what is obtainable, instead of getting low pensions or paid nothing when the balances in their RSAs are very small.