The National Pension Commission has suspended the payment of 20 per cent lump sum to retirees under the Contributory Pension Scheme and directed all Pension Fund Administrators to revert to the old template of 25 per cent.
The acting Director-General, PenCom, Mrs Aisha Dahir-Umar, stated this in Lagos on Thursday at an insurance conference.
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The PenCom DG, who was represented at the forum by the Head, Contributions Bond Redemption Department at PenCom, Olulana Loyimi, said the commission decided to suspend the new template because of the criticisms against its introduction.
She said, “As you are aware the commission introduced a new template for Programmed Withdrawal which took effect from 15th May, 2018. There have however been concerns expressed by some stakeholders. The commission in its usual responsive and consultative manner has decided to review the template. Consequently, the commission has directed that Pension Fund Administrators revert to the old template till further notice.”
The commission in May released the template to the PFAs for the calculation of retirement benefits to CPS retirees, which led to the reduction in the lump sum being paid out to the retirees to 20 per cent of the balance in their Retirement Savings Accounts and as low as 16 per cent for some pensioners.
The retirees daily expressed their displeasure at their inability to access at least 25 per cent of the balance in their RSAs which the law hitherto allowed.
Part III Section 7(1) A of the 2014 version of the law states. “A holder of a RSA shall upon retirement or attaining the age of 50 years, whichever is later, utilise the amount credited to his RSA for the following benefit: withdrawal of a lump sum from the total amount credited to his RSA provided that the amount left after the lump sum withdrawal or annuity for life in accordance with extant guidelines issue by the commission from time to time.”
The major parameters used on the template to calculate the monthly pensions are the date of birth, RSA balance, last salary before retirement and gender of the retiree.
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