Law To Make Pension a Direct Deduction from State and LG Revenue Allocation and Ensure Retirees get at least 50% as Lumpsum is Underway. – PensionNigeria

Law To Make Pension a Direct Deduction from State and LG Revenue Allocation and Ensure Retirees get at least 50% as Lumpsum is Underway.

A bill seeking to stop state governors from diverting pension funds for other use, is among proposed legislations now before the National Assembly.

The bill described as “An Act to Amend The Pension Reform Act” criminalizes diversion of pension fund by state governments and prescribes a jail term of 15 years for state officials found culpable.

Aliu Kuye, a member of the House of Representatives and sponsor of the bill disclosed that the plight of pensioners had worried him for so long and he was now determined to make a contribution along with his colleagues so that pension payments are not delayed any longer.

The bill, which has passed first reading, seeks, among others, amendments to Section 11(7) of the Pension Reform Act to read:

“The contributions of the state to the retirement benefits of employees of the state under section 11(3) of the Act shall be a charge on their respective revenue allocation. The state Accountant-General shall make the deductions of the contributions mentioned in subsection 5 of this section.”

“The contributions of the Local Government to the retirement benefits of their employee of the Local Government under section 11(3) of this Act shall be charged on their revenue allocation. The Local Government treasurers shall make the deductions of the contributions mentioned in subsection 7 of this section.”

Kuye revealed that many states are unable to meet up with pension payments to retirees because some governors divert pension funds to projects and other uses, adding that the bill would make sure that it becomes impossible since the money would be deducted from source.

A further amendment to Section 100 (1) of the Act says any “body who appropriates or diverts pension funds commits an offence under this Act and is liable on conviction to a fine of an amount equal to ten (10) times the amount so misappropriated or diverted or a term not less than 15 years imprisonment or both.”

An explanatory note to the bill states that it is to grant quicker access to more funds from the retirement savings account of pensioners after retirement while prescribing stiffer punishment for contravention of the Act.

The bill also wants pensioners to have access to at least 50% of their savings upon retirement instead of the current arrangement which could gives less in some cases.

“If you have substantial fund upon retirement, you would be able to invest well,” stated Kuye, who added that the bill also provided for better regulation of pension fund.

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