Cut in budgetary proposals presented to the National Assembly by the National Pension Commission (PenCom) is one of the main reasons why retired federal workers do not get their retirement benefits promptly.
Daily Trust’s findings show that PenCom computes the entitlements of prospective retirees ahead of time and factors same into the budget submitted to the lawmakers for approval.
Findings show that once the lawmakers cut the budget, the retirees will have to wait until another budgetary provision is made to make up for the shortfall.
For instance, a source within PenCom revealed that Federal Government workers due to retire in 2019 will be affected by the recent cut in the pension budget of the Federal Government by the National Assembly.
The source said the pension budget cuts by the lawmakers were the absolute amount of the total accrued rights of the Federal Government workers due to retire in 2019.
“We engaged the lawmakers and explained to them that the budget proposal was absolute, being that if you cut anything, it will affect the payment. They went ahead and cut it,” the source said.
The source explained that the implication is that the cut in the budget will lead to a delay in the payment of the prospective retirees until a new budget is approved.
In a recent interview, PenCom’s Head of Corporate Communication, Peter Aghahowa, said pension budgets are absolute figures and once there are cuts, they affect the pensioners.
On accrued rights, he said, “These were absolute figures, and once there is a reduction in the figure, you have actually reduced for some people. So, the monies have not been released completely. As far as the money has not been released completely, there is no how people will get it.”
He explained further that accrued rights is the component of the contributors’ benefits that accrued over time right from when they commenced work up to the time the pension reform commenced.
He explained the process of arriving at the absolute figure inputted into the budget as enrolment of workers about to retire and after enrolment, the accrued rights, for those that will be retiring, which will is computed and communicated to the Federal Government.
“They will now make provision for it and include it in the budget. So, once that is computed and communicated to the Federal Government, it has to be appropriated for in the budget. Once there is an appropriation and when the budget is being implemented, it will be released,” he said.
Last year, the Federal Government released N54 billion to settle accrued rights of retirees but the amount is not sufficient to settle the entire liabilities and the recent cut in the budget may increase the liabilities.
There have been calls for the Federal Government to raise bond to settle the accumulated accrued rights to enable retirees enjoy their benefits without delay.
Daily Trust findings show that many retirees have not been able to access their retirement benefits due to the government’s inability to settle their accrued rights.
Accrued rights are the benefits which the workers who worked for the government prior to 2004 when the CPS was introduced are entitled to.
In what appears to be a deliberate policy to ensure that the government settles the backlog of accrued rights, however, the National Pension Commission (PenCom) directed PFAs not to allow the retirees access to their retirement savings until the Federal Government released the accrued rights component.
For public service workers who migrated to the Contributory Pension Scheme (CPS) in 2004, shortly before they retired, they are entitled to two components of retirement benefits: the contributions accumulated in their Retirement Savings Accounts (RSA) and their accrued rights from the time they joined the service to the time they migrated to the CPS.
In addition to the retirees’ contributions from 2004 to date, the Federal Government must pay the retirees their accrued rights before the total benefits can be paid out.
There have been calls for PenCom to allow Federal Government retirees to access their RSA balances pending when government pays the accrued rights.
