A new pension scheme which provides life pension for civil servants who have attained the status of Head of Civil Service of the Federation (HCSF) or permanent secretaries approved by President Muhammadu Buhari is rattling Nigeria’s Contributory Pension Scheme, which is currently spearheaded by the National Pension Commission (NPC), Daily Trust can report.
Prior to the Contributory Pension Scheme (CPS), Nigeria operated the defined benefit scheme in which employers bore the entire pension burden of employees on retirement. The inability of governments to meet the pension obligations of retired civil servants saw many die while still awaiting payment of their entitlements.
The federal government’s inability to meet its pension obligations led to the reforms embarked upon by the Olusegun Obasanjo administration in 2004, with the enactment of the Pension Reform Act (PRA). Under the new arrangement, the Pension Transitional Arrangement Directorate (PTAD) took over the administration of the defined benefit scheme while PenCom coordinates the newly introduced contributory pension arrangement.
With the pension reform, civil servants and the government, being their employer, make monthly contributions towards retirement and the retirees are paid their full benefits by the Pension Funds Administrators (PFAs) upon exit from service. In the pension reform guidelines, which were issued by PenCom in 2015, the head of service and perm-secs were asked to open retirement savings accounts and make pension contributions same as other pensioners.
The guidelines also stated that their benefits were already defined by law, guaranteeing that the government would pay them 100 per cent of their terminal benefits as pension upon retirement. The regulator, therefore, said the federal government, as the employer, is statutorily obligated to pay the shortfall in case the RSA savings do not cover the 100 per cent, thus alluding to the fact that they won’t lose a kobo of their entitlements.
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