Retirees Benefit to Increase to 75% in Amended Pension Act 2014
The process to review the Pension Reform Act 2014 has begun, and provisions in the proposed law would see an increase in the retirement benefits due to retirees or disengaged workers, from 25% to 75% immediately upon retirement.
Recall that the National Pension Commission (PenCom) in August initiated the process of reviewing the Pension Act 2014 in order to address identified challenges and public clamour.
The Head, Corporate Communications Department, PenCom, Peter Aghahowa, had stated that the review became necessary to reposition the Contributory Pension Scheme and consolidate the gains of the pension reform for the benefit of Nigerians
The Amendment process has however began in the House of Representatives after several stakeholder engagements, and has undergone second reading.
The bill, sponsored by Hon. Olaifa Jimoh Aremu, seeks to amend sections 1(C), 7(2), 8(1), 18, 24 and 99 of the Pension Reform Act Cap. P50 Law of the Federation of Nigeria (LFN), 2014.
Aremu proposed that Section 1(c) of the Pension Reform Act 2014 be amended by deleting ‘receives his retirement benefits as and when due’ and replaced with “receives at least 75% of his retirement benefits immediately upon retirement, disengages or is disengaged.”
The stakeholders also seek amendment of section 1(c) by adding a new paragraph (e) immediately after (d) and rearranged as follows: “make provision for payment of the remaining benefits or every benefit without delay.”
When the bill is finally passed, the section 1(C) will read as follows: “Ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory, States and Local Government or the Private Sector receives at least 75% of his retirement benefits upon retirement, disengages or disengaged.
In the same vein, the bill also proposed the amendment of Section 7 (2) by deleting the figure ’25’ inline-four and replace it with ’75’ and delete “provided that such retirement or cessation of employment and the employee does not secure another employment” and rearranged as follows:
“Where an employee voluntarily retires, disengages or is disengaged from employment as provided for under section 16 (2) and (5) of this act, the employee may with the approval of the Commission, withdraw an amount of money not exceeding 75% of the total amount credited to his retirement savings account.”
The proponent further proposed amendment to Section 8(l), by adding “all” immediately after ‘dies’ in line one and rearranged as follows: “Where an employee dies, all his entitlements under the life insurance policy maintained under section 4(5) of this act shall be paid by an underwriter to the named beneficiary in line with section 57 of the Insurance Act.”
Similarly reviewed is Section 13 of the pension Reform Act 2014 by adding a new paragraph (d) immediately after (0) and rearranged as follows: “Ensure prompt payment of retirement benefit without undue delay.”
The bill also proposes amendment of section 99 of the Pension Reform Act 2014, by adding new subsection (5) immediately after subsection (4) and re-arranged as “Any person, body, Pension Fund Administrator, or Pension Fund Custodian that withholds or unduly delays payment of retirement benefit which have been released by the Federal Government or its Agency, Commission or Body commits an offence and shall be liable to 3 years imprisonment or a fine of N2 million or both.”
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