The National Pension Commission (PenCom) announced the release of N22 billion by the Federal Government for the settlement of accrued pension rights for retirees of Ministries, Departments, and Agencies (MDAs). This disbursement, channeled through the Office of the Accountant-General of the Federation, covers retirees from October 2023 to January 2024 and includes accrued rights for some deceased employees. The funds have been deposited into the Retirement Benefits Bond Redemption Fund Account at the Central Bank of Nigeria and subsequently credited to individual Retirement Savings Accounts (RSAs) via Pension Fund Administrators (PFAs). This recent release brings the total disbursement for accrued pension rights from the 2024 appropriation to N66 billion. PenCom has directed PFAs to expedite the payment process to ensure prompt access for eligible retirees.
This disbursement follows a previous release of N44 billion in December 2023, which covered retirees from March to September 2023. The staggered release of funds for accrued pension rights has drawn criticism from advocacy groups like the Centre for Pension Rights Advocacy, which argues that the government should uphold its legal obligations rather than adopting a seemingly benevolent approach. The Centre contends that accrued pension rights are a legal entitlement, not a discretionary benefit, and should be paid promptly and in full upon retirement. This underscores the ongoing debate surrounding the timely and consistent payment of accrued pension rights in Nigeria.
Accrued pension rights represent the benefits earned by employees during their service years under the old defined benefit pension scheme, which existed before the Contributory Pension Scheme (CPS) was introduced in 2004. The CPS is a defined contribution scheme where both the employer and employee contribute towards the employee’s retirement savings. However, for employees who transitioned from the old scheme to the CPS, their accumulated benefits under the old scheme constitute their accrued rights, which the government is obligated to pay. The timely release of these funds is crucial for retirees’ financial security and well-being.
The process of accessing these funds involves verification and enrollment by PenCom, followed by the transfer of funds to the designated account at the Central Bank of Nigeria. From there, the funds are credited to individual RSAs managed by PFAs. Retirees are then required to contact their respective PFAs to complete the necessary documentation and initiate the withdrawal process. PenCom’s directive to PFAs to expedite the payment process aims to minimize delays and ensure that retirees receive their entitlements without undue hardship. This streamlined process is essential for efficient disbursement and access to retirement funds.
The importance of timely payment of accrued pension rights cannot be overstated. These funds often represent a significant portion of a retiree’s financial resources and are crucial for meeting their post-retirement needs, including healthcare, housing, and daily living expenses. Delays in payment can cause significant financial strain and hardship for retirees, particularly those who rely solely on their pension income. Moreover, the prompt payment of accrued rights demonstrates the government’s commitment to its obligations to its former employees and contributes to a sense of financial security and stability for retirees.
The government’s efforts to address the backlog of accrued pension rights payments are commendable, but the ongoing need for phased disbursements raises concerns about the sustainability of the current system. The advocacy for a more structured and predictable payment schedule highlights the need for a long-term solution to ensure the timely and consistent settlement of accrued pension rights. This could involve dedicated budgetary allocations, improved administrative processes, and a stronger commitment to meeting statutory obligations. Ultimately, a robust and efficient system is essential to protect the financial well-being of retirees and uphold the integrity of the pension system.
