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Lack of PenCom board stalls N14,400 minimum pension payment

Five years after the pension operators and the National Pension Commission drafted guidelines to commence N14,400 minimum pensions for retirees, the payment is yet to begin.

A source at PenCom said the minimum pension could not commence because the commission had no board in the past five years.

Operators had recommended 80 per cent of minimum wage to be paid to retirees, following complaints of ridiculously low stipends paid to retirees with low balances in their Retirement Savings Account.

The PenCom source said, “The guidelines are yet to be approved. So, we still cannot say this is the amount because we are going to make contributions before it is approved.

“What was proposed then was 80 per cent of minimum wage at that time, which was N14,400.”

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“We did not have a board and that was why we could not progress with it, but now that we are expecting to have a board, we hope it would be reviewed because it is the responsibility of the board to approve it.”

According to the source, with a new board, the commission may review the minimum pensions based on what the current minimum wage is.

It would be recalled that PenCom’s board was sacked in 2015, after which the executives were dissolved in 2017.

At a retreat organised by the Pension Fund Operators Association of Nigeria for the National Assembly Joint Committees for Establishment and Public Service of the Senate and House of Representatives Committee on Pensions in December, the operators urged the Federal Government to constitute PenCom board.

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They expressed worry that the sector, which had continued to record the fastest growing assets in the financial system, had been left without a board.

As of June 2020, total pension funds stood at N11.05tn.

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 guarantee 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.

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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 this privilege.

This initiative, according to the operators, will bring an end to situations were retirees are paid abysmally low pensions or when the balance in their RSA were awfully small, which made them un-pensionable.

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