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THE NATION WEDNESDAY, MARCH 12, 2014

THE NATION

BUSINESS PENSION

PHCN pensioners demand over N16b arrears, severance benefits

BOUT 20, 000 electricity sector pensioners of the defunct Power Holding Company of Nigeria (PHCN) have given the Federal Government up till midnight today to pay their N16 billion outstanding pension arrears, gratuities, death benefits, among others. The pensioners under the umbrellabody of the Nigeria Union of Pensioners (NUP), electricity sector, also want the government, through the Nigeria Electricity Liability Management Limited (NELMCO), to pay the monthly pensions of their members for January and last month. They warned that the failure to pay the outstanding areas would result in a protest. President, NUP, Comrade Temple Ubani, said they were aware that the government had paid for the same period, other pensioners through the Pension Transitional Administration Department (PTAD).

• May begin nationwide protest today

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He said they were informed by NELMCO that NEPA/PHCN Pension Fund is classified as Capital Budget and domiciled in the Central Bank of Nigeria, where it is released quarterly to make for the monthly payment of pensioners. They criticised the arrangement as cumbersome and unwieldy. He noted that it is common knowledge that salaries and pensions are overhead expenses normally classified as recurrent budget and released monthly as first-line charge. “We have repeatedly experienced delays in payments during the first month of each quarter of the year as a result of the uncooperative attitude between the Ministry of Finance, the Budget Office and the AccountantGeneral’s Office, thereby making

payment of our stipends very rigorous and tasking for NELMCO, every month. “Our union and NELMCO management have sought the intervention of relevant authorities, including the presidency and the National Assembly to redress these anomalies to no avail. “It is also on record that many NEPA/PHCN retirees have not been paid their outstanding terminal benefits.These include gratuities, arrears of pensions, death benefits to the next of kin of deceased workers and retirees and monetisation arrears. Others are harmonisation entitlements, electricity rebate benefits, spanning over several years, and different forms of verification exercises conducted by different Federal Government agencies. “In 2013 the Minister of Power,

No official can steal N4tr pension fund, say PenCom, PeNop T HE N4trillion workers and retirees’ contribution under the Contributory Pension Scheme (CPS) cannot be stolen by any individual, or organisations owing to its structure, the Acting Director-General of the National Pension Ciomision, Mrs. Chinelo Anohu-Amazu, has said. This is coming on the heels of claims by the Chairman of Independent Corrupt Practices and Other Related Offences Commission (ICPC), Mr. Ekpo Nta that a junior staff member of the Commission was arrested with 50 bank accounts with others involved in fraud running into billions of naira. The discovery resulted in a public outcry from Nigerians who could not hide their disappointment following the development which painted all the assurances of safety of pension fund under the contributory pension scheme in bad light. Part of the setback for CPS is the negative impression of the residual scheme from the Defined Benefits of Non-Contributory Pension Scheme in the country, which is fraud prone. This has continued to pose serious challenge to the nine-year old contributory pension scheme in the country. PenCom Acting Director-General, Mrs. ChineloAnohu-Amazu told The Nation, that she was miffed by the report, noting that the Commission had been working hard to gain the confidence of Nigerians. She said the junior officer mentioned by the ICPC is not a PenCom staff member and the ICPC had recanted that the man is a civil servant. She said there are safeguards protecting the pension funds from misappropriation, with the functions of custody and administration of the funds clearly delineated in the Pension Reform Act, 2004. Mrs. Anohu-Amazu stressed that while the Pension Fund Custodians (PFCs) are in custody of the funds; the PFAs manage and administer the contributions, adding that the PFAs and PFCs are also mandated by the Commission to maintain high levels of transparency and accountability and to give contributors unfettered access to any information relating to their accumulated pension savings. She said: “PenCom has in place

• Mrs. Anohu-Amazu

• Yola

strict regimes, which include daily monitoring of the investment activities of PFAs and the institution of strict pay-out authorisation requirements. These ensure that PFAs are not reckless in their investment decisions, while ensuring that only the right beneficiaries would have access to the pension funds “Some other measures include the guarantee to the full sum and value of the pension fund and assets held by Pension Fund Custodians as mandated by the regulator as well as risk rating for instruments that pension funds could be invested in. “In addition to the engagement of a Compliance Officer (CO) who is saddled with ensuring compliance with the provisions of the law regarding pension matters as well as the internal rules and regulations of any operators, PenCom keeps track of the activities of pension operators. Every PFA is also required to maintain a Statutory Reserve Fund, into which shall be credited annually with 12.5 per cent of the net profit after tax, or as stipulated by PenCom to meet claims.” Mrs. Anohu-Amazu said the Commission also imposes legal and administrative sanctions for non-compliance with the rules and

