Mr Olufela Fashoro bowed out of one of the federal government agencies in May 2020 after serving for over three decades, joining the league of retirees.
“God and my wife have been my means of survival since my retirement last year,” he answered when asked about life in retirement not too long ago.
He said that one year after, he had yet to receive his initial retirement benefits under the Contributory Pension Scheme (CPS), noting that he was not alone in such situation.
Indeed, the CPS commenced in July 2004 to assist workers to save in order to cater for their livelihood during old age.
The scheme encourages and mandates employees to contribute towards their retirement in order to significantly reduce poverty, enhance the socio-economic conditions of Nigerians and improve the social security of the citizens.
To this end, a strong regulatory and supervisory framework, the National Pension Commission (PenCom) was established and several Pension Fund Administrators (PFA’s) were licensed.
Compared to the old pension scheme(s), where most of the accounts were not fully funded and there were no ready funds to pay the pensioners, the CPS is expected to be fully funded and provides for the contributor to account for his own self-security.
This means that the employer is expected to contribute a minimum of 10 per cent of the employee’s monthly emoluments (sum of the basic salary, transport, and housing allowances) while the employee contributes a minimum of 8 per cent.
It means a total of 18 per cent pension contributions on monthly basis is contributed to the individual employee’s Retirement Savings Account (RSA) and is accessible as benefits when he/she retires.
Fashoro, however, said that during their pre-retirement workshop and verification, they were told that the payment of their accrued rights could take up to one year or more.
He said the issue was peculiar to workers who joined civil service before the commencement of the CPS in 2004.
Accrued pension rights represent an employee’s benefits for the past years of service up to June 2004 when the CPS came on board.
“For someone like me who joined active service in 1992 before the commencement of the CPS in 2004, PenCom would have to calculate my accrued benefit from 1992 to 2004 for payment, and that is what the government is yet to fully pay.
“Until this part of the fund is released by the government and added to that which was contributed to the PFA from 2004 till my retirement in May 2020, no dime can be paid to me, ” he said.
The senior citizen expressed disappointment that the government had shortfalls in the payment of the accrued right, resulting in the present situation.
He said if the government was releasing fund to pay the pensioners on monthly basis, the backlog would have been cleared by now.
“Unless the government decides to be responsive and committed to this course, many who work in the civil service will also experience this ugly trend I am going through.
“Unfortunately, we are now hearing of government proposing to borrow from the pension fund which would even worsen the situation if allowed,” he said.
Mr Wale Odutola, President, Pension Fund Operators Association of Nigeria (PenOp), explains that it is impossible for the PFAs to pay the employees portion of retirement contribution until it receives the accrued rights from the government.
“For the affected category of retirees, we need to wait for their accrued rights to be paid by the government so that we can calculate their pension and begin to pay them.
“If the accrued right is not paid, all the money in their Retirement Savings Account (RSA) is that contributed post-2004 and their entitlement before 2004 would not be there, ” he said.
Odutola, however, said that the problem of the delay in the payment would soon be a thing of the past because most of the backlog had been cleared.
“We are also engaging PenCom and hopeful that the commission gives nod to our discussion on a consideration that allows a part payment from the contribution to the beneficiary, pending when the accrued right is received ,” he said.
Mr Peter Aghahowa, Head, Corporate Communication Department, PenCom, told NAN that the problem on ground was a funding issue that affected government employees in the treasury-funded MDA’s.
Mr. Aghahowa said that the portion of the accrued rights funded by the government which had not been paid up-to-date was responsible for the delay in the payment of the retirement benefits.
He said that other self-funded federal government agencies such as the Central Bank of Nigeria (CBN) and other parastatals who generate their own funds are not affected by the problem and are paid immediately after retirement.
He noted that the release of N11.82 billion by the government months back would go a long way to cover some of the arrears, but not all of it.
“As a commission and regulator, we have been engaging the government and that is why we are getting the releases more frequent to pay the backlogs.
“We must also understand that the state of the economy also affected the turn up from the government, and also, this is a liability of employees’ benefit that had accumulated before the commencement of the CPS in 2004.
“If the government can sustain the tempo of the releases, the backlogs would be cleared soon,” he said.
The commission spokesman said that accrued rights of retirees had been paid up to some months in 2020 and more would be paid as releases come in.
Aghahowa assured that pension fund was safe in the Retirement Savings Account (RSA) and workers should not entertain fear that the money would be borrowed by the government because it was not possible.
“Pension fund are not borrowed, they are invested and can only be invested if the instrument for investment meets the guidelines of the PenCom,” he said.
Aghahowa noted that commission was also engaging state governments at different levels to be more committed and responsive to the cause, and this was yielding result.
“On state basis, they are at different levels and as the commission engages them, the status changes and we update accordingly on our website.
“Maybe, some states that do not have life insurance for their employees have now done so, meaning that they have complied in that aspect.
“Some states were also remitting only the portion of the employees’ contribution but have improved to remit both the employees and employers portion, following our engagements,” he said.
Aghahowa empathised with the affected retirees’, noting that the commission feels their pain and would continue to engage government at all levels to be more committed to do the needful.
Fashoro, who continues to wait, said his Pension Fund Administrator (PFA) had called him toward the end of 2020 that PenCom had received the cash back to pay backlogs of unpaid pensions to retirees up to January 2020.
He said after that, he learnt that more had again come in to cover till the month of March 2020.
“So, those of us who retired afterwards should be expectant to be called for our payment soon,” he said.
For Mr Babatunde Popoola, he retired as an Assistant Director of the Department of Fisheries, Ministry of Agriculture on Feb. 24, 2020.
He said he was able to receive his first pension benefit on Feb.19, 2021, a year after.
Popoola said the waiting period was not easy, as he was only able to meet up with some of his basic needs with the money he saved during his active service years through cooperative and other insurance investment policies.
“Thank God I am somebody who had a good saving culture and my wife is still in active service; I would not have been able to cope with survival.
“While waiting for my benefit, I was thinking of how officers who were at the lower cadre and may not have been able to save much because of their meagre pay and responsibilities to cater for will survive ,” he said.
Looking back at the one-year wait, he appeals to government to peg the duration for the payment of the accrued rights to maximum of three months after retirement.
Popoola said government must put in place models that would fast track the payment of the pension benefit.
Following some challenges identified in the payment of the retirees’ accrued rights, moves were initiated in 2020 to further amend the Pension Act in the National Assembly.
Stakeholders and experts believe addressing the loopholes in the present Act in place to remove bottlenecks and make it more friendly to the pensioners is a step in the right direction.
Despite its challenges, however, Mr Omagbitse Barrow, a financial expert, urged employers who had yet to register their workers under the scheme to do so as expected.
Barrow said that employers must remit their workers’ monthly contributions promptly to secure life for the employees after retirement.
He noted that lack of proper understanding on the mode of withdrawal of pension funds, however, posed a challenge to the growth of the industry.
The finance expert urged the public to seek understanding on the withdrawal modes during registration process, so that they would be better informed on the exit options which include Annuity and Programmed Withdrawal.
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