About 72,113 retirees who subscribed to the Contributory Pension Scheme have got refunds of N17.3bn from their Pension Fund Administrators after they were declared not eligible for pension payment, investigation has revealed.
According to a report obtained from the National Pension Commission, the affected retirees contributed from the public and private sectors and got their refunds as of the end of September 2016.
PenCom disclosed that the ineligible retirees for pension were those who did not have more than N550,000 in their Retirement Savings Accounts upon retirement, and foreign nationals who were returning to their countries.
“These were retirees whose RSA balances were N550,000 or below and considered insufficient to procure programmed withdrawal or life annuity of a reasonable amount over an expected life span. These also included foreign nationals who have voluntarily contributed, but are returning to their countries,” the report stated.
According to the report, 5,918 of the affected retirees are ex-Federal Government workers, 1,423 former state government workers, while the remaining 64,772 contributors are from the private sector.
Since the operators started paying retirees under the CPS in 2007, a major worry has been the existence of pensioners who have been receiving very low pensions, while many others have ridiculously low balances in their RSAs that are not enough to earn them monthly pensions.
To address the issue of those with low monthly pensions, 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 will 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 will 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 prepared by the regulator and operators to kick-start the minimum pension payment states that only workers who have contributed for a minimum of 15 years into their RSAs will enjoy the minimum pension stipend.
It adds that informal sector and casual workers must have contributed to their RSAs for 120 and 135 months, respectively before they can enjoy this privilege.
As part of efforts to commence the implementation of the minimum pension scheme, PenCom ordered the PFAs to pay three per cent of their management fees into the Pension Protection Fund.
Some of the operators, who disclosed this to our correspondent, said that the three per cent was based on their 2015 financial records because most of the firms had yet to submit their 2016 accounts.