There are growing concerns over the exclusion of federal retirees under the Contributory Pension Scheme (CPS) in the new wage increase by the federal government for federal pensioners, Daily Trust can report.
It would be recalled that on 30th April 2024, the federal government approved a salary increase of between 25% and 35% for civil servants on the remaining six Consolidated Salary Structures.
The Salary Structure includes the Consolidated Public Service Salary Structure (CONPSS), Consolidated Research and Allied Institutions Salary Structure (CONRAISS), Consolidated Police Salary Structure (CONPOSS), Consolidated Paramilitary Salary Structure (CONPASS), Consolidated Intelligence Community Salary Structure (CONICCS) and Consolidated Armed Forces Salary Structure (CONAFSS).
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Similarly, the government approved increases in pension of between 20% and 28% for pensioners on the Defined Benefits Scheme (DBS) who fall under the above-mentioned six consolidated salary structures.
Consequently, the National Pension Commission in a letter obtained by Daily Trust and addressed to the Minister of Finance and Coordinating Minister of Economy, Wale Edun expressed worry over the current development.
The letter dated May 3, 2024 and signed by the Director General of the Commission, Mrs. Aisha Dahir-Umar noted that the Commission had submitted a letter on the matter dated 21 February 2024 to the Tripartite Committee of the National Salaries, Incomes and Wages Commission on the National Minimum Wage.
Part of the letter titled “RE: REVIEW OF PENSION RATES IN THE FEDERAL PUBLIC SERVICE” as seen by Daily Trust reads: “The National Pension Commission (the Commission) refers to the Circular referenced SWC/S/04/S.542/ll/449 of 30 April 2024 from the National Salaries, Incomes and Wages Commission conveying the approval for the implementation of new pension rates for pensioners under the Defined Benefits Scheme (DBS), following the recent increase in salaries for employees of treasury-funded Ministries, Departments and Agencies (MDAs).
“While the commission commends the gesture of the federal government in implementing the constitutional requirement for pension increase, it is a cause for serious concern that the circular under reference omitted pensioners under the Contributory Pension Scheme (CPS).
“This is, especially so as the commission had submitted a letter on the matter dated 21 February 2024 (copy attached as Appendix 1) to the Tripartite Committee of the National Salaries, Incomes and Wages Commission on the National Minimum Wage. Indeed, this fundamental omission is contrary to both Section 173 (3) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) and Section 15 (4) of the Pension Reform Act (PRA) 2014.,” the PenCom DG explained.
Furthermore, she noted that “It is, perhaps, apposite to state at the onset that, following the 2004 pension reform, retirement benefits under the CPS consist of both the monthly pension contributions accumulated from the commencement the scheme in 2004 and the Accrued Pension Rights for past service rendered prior to the commencement of the Scheme.
“The two components together with accrued investment income are consolidated at the point of retirement in the Retirement Savings Account (RSA) and accessed as retirement benefits through programmed withdrawal or annuity for life. Thus, part of the arrangements for persons transiting from the DBS to the CPS is to recognise their rights under the defunct Scheme, including the constitutional right to pension increases protected under Section 173 (3) of the 1999 Constitution (as amended).”
The pension sector regulator in the letter further noted that the previous wage increase and consequential adjustments for pensioners in the Federal Civil Service under the CPS is pending.
The letter added that: “Without prejudice to the above, the honourable minister is invited to recall that the federal government had, pursuant to Section 173(3) of the Constitution, approved pension increases of 15% in 2007 and 33% in 2010 respectively, following salary reviews in the Public Service. There was also a subsequent consequential adjustment in the pension benefits of FGN retirees, following the federal government’s approval of N30,000.00 minimum wage in 2019.
“Accordingly, the commission had, in line with Section 39(3) of the PRA 2014, submitted to the Budget Office of the Federation on an annual basis, the financial implications for the implementation of the pension increases for retirees under the CPS. Please see attached as Appendix 3, copy of a letter dated 31 August 2023 to the Federal Ministry of Finance on the subject.
“It is, however, worthy of note that the necessary appropriation and release of funds for the implementation of the pension increases and the consequential adjustment is yet to be effected. Consequently, while the pension increases of 2007 and 2010 and the consequential adjustment of 2019 have been implemented for retirees under the Defined Benefits Scheme, the same is yet to be extended to retirees under the CPS.
“This was brought to the attention of the Head of the Civil Service of the Federation and the Chief of Staff to the President, vide letters dated 28 November 2023 and 22 March 2024 (copies attached as Appendix 4(a) and 4(b)), respectively. It would, therefore, appear that the present circular issued by the National Salaries, Income and Wages Commission is a continuation of this non-implementation of the constitutional and legal rights of retirees under the CPS.”
The commission further implored the minister to approve the implementation of pension increase for workers under the CPS.
“Accordingly, the commission urges the honourable minister to note the above and direct the implementation of the following pension increments for the benefit of retirees under the CPS for 15% increment in 2007; and 33% increment in 2010; as well as consequential adjustment in 2019 following the increment in minimum wage; and also 20% to 28% increment in 2024,” it added.
Reacting to the development, a pension expert, Mr. Sani Mustapha said, “The onus lies on the National Pension Commission as the regulator of the sector to guide the government and advise them appropriately on the new pension increase to ensure that it is implemented.
“In my opinion, the government thought because the money in the retirement savings account of CPS pensioners increases almost every month because it’s being invested so there was no need for increment as they don’t also pay tax. However the case is not the same with DBS pensioners who can stay for years without a kobo being added to their pension.”
Meanwhile, PenCom has revealed that Nigeria’s pension fund assets dropped marginally to N19.669 trillion for the period ended 31st March 2024.
This was contained in the commission’s monthly report for March 2024.
The figure represents a marginal decrease of about 0.45 per cent compared with N19.759 trillion reported as net asset value (NAV) in February 2024.
Details of the report showed that the total pension fund net asset value dropped to N19.669 trillion in March compared to N19.759 trillion reported a month earlier.
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