regulations as any operator found wanting would be sanctioned in line with the law, among other things. These checks and balances, she noted, were embedded in the law to give the contributors rest of mind and encourage workers not to be skeptical about the new contributory pension scheme. The pension reform has addressed problems of past pension schemes to a large extent, she stated. Also, Chairman, Pension Fund Operators Association of Nigeria (PenOp), Mr. MisbauYola, said it would take the collusion of PenCom, PFA and PFC officials to loot the fund. He assured the six million employees who are listed in the CPS of the safety of their contributions. He said the law establishing the CPS has an in-built mechanism that guarantees safety of the funds and its availability at the point of retirement of the worker, adding that the funds are protected and would be available to them at their point of retirement. Yola added that since the coming on board of the Scheme about eight years ago, it has not recorded any form of fund mismanagement, saying, “The system is watertight and no one can have access to the money except the contributor at the point of retirement,” he added.

Prof. Chinedu Nebo informed the whole world that government had set aside over N16billion for the settlement of these liabilities. Unfortunately all targeted payment dates did not materialise and some beneficiaries have since died without getting their benefits,” he said. Ubani pointed out that they have taken notice of the concerned intervention of some critical stakeholders, like the Chairman, Senate Committee on Power, Senator Phillip Aduda and the Director-General of PTAD, Ms. Nellie Mayshak, who have pleaded through the Managing Director of NELMCO, Dr. Samuel Agbogun, to give them some time. He said it is expected that their intervention shall facilitate the payment of their January and February Pensions by that date, and address other outstanding and residual mat-

• Ubani

ters. “Nonetheless, this memo shall serve as due notice to Government and NEPA/PHCN retirees, that in the event that arrears of pensions are not paid by 12 midnight on Wednesday, March 12, 2014, Government should hold its relevant agencies responsible for whatever reactions the pensioners, the widows and orphans of deceased power sector workers may decide to embark on,” he said.

‘Life insurance operators, PFAs help retirees on best retirement option’

ICENSED life insurance companies providing Life Annuity and the Pension Fund Administrators (PFAs) providing Programme Withdrawal to retirees as the two retirement options under the Contributory Pension Scheme (CPS), are working to ensure they get the right plan for retirement. The Managing Director, LASACO Life, Dimeji Olona, who said this, explained that Section 4 of the PRA allows an employee to use the amount accumulated in his Retirement Savings Account (RSA) to buy either programmed withdrawal or life annuity at retirement, or attaining the age of 50 years, whichever is the latter. Olona said the contributor is also allowed to take a lump sum at age 50, or at retirement whichever is the latter from the RSA balance, provided that the amount left after the withdrawal shall be sufficient to procure Annuity for life, or fund Programme Withdrawals that will provide an amount not less than 50 per cent of his annual remuneration as at the date of his retirement. He praised the efforts of the regulators, the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom), for ensuring that the retirees are well protected. He said the Lagos State Pension Commission (LASPEC) has, on its part, also ensured that the PFAs and insurers compete in a healthy environment. He affirmed that both the PFAs and Annuity providers are partners in progress as there cannot be an effective administration of annuity without the involvement of PFAs who are supposed to accumulate the fund to use in purchasing the annuity for life. Olona explained that annuity is a series of payments made at equal intervals of time in conservation of a lump sum, or a regular contribution made over a predefined period. He said: “We have different types of annuity, but the type being made popular in Nigeria

through the Pension Reform Act (PRA) 2004, is called Immediate Annuity. “The Programmed Withdrawal is provided by the PFAs, while the annuity for life is provided by licensed life insurance companies in Nigeria. The Programmed Withdrawal and Annuity are two distinct options available to the retirees. Both options, although have clearly distinct features, have been carefully chosen by the regulators to protect the interest of the retirees. “The process of selecting the providers of either option is also stringent to ensure that only the companies that are adjudged by the regulators to be capable are licensed.” Olona said some of the advantages of annuity are: “That the product is used to take care of the basic fear of an intending retiree at risk of outliving his income which is called longevity risk. This risk is borne by the insurance company if the retiree lives very long. For instance, a retiree that leaves service at the age of 60 and lives up to perhaps 90 years can buy annuity for life which can be used to solve the financial burden at old age. “Life Annuity authorised under the PRA 2004, is guaranteed for 10 years but if the annuitant dies before 10 years, the balance would be paid to the named beneficiary. If the annuitant survives the guaranteed period, the annuity is payable thereafter as long as the annuitant lives.” Another advantage, Olona mentioned, is that the investment risk is borne by the annuity provider and not the annuitant, as a guaranteed sum is given to him or her on a regular basis in spite of harsh investment climate that might be experienced by the company. He said PenCom and NAICOM collaborated in 2006 to jointly regulate Life Annuity and Group Life insurance policy under the CPS. Both regulations have been implemented for six years and three years.