Pension accrued rights: The damage and the losses

The news last week about the release of N54 billion by the Federal government to clear part of the backlog of accrued pension rights for the years 2014, 2015 and 2016 owed federal government retirees was hearth warming and a big plus to the Country’s Contributory Pension Scheme(CPS).

Also exciting was the newsaboutconstitution of an inter-ministerial committee on pension liability to reconcile outstanding pension liabilities and proffer solutions to the lingering problems.

Both were positive policy decisions by government, which has been long expected given the sensitivity of pensions to a country’s workforce, and what negative impact of non remittance could mean government’s image.

Specifically, these decisions will go a long wayto redeem

Governmentsimage and also revive the CPS that was losing its taste because of government poor compliance attitude.

The success of the contributory pension scheme right from the beginning was the initial commitment of government in the area of compliance, which influenced compliance at the private sector and other employers of labour.

So, everyone had looked on the government for good example, and as soon as government derailed in compliance by the no remittance of many months pension accrued rights, it was obvious that bad precedence was setting in, as some private sector employers began togive excuses for non remittance of their pension deductions, on the grounds that after all government was owing.

Now government has paid its outstanding. Will the private sector that have followed government to owe their employees, pay their outstanding as well? If they show interest to pay, what of accrued interest on the defaults? What of the organisations that are gone with the economic recession that also owed? What happens to their employees contributions? The employees have lost, who pays for the damage if such organisations are no longer able to pay or have closed shop?

What of retirees who left employment in the last 15 months and as a result of frustration of not being able to access their pensions have died due to hunger or sickness, and could not afford medical care for lack of money? All of these are part of the losses this non remittances of pension accrued rights have caused individual retirees, and the nation as a whole. This is the irony of the whole thing. Could we learn some lessons from here?

SalisuDanbatta, director of information, ministry of finance, on Wednesday last week said that N41.5 billion has already been released to the National Pension Commission (PenCom).

The amount released was for onward payment to those who retired under the contributory pension scheme and those who were yet to be paid.

Danbatta quoted the minister of finance, Kemi Adeosun as saying that N12.5 billion, being outstanding for January, February and March 2017, was also released, bringing the total to about N54 billion.

“Consistent with this, we have released N41.5 billion which clears the arrears inherited from the previous administration relating to the period 2013-15 and underpayments in 2016.

“This will bring relief to thousands of our elders who have served and deserve to be paid their entitlements promptly and fully.The minister said that the amount paid also included arrears of those who retired as far back as 2013 and had been unable to access their pension under the contributory scheme due to non-payment.

To avoid future accumulation of pension arrears, Adeosun said that henceforth “the monthly allocation to PenCombased on the appropriation of 2017 will regularly be paid along with monthly salaries of Ministries, Departments and Agencies (MDAs)”.

Meanwhile, a committee was constituted barely 48 hours after the Minister of Budget and Planning, Senator UdomaUdoUdoma hinted that the federal government would constitute a special committee to reconcile conflicting figures on pensioners’ claims and evolve creative measures to raise funds towards resolving the huge pension liabilities to workers.

Chaired by the Minister of Finance, Kemi Adeosun, other members of the new committee include a representative of the Secretary to the Government of the Federation, representative of the Head of Service of the Federation, the Accountant General of the Federation, Director General of the Budget Office, Director General of Pension Commission (Pencom) and Director General of Pension Transition Arrangement Directorate (PTAD), who will also act as secretary.

A statement issued by the Special Adviser to the Minister of Budget and National Planning, Akpandem James said the committee was to review and reconcile all pension liabilities of the federal government and make recommendations as to what portion of the liabilities could be funded through budgetary appropriations.

The Committee is also to suggest creative ways of funding the balance and has four weeks to conclude its assignment and report back to the President.

ChineloAnohu-Amazu, director general, PenCom in a memorandum submitted to the National Assembly Joint Committee on appropriations at the budget defence session on the 2017 budget estimate in Abuja requested for the appropriation and release of the accumulated funds to keep the pension system working.

She stated that based on the number of verified and enrolled Federal Government employees that retired from January to December in 2016 under the CPS as well as deceased employees within 2016, PenCom requested for the provision of the sum of N91, 914,899,000.00 in the 2016 FGN Appropriation Bill. However, the National Assembly approved only the sum of N50, 195,808,918.00 in the 2016 Appropriation Act, thereby resulting in a shortfall of N41, 719,090,082.00.

“Furthermore, out of theN50, 195,808,918.00 appropriated for the Retirement Benefits Bond Redemption Fund (RBBRF) Account in the 2016 Appropriation Act, only N18, 823,428,342.00 had so far been released into the RBBRF Account as at date. This leaves an outstanding balance in the sum of N31, 372,380,576.00 which are yet to be released for 2016.”

Accordingly, the Joint Committee on Appropriations is requested to consider and ensure the appropriation and release of the sum of N73,091,470,658.00 to pay January to December 2016 retirees of the Federal Government.

For the 2017 Pension Liability of the Federal Government under the CPS1, Anohu-Amazu stated that based on the number of verified and enrolled Federal Government employees that will retire from January to December in 2017 under the CPS, PenCom determined and requested for the provision of the sum of N113, 023,255,000.00 in the 2017 FGN Appropriation Bill. “However, we observed that in the proposal to the National Assembly, the Federal Government submitted only the sum of N50, 195,808,918.00 in the 2017 Appropriation Bill, thereby resulting in a shortfall of N62, 827,446,082.00.”

“PenCom would like to humbly request for the appropriation of the entire sum of N113, 023,255,000.00 for 2017 retirees of the Federal Government, as determined by PenCom pursuant to Section 39(3) of the Pension Reform Act (PRA) 2014.”