Govt yet to implement 18% pension contribution, says PenCom DG

PenCom Director-General, Chinelo Anohu-Amazu

•N10b increase sought for accrued rights

The Federal Government is yet to implement the 18 per cent pension contributions as revised by the Pension Reform Act (PRA) 2014, National Pension Commission (PenCom) Director General (DG), Mrs. Chinelo Anohu-Amazu, has said.

She spoke while defending the Commission’s 2017 budget before the National Assembly Joint Committee on Appropriations.

According to her, N79.1 billion was needed for payment of pension increase for the 79,961 pensioners, who retired under the contributory pension scheme (CPS) from 2004 to 2014.

On the implementation of the new rate of pension contributions, she said under the defunct PRA 2004, the rate of pension contribution for Federal Government employees was a minimum of 15 per cent of monthly pay. This, she said, is shared into two – 7.5 per cent each to be paid by the employer and the employee.

These, she said had been reviewed upward by Section 4(1) of the PRA 2014, to a minimum of 10 per cent for the employer and minimum of eight per cent for the employee, thereby making it 18 per cent of an employee’s monthly emolument.

The DG appealed to the Joint Committee on Appropriations to ensure adequate appropriation under the Federal Government’s recurrent expenditure in order to facilitate the implementation of the new 18 per  cent pension contribution rate.

On the N79.1 billion required for payment of pension increase, she noted that it was constitutional that there should be periodic review of pensions.

Mrs Anohu-Amazu said: “I wish to note that under the provisions of Section 173(3) of the Constitution 1999 (as amended) employees of Federal Government treasury-funded ministry, department, agencies (MDAs) have the right to periodic pension review. Following the Federal Government’s approval and payment of 15 per cent upward review of pension to pensioners under the defunct Defined Benefit (DB) Scheme, retirees under the CPS are also agitating for the implementation of same in line with their rights under the 1999 Constitution.

“In compliance with Section 39(3) of the PRA 2014, the Commission engaged the firm of Alexander Forbes Consulting Actuaries Limited to determine the financial implication of the 15 per cent salary review in 2007 on the pension components of the defined benefits rights also referred to as accrued rights.

“Consequently, the sum of N79.1 billion was determined as pension increase for the 79,961 employees, who retired under the DB Scheme from 2004 to 2014. The computation for the pension increases of FGN employees who retired in 2015, 2016 and those that were scheduled to retire in 2017 would be forwarded for inclusion in subsequent appropriations after due actuarial valuation is concluded.”