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Home National

PenCom explains delay in gratuity payment

23rd October 2017
in National
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PenCom explains delay in gratuity payment
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Acting Director-General of the National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar, has revealed that some retirees, under the Contributory Pension Scheme (CPS), are yet to receive gratuity due to unfunded  Defined Benefit Scheme (DBS) backlog owed by the Federal Government.

The acting  director-general said the affected retirees had been in service before the enactment of CPS Pension Reform Act, 2004.

According to Dahir-Umar,  the DBS faced the problem of huge pension liabilities arising from inadequate and untimely budgetary provisions and increases in salaries and pensions.

“Pension administration was largely weak, inefficient, less transparent and cumbersome, and marred with corrupt practices.” she told the News Agency of Nigeria (NAN).

The PenCom boss said until recently, the Federal Government could not unburden DBS Accrued Rights because of huge unfunded pension liabilities inherited by the present administration.

Said she: “The Federal Government is overburdened with payment of pensions, as illustrated by 2016 Appropriation Act, which made a provision of N200.17 billion as total pension and gratuity allocation. The allocation is still insufficient to fund the liabilities.

“For instance, the PTAD’s budget proposal indicated a total annual pension liability of N388.32 billion out of which N255.89 billion constituted unfunded liability inherited by PTAD. This was due to outstanding payment of 33 per cent arrears to pensioners under DBS.

“The directorate indicated that there had been no provision for liabilities in the past that now form core part of its pension obligation.”

The PenCom boss noted that the Federal Government took measures to tackle the issue and provided predictable retirement income for employees in public and private sector.

“The measure culminated in the enactment of the Pension Reform Act (PRA) of 2004,” she said, adding:  “The PRA was consequently amended by the National Assembly in 2011 and further repealed and replaced by the 2014 PRA.”

Dahir-Umar said the Pension Act had enabled PenCom to record progress by building 21 Pension Fund Administrators (PFAs), four pension custodians and seven closed pension custodians.

She noted that the Federal Government released N54 billion in April, which had been used to pay part of the arrears. According to her, retirees from January 2016 to October 2016, have been paid gratuity and are receiving regular monthly pensions.

Dahir-Umar said the Federal Government would soon release funds to pay the next batch of retirees.

“President Muhammadu Buhari should be commended for settling the accrued pension rights for that period,” she said, adding: “Despite competing demands for available cash, President Buhari has always expressed concern about the plight of workers and pensioners.”

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