FG appropriates N20.7bn as payment for pension differentials

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The Federal Government has appropriated N20.7 billion in the 2022 Appropriation Bill as provision for consequential adjustment on pensions of its workers for April 2019 to April 2021.

  This was disclosed in the 2022 Appropriation bill under the title “Arrears of Pensions as a result of consequential adjustment on pensions (April 2019 – April 2021)”

  This implies that payments for May 2021 – December 2022 will remain outstanding, even as payments from 2014 when the Pension Reform Act was amended till December 2020 still remain outstanding.

It will be recalled that since the law was amended, the FG has only paid N5 billion in July 2021.

  Consequential adjustment on pensions is the 2.5 per cent differential in the rate of employer pension contribution for Federal Civil Service retirees and employees.

  The minimum pension contribution for employers was increased from 7.5 per cent to 10 per cent in line with Section 4(1) of the Pension Reform Act, PRA 2014. However, the federal government failed to implement the provision and continued to remit 7.5 per cent for its employees.

It will be recalled that the National Pension Commission, PenCom, said that N5 billion was disbursed in July 2021 for payment of the 2.5 per cent differential in the rate of employer pension contribution for Federal Civil Service retirees and employees.

The Commission, however, stated that the payment is from 2019 to December 2020, while indicating that the backlog will be cleared at an unspecified later date.

Speaking on the issue, Head, Contribution & Bond Redemption Department of PenCom, Mr. Saleem AbdulRahman, said: “The federal government released about N5 billion for the payment of the 2.5 per cent differential which will be paid into the Retirement Savings Account, RSA, of employees. The money will also get to respective retirees. Some may likely get additional lump sum, some might likely get advanced monthly withdrawal pension, active employees will get the 2.5 per cent. This is only for treasury funded employees and retirees.”He added: “Subsequently, the federal government is expected to continue with the payment of the 10 per cent rate of employer pension contribution for its employees, thus ensuring a remittance of at least 18 per cent monthly (employer 10 per cent and employee 8 per cent ) as provided by the PRA 2014.

“Funds have already been made available for the settlement of the above stated pension liabilities. Accordingly, remittance into the various Retirement Savings Accounts (RSAs) of the affected retirees and employees is currently being processed. The affected retirees and employees would be notified in due course by their respective Pension Fund Administrators (PFAs)”.

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