An actuarial scientist and chartered insurer, Dr. Pius Apere, has said it is necessary to implement the minimum pension payments for all retirees under the Contributory Pension Scheme.
He said this while speaking on the rationale and implications for introducing the enhanced pension program for only the Programmed Withdrawal pensioners.
“It is clear that enhanced pension is not a substitute of guaranteed minimum pension and therefore, there is an urgent need to implement the GMP for the benefit of all eligible pensioners (not only the programmed withdrawal pensioners) in order to have a decent standard of living in retirement, particularly in this period of serious economic hardship facing the country,” he stated.
He said the Nigerian pensioners had two basic expectations under the Contributory Scheme which were to have sustainable standard of living in retirement and their benefits paid as at when due. According to him, the expectations cannot be fully met for all pensioners without the implementation of the guaranteed minimum pension as stated in Section 84(1) of the Pension Reform Act (PRA) 2014.
He explained that this was true particularly for those retirees with small Retirement Savings Account balances, because they have not accumulated enough as at the date of retirement to have a decent standard of living in retirement.
Apere said that the delay in the implementation of the GMP by the National Pension Commission for more than 10 years after the CPS was established in 2004 had resulted in growing sense of disenchantment among current pensioners with relatively small RSA balances at retirement.
This, he explained, was because of the small monthly pension they had been receiving over the years relative to the huge gains (from investment returns and/or dividends) the Pension Fund Administrators were currently making. Apere stated that the GMP (if implemented) would have eliminated the disenchantment among the current pensioners.
He said, “The delay in the implementation of the GMP could be considered to be the main reason for PenCom’s attention being drawn to the clamoring for periodic enhancement of the pension for retirees on programmed withdrawal under the CPS.
“The grumbling may arise mainly due to the contributors and/or new retirees demanding for huge initial lump sum payment, leaving them with reduced RSA balances for investment which in turn has reduced the monthly income to live on in retirement.”