Unpaid FG’s Workers’ Benefits: Pensioners accuse PFAs of short-changing them, sabotaging PenCom
Smarting from the pains and embarrassment of non-payment of their retirement benefits a year after, Federal Government retirees have accused Pension Fund Administrators (PFAs) of sabotaging the 2004 Contributory Pension Scheme.
They also took a swipe at the PFAs who are the custodians of the pensions contributed by civil servants before retirement, for flouting the directives of the National Pension Commission (PenCom), the regulatory body set up by government to supervise PFAs.
The 2004 pension scheme is a fall-out of a major reform of the nation’s old pension system (Defined Benefit Scheme) that had sent hundreds of retired workers to their untimely graves because of unpaid years of backlog of gratuities and pensions.
To put an end to needless deaths of pensioners, particularly those in the queue to collect their benefits after serving their fatherland for 35 years, the Federal Government introduced the Contributory Pension Scheme.
Under the scheme, the government deducts 7.5 per cent from workers’ salaries monthly and remits to the PFAs directly, while it contributes 7.5 per cent which it remits in arrears after workers’ retirement in form of “intervention’’.
For instance, the President Muhammadu Buhari administration had in April 2017, released about N54 billion to PenCom to transfer to PFAs to settle arrears of gratuities and pensions for retirees of 2014, 2015, 2016 and 2017 and subsequently, monthly releases of some millions.
A pensioner, name withheld, who retired as a director in a federal government agency, got the greatest shock of his life when he visited a PFA — Nigerian Life and Provident Company at Anthony Village, Lagos, as he was paid only 17 per cent as gratuity instead of 40 per cent after 13 months he had retired.
According to him, he had planned to collect N7 million but was given N3 million, representing 17 per cent of his contributions and that of the federal government.
The sobbing ex-director told the News Agency of Nigeria (NAN) in Lagos: “It was a financial shock and embarrassment to me after I had waited for 13 months to collect the money which I have planned for.
“When I noticed this, I approached the officials and I was informed that a `new circular’ has just emerged from PenCom.
“According to them, the circular directed that only 17 per cent should be given to pensioners as lump sum (gratuity), this is be painful.’’
He said his Retired Savings Account (RSA) statement from the PFA revealed that over N552,000 was withdrawn by PenCom in January from his account.
“Despite the fact that they (PFAs) invest our hard-earned money in business, they still deprived us of our money when we need it,’’ the pensioner, a journalist, said.
Another retiree, who left the service in November 2017 as a deputy director, also told NAN the delay in settling retirees’ gratuity and pensions, had brought untold hardships and financial embarrassment to her.
The woman, who retired from one of the River Basin Development Authorities, said: “We are hoping against hope that our PFA will soon invite us to come and collect our money.
“It has been extremely difficult to make ends meet with some of the children still in school, feeding and other expenses.
“The contributory pension scheme is to ensure that a month after disengagement or retirement, a staff should be paid like in the private sector, but it is not so.
“It appears that we are back to the old pension scheme where people who have retired died without getting their money after 35 years in active service.
“It is embarrassing and I plead with the National Assembly to amend the law setting up the contributory pension scheme to make it mandatory for PFAs to pay retirees a month after retirement.
“The law should also make FG’s remittance to PenCom as first line charge on monthly basis not yearly or two or three years after.’’
A former NTA staff member in Abeokuta, Mr O. Aretola, also expressed disappointment with the implementation of the contributory pension scheme, saying “retirees are now at the mercy of PFAs and PenCom.’’
“We had great hopes and expectations about the scheme but we were disappointed to find out that we have been short-changed.
“Nobody will tell you how much you are entitled to get at retirement and the FG’s contributions may be delayed if there is no fund depending on the priority of the administration.
“Our colleagues are dying in droves while some have serious health challenges that require money to treat to stay alive,’’ he told NAN.
Meanwhile, investigations by NAN show that the PFAs are using different percentages in calculating the pensioners’ gratuity.
The PFAs paid some retires 40, 38, 25 and 17 percentages respectively.
For instance, a worker who retired on Grade Level 13 was paid 25 per cent as gratuity, while two directors, who retired on Grade Level 17 got discriminatory percentages – 38 and 17.
Reacting to the development, the National Pension Commission (PenCom) denied giving any directive to PFAs to pay 17 per cent of the total contributed pensions as gratuity to pensioners.
The Head, Research and Corporate Strategy Department, Dr Aminu Farouk, told NAN: “We did not issue any circular to PFAs to pay 17 per cent to retirees as gratuity.
“That is not true and if such a directive was given, it would have been placed on the commission’s website.
“If any PFA said that, it should forward a copy of such circular to PenCom for further investigations.’’
“Gratuity is calculated in a way that a pensioner could receive half of his salary as monthly pension as long as he or she lives.’’
Farouk described the 2004 Contributory Pension Scheme (CPS) as one of the most successful initiatives or policy of the Federal Government since the return of the country to democratic governance in 1999.
“The plight of pensioners under the previous Defined Benefit Scheme (DBS) before the enactment of the Pension Reform Act in 2004 is not worth recalling.
“However, it is worth emphasising that while the DBS accumulated a deficit of more than N2 trillion before 2004, the CPS since then has amassed N8 trillion pension assets as at March 2018.
“The money is safe with the Pension Fund Custodians (PFCs), it just the DBS-accumulated deficit that is to be cleared in tranches that is causing delay in gratuity payments,’’ the PenCom official said.
The Pension Reform Act 2004 states that there shall be established for any employment in the Federal Republic of Nigeria, a Contributory Pension Scheme (CPS) for payment of retirement benefits of employees to whom the Scheme applies under this Act.
The objectives include ensuring that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his or her retirement benefits as and when due.
A holder of a Retirement Savings Account (RSA) on retirement or attaining the age of 50 years or more, whichever is later, shall utilise the balance standing to the credit of his RSA account for the following benefits.
1. Programmed monthly or quarterly withdrawals calculated on the basis of an expected life span.
2. Annuity for life purchased from a life insurance company licensed by the National Insurance Commission with monthly or quarterly payments.
3. A lump sum from the balance standing to the credit of his RSA provided that the amount left after that lump sum withdrawal shall be sufficient to procure an annuity or fund programmed withdrawals that will produce an amount not less than 50 per cent of his annual remuneration as at the date of his retirement.
NAN also reports that PenCom is invested with the power to supervise the PFAs and to receive and investigate complaints of impropriety levelled against any pension administrator, custodian or employer or any of their staff or agent.
About 21 Pension Fund Administrators (PFAs) were registered by the government. They are: American International Insurance Company (AIICO) Pension Managers Ltd., APT Fund Managers Ltd., Axa-Manxard Pensions, Arms Pensions Managers Ltd. and Fidelity Fund Managers Ltd.
Others are Crusader Steering Pensions Ltd, First Guarantee Pension Ltd, Future Unity Glavallis, IEI-Anchor Pension Managers Ltd., Stanbic IBTC Pensions Managers Ltd., Sigma Pensions Ltd., NLPC Pension fund Administrators Ltd. and Leadway Pensure Fund Ltd. (NAN)