Retired paramilitary officers in the country have asked to be exempted from the Contributory Pension Scheme (CPS).
The retired officers, under the aegis of the National Association of Retired Paramilitary Officers, stated this in a statement in Abuja on Monday ahead of their participation in the public hearing by the House of Representatives on the bill to amend the Pension Reform Act 2014. The statement was signed by the National President of the Association, Victor Ogbebor.
In the statement, the Association noted that the military, SSS and DIA have been withdrawn from the CPS due to the hazardous nature of their jobs.
The Association said the reason it advances exempting the military, together with the police and other paramilitary agencies, is because they also face similar hazards and difficulties in the course of their constitutional or assigned duties.
NOTE – The Military and Security Agencies were exempted from the Contributory Pension Scheme in 2011. The Police were not exempted but a special Pension Fund Administrator (PFA) was incorporated in 2013 to cater for their unique needs.
The association further noted that the problem of the CPS is caused by the ignoble role of pension administrators who are allegedly profiting from the scheme to the detriment of the contributors on whose behalf they are investing the funds.
“This inordinate profit undisputedly is what informs the resistance of those against the withdrawal of the para-military Services from the CPS despite the minute share of their contribution.
NOTE – The fees charged by Pension Fund Administrators (PFAs) are regulated by the National Pension Commission (PenCom), you can check out the fee Table HERE
“That in spite of the huge profits declared at the end of every year at Annual General Meetings, pensioners who are on the new scheme (PENCOM) have been on the same amount as programmed monthly pensions from the period of retirement from service until last year when they decided to add some pittance.
NOTE – The first enhancement that allowed retirees on programmed withdrawals to have their monthly pension increased was done in 2020 not 2021, you can check out the publication HERE
“This is contrary to Section 72 of the Act, which states that the contributions shall be invested by the pension fund administration for safety and maintenance of fair returns on the amount invested,” the association said.
NOTE – Most Pension Fund Administrators (PFAs) have delivered competitive returns on investment, our last tracking for this was in March 2021 but the report will be updated soon HERE
The Association also complained that pensioners who had very few years to retire before the commencement of CPS lost much more. “The CPS may be good if affected individuals have sufficient number of years to do so before retirement and not for people who are at the verge of retirement.”
“At the implementation of the contributory pension scheme in June 2004, the circular from the office of Head of Service of Civil Service of the Federation only exempted people who have three years left to go on retirement from being enrolled on the scheme.”
“…If you have three years and even one month to go on retirement, you are dumped in the CPS when no meaningful contributions have been made by retirees who have put in 25 years and above.”
“Retirees under CPS get little or nothing from monthly pension compared to their colleagues in the Defined Benefit Pension Scheme who earn 80 per cent of their monthly salary while in the service as their monthly pension. Retirees on CPS earn peanuts far less than 20 per cent of their monthly salary while in the service as their monthly pension,” it said.
NOTE – Retirees under Contributory Pension Scheme (CPS) have the option to get up to 100% of their last salary as monthly pension if their Retirement Savings Account balance can fund it, but where a retiree has opted for a lump sum with which the RSA balance can not fund higher pension then the monthly pension could be pegged to 50% of last salary. In addition, where the RSA balance is small compared to years of service and last salary, and the retiree opted to collect a lump sum, then the monthly pension could be lower than 50% of the last salary.
The Association also asked that the House look into the possibility of reverting CPS retirees who have put in 25 years and above in the service of their nation before the commencement of the contributory pension scheme in June 2004, to Defined Benefit Pension Scheme.
They said this was apt since they did not have sufficient time to contribute anything meaningful that would have placed them at vantage position on retirement. This, they said, will put an end to the agitation against poor implementation of CPS.
NOTE – The above is why there is a provision in Pension Reform Act that mandates public sector employers to have a Retirement Bond for their employees, once an employee retires, the public sector employer is expected to transfer the employee’s accrued rights, which represents their pension contributions from date of first employment to when the new contributory pension act became effective, into the employee’s Retirement Savings Account.
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