PenCom On Payment Of Accrued Rights: Our Hands Are Tied

The National Pension Commission (PenCom) has said the commission is limited in the payment of retirees’ accrued rights.

The accrued right is the total amount the federal government owes its workers who have been in service before the commencement of the Pension Reform Act, 2004 which was reviewed and re-enacted in 2014.

According to the Head of Corporate Communications Department, Peter Aghahowa, during an interview with the THEWHISTLER, the commission could not force the federal government to comply with the new contribution rate.

The commission had said that since the review of 2004 pension reform Act in which the government’s contribution to workers Retirement Savings Account (RSA) was upgraded from 15% to 18%, the federal government was yet to commence its implementation as its contribution to employees RSA has remained at 15%.

He, however, noted that attempts in previous years by PenCom to capture the N62.83 billion shortfall in previous budgets were unsuccessful, as the appropriated funds were never enough.

For instance, it was gathered that in 2018, PenCom submitted N112.06 billion to the Budget Office but it was cut to N110.19 billion, effectively making it impossible to clear the debts.

“For a federal government retiree entitled to accrued pension rights to have access to his or her RSA, the federal government must pay the accrued rights and same is consolidated with the contributed savings in the RSA before access is granted to the retiree,” he said.

On the fear that PenCom was investing a huge chunk of pension funds into federal government securities, Aghahowa said the commission was not an investor but rather the Pension Fund Administrators (PFAs), “all we do is regulate and supervise them.”

He stressed that retirees would keep being short-changed as long as the federal government does not release funds.

“They came up with a law and if the people that enacted the law are breaking it then there is nothing we can do.”

Recall that President Muhammadu Buhari had directed the Minister of Finance, Budget and National Planning, Zainab Ahmed, to appropriate and release N62.83bn to clear the backlog of accrued pension rights of retirees in the next three years.

He also directed the budget office to include N12.83bn, N25bn and another N25bn in the budgets of 2020, 2021 and 2022 respectively to settle the outstanding accrued pension rights of the federal retirees under the CPS.