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The National Pension Commission (PenCom) has frowned at the suggested payment of “at least 75 per cent’’ lump sum to retiring workers under the Contributory Pension Scheme (CPS).
The suggestion was made in the Pension Reform Amendment Bill currently before the National Assembly.
PenCom’s Director-General, Mrs Aisha Dahir-Umar, says the implication of the suggestion is that a retiring worker can decide to take 100 per cent of the money in his or her Retirement Savings Account (RSA).
Dahir-Umar noted that the suggestion was based on a misunderstanding of the concept of pension payment under the CPS.
She said the proposed amendment also contravened the 1999 Constitution, which guaranteed the right to pensions for all public officers.
“That suggestion also converts the CPS into a Provident Fund and leaves such a retiree with no periodic pensions, contrary to the requirement of Section 173 of the 1999 Constitution,’’ she said.
Dahir-Umar expressed her views in a presentation at a public hearing organised by the House of Representatives Committee on Pensions.
The hearing focused on a Bill for an Act to amend Section 1(c) and Section 7(2) of the Pension Reform Act 2014.
A copy of her presentation was obtained by the News Agency of Nigeria (NAN) on Monday in Lagos.
Section 7 (1) (a) of the Pension Reform Act (PRA) 2014 allows for only 25 per cent of the retirement saving to be paid as lump sum to a retiree.
This is provided that the amount left after the lump sum withdrawal is sufficient to fund a programmed withdrawal or annuity over 10 years or expected lifespan of the retiree.
According to Dahir-Umar, the provision of monthly pensions is central to the objective of mitigating old age poverty under the CPS.
She explained that PenCom retirement benefits payment template ensured that the RSA had enough balance and should be sufficient to provide at least 50 per cent of the retiree’s terminal pay as monthly pensions.
