The National Pension Commission (PenCom) announced a maiden pension enhancement for this category of pensioners with effect from December 2017, with subsequent reviews to be advised by PenCom from time to time.
The announcement was contained in a framework on the issue, released by PenCom to Pension Fund Administrators and Pension Fund Custodians. The objective of the framework is to provide uniform modalities for the implementation of periodic pension enhancement for the affected category of pensioners, using the surpluses generated from the return on investment, and the Retirement Savings Account (RSA) balance.
One other issue addressed by PenCom in the framework is the issue of Minimum Guarantee Pension as provided for in Section 84 subsection 1 of PRA 2014. The section provides that all RSA holders who have contributed to a licensed PFA for a number of years to be specified by the Commission shall be entitled to a guaranteed minimum pension as may be specified from time to time by the Commission.
The framework directs PFAs to continue paying pensions to retirees that have fully exhausted their RSAs from their statutory reserve, pending implementation of Minimum Pension Guarantee.
This is in line with Section 81 of PRA 2014 which creates a Statutory Reserve Fund to be maintained by every PFA as ‘’contingency fund to meet any claim for which the PFA may be liable as may be determined by the Commission. The Fund shall be credited annually with 12.5 percent of the net profit after tax or such percentage of the net profit as the Commission may, from time to time stipulate.’’