The National Pension Commission (PenCom) is taking steps to raise pension bonds through the Debt Management Office (DMO) to offset the N400 billion pension arrears of federal retirees.
The acting Director-General, PenCom, Aisha Dahir-Umar said the commission had been engaging relevant authorities in order to ensure funding of the arrears accumulated through accrued rights.
According to PenCom, “Section 39 (2) of the Pension Reform Act 2014 mandates the Federal Government to pay into the Retirement Benefits Bond Redemption Fund Account an amount not less than five per cent of the total monthly wage bill payable to employees in the public service of the federation towards the redemption of the accrued pension right of FGN retirees.
“In the last five years, budgetary funding/releases had not been regular and adequate for the payment of outstanding accrued pension rights as a result of decline in government revenue,” a report by Punch disclosed.
To clear the debt, PenCom submitted a suggestion to the government to consider issuance of bond through the DMO instead of placing the burden on budget allocation.
According to a source in PenCom, who spoke on the delay of the pension arrears, “The commission had been in talks with the DMO on how to raise the pension bonds to clear the pension arrears.
“While the discussion is still ongoing, the Federal Government said some funds should be released over a period of time.
“But as the funds have not been released, we are still trying to see the possibility of raising the pension bonds to clear the backlog.”
FG’s attempt to stop payment delay: The Federal Government will release N62.83 billion to clear the backlog of accrued pension rights of retirees in the next three years through the Ministry of Finance, Budget and National Planning.
The Finance Minister, Zainab Ahmed has been directed to appropriate and release N12.83 billion, N25 billion and another N25 billion in the budgets of 2020, 2021 and 2022 respectively.
Also, the government had disclosed its intention to fast-track pension payment for workers who switched to the Contributory Pension Scheme (CPS) before retirement. So, the funds will be for retirees under CPS.
But there’s a problem: Many retirees can’t wait for that long. Most want the pension payment to be fast-tracked with immediate effect rather than wait for that long. Though the 2020 budget has been approved, the funds haven’t been disbursed by the government.
Some of the retirees are reportedly scared that when payment begins, they probably wouldn’t be alive to enjoy the reward of their efforts during service to the government. The space within the period of payment worries them, and the inflation, as well as proposed VAT increase, which is expected to increase the cost of living, isn’t helping the situation most of them are said to be.
Should PenCom invoke its right? With retirees complaining of the delay in pension payment and the government not swiftly clearing the debt owed to them, PenCom could go over the government’s head to invoke its right to ensure payment.
The Pension Reform Act 2014 gives statutory power to PenCom to direct the Accountant General of the Federation to deduct at source unpaid accrued pension rights. But the commission might not due to political constraints; note that the power has never been exercised for this reason.