The National Pension Commission (PenCom) is actively collaborating with the Ministry of Finance to establish a streamlined process for the prompt payment of retirement benefits to retirees under the Contributory Pension Scheme (CPS). This initiative aims to address the persistent delays in the disbursement of accrued rights and monthly pensions, ensuring that retirees receive their entitlements within a month of retirement. The current system has left many retirees in financial distress, prompting PenCom to seek a permanent solution to this recurring issue. PenCom acknowledges the legitimacy of retirees’ concerns and the hardships caused by payment delays but emphasizes the need for a comprehensive approach that guarantees timely payments in the future.
The urgency of this matter is underscored by the fact that approximately 18,000 retirees, who exited the workforce between November 2023 and the present, are currently awaiting their benefits. The existing legal framework prevents PenCom from directly releasing the retirees’ contributions, necessitating government intervention to disburse the accrued rights. PenCom is working closely with the Ministry of Finance to develop a sustainable mechanism that ensures prompt payment, eliminating the current delays and anxieties experienced by retirees. The goal is to prioritize the payment of CPS contributors, acknowledging their consistent contributions throughout their working lives.
While the government recently released N44 billion to cover accrued rights for retirees from March to October 2023, this represents a short-term solution. PenCom’s objective is to implement a system where retirees receive their benefits within a month of retirement, eliminating the need for protracted waiting periods and ensuring financial security for retirees. This initiative represents a significant step towards enhancing the efficiency and effectiveness of the CPS, bolstering confidence in the system, and providing retirees with the financial security they deserve.
In a separate development, PenCom has taken decisive action against African Alliance Insurance Company, banning them from selling annuity products following their failure to meet their obligations to annuitants. Annuities, a financial product where retirees invest a lump sum with an insurance company in exchange for a regular income stream, require meticulous management to ensure timely and accurate payments. PenCom’s intervention underscores their commitment to protecting the interests of retirees and ensuring the integrity of the pension system. The ban on African Alliance Insurance Company will remain in effect until PenCom is satisfied that the company has implemented measures to prevent future payment defaults and can reliably meet its obligations.
PenCom’s actions reflect a proactive approach to safeguarding the retirement savings of Nigerians and ensuring the stability of the pension system. The collaboration with the Ministry of Finance on prompt payment of retirement benefits demonstrates a commitment to addressing the systemic challenges that have plagued the disbursement process. The intervention in the case of African Alliance Insurance Company highlights PenCom’s dedication to upholding the highest standards of accountability and protecting the financial well-being of retirees.
Furthermore, PenCom has reaffirmed its commitment to investing pension funds in Federal Government securities. This investment strategy, common amongst pension funds globally, is predicated on the low-risk nature of government securities and the consistent repayment history of the Nigerian government. PenCom views these investments as a secure and reliable avenue for generating returns on pension funds, contributing to the long-term growth and sustainability of the pension system. These investments provide a crucial source of funding for government projects and initiatives, while also offering a safe and profitable investment option for pension funds.
