Don't Miss


Home   >   Business   >   Industries   >   Insurance   >   FG stops remittance of workers’ pension deductions

FG stops remittance of workers’ pension deductions

By on July 15, 2016

The Federal Government has not been remitting the pension contributions of most of its workers into their Retirement Savings Accounts under the Contributory Pension Scheme since October last year.

This revelation was contained in the 2016 annual report of the Pension Fund Operators Association of Nigeria, which was obtained exclusively by our correspondent on Wednesday.

PenOp stated in the report, “Compliance with regard to remittances of pension contributions from the public sector at both the federal and state levels have lagged notably. While remittances from the Federal Government through the National Pension Commission were last received for September 2015, some states have outstanding remittances dating back over two years.”

The association, however, said private sector remittances had been more consistent though impacted by the current adverse economic environment in the country.

Most of the federal workers affected are direct employees of ministries, who are not under the parastals but are being paid by PenCom with the funds released from the Central Bank of Nigeria.

It was also gathered that the Federal Government had also failed to increase its contribution into the RSAs of workers in the parastals by crediting their accounts with 15 per cent of their total monthly emolument two years after the Pension Reform Act, 2014 increased the contribution to 18 per cent (10 per cent for employers and eight per cent for the workers instead of the 7.5 per cent that each was contributing before 2014).

The implication of the non-remittance of the pension contributions to the workers’ RSAs is that upon retirement, most of the workers will be unable to process their pensions until all arrears are paid together with their accrued rights under the Defined Benefits Scheme.

However, the Pension Fund Administrators may agree to pay the retirees if their unpaid arrears are negligible by then.

Amidst the dire economic challenges in the country, PenOp said the aggregate pension assets under the CPS grew by 15 per cent from N4.61tn as of the end of December 2014 to N5.3tn in 2015.

The association said the call to invest a greater portion of the pension funds in infrastructure required clear, calm, incisive and strategic thinking to achieve any notable success.

“With N5.3tn grown over an 11-year period, careless deployment could wipe these gains out in an instant,” PenOp said.

If looked at as a constituent part of national economic strategy, PenOp said the focus would switch to how it could support the industry to grow beyond N20tn.

 

[Punch]