Twelve years after the Contributory Pension Scheme kicked off in the country, about 162,025 retirees are earning their monthly benefits from pension and insurance operators.
The CPS was introduced following the enactment of the Pension Reform Act in 2004 to introduce a new platform for employees of the public and private sectors to be able to save during their working years and have financial security when they retire.
Currently, the scheme has produced 162,025 retirees who are earning regular monthly income from operators of the scheme.
The CPS mandates employers to contribute 12 per cent and deduct eight per cent of the employers? monthly emolument, which are to be regularly remitted into the workers? Retirement Savings Account with their respective Pension Fund Administrators.
The worker could have access to the fund at retirement or at the age of 50. However, the law allows the contributor to deduct part of the contribution under some specific conditions.
Upon retirement, the worker accesses the pension either as programmed withdrawal, which is managed by the Pension Fund Administrators or annuity by the life insurance companies.
According to the Act, programmed withdrawal is an option that is calculated on an expected life span, which means that the pensioner will be paid on a regular basis for a fixed number of years, after which he ceases to earn any further income from his PFA again.
The Act specifies that the annuity will be paid on a regular basis by the insurance company to the pensioner until he dies, no matter how long he lives.
Figures from PenCom showed that as of the end of March this year, 132,405 retirees were earning their pensions through programmed withdrawal and had collected lump sums worth N329.384bn.
The programmed withdrawal retirees were also collecting monthly pensions worth N4.3bn from their respective PFAs.
PenCom revealed that 86,297 of the retirees were Federal Government retirees, while 10,203 and 35,905 were state governments and private sector retirees.
According to the commission, 29,620 retirees were earning their pensions from insurance companies as annuity.
The annuity retirees had so far collected lump sums worth N41.84bn and were getting monthly income of N1.5bn from their insurance companies.
The commission revealed that 19,527 of the retirees were Federal Government retirees, while 2,960 and 7,133 were state governments and private sector retirees, respectively.
According to statistics obtained from PenCom, 7,006,734 employees were registered as of the end of March under the CPS.
The total assets under the CPS rose to N5.729tn as of the end of June.
While the number of private sector employees has been growing under the CPS, most states are not yet part of the scheme because the Pension Reform Act did not make it mandatory for them.
Only 10 states have commenced the remittance of funds into the RSAs of their employees out of the 26 states that have enacted their Pension Reform Laws.
Figures obtained from the National Pension Commission on the implementation by the state governments showed that the 10 remaining states have their pensions? bills pending in their Houses of Assembly.
It stated, ?Ten out of the 36 states had commenced remittance of contributions into the RSAs of their employees. Similarly, eight state governments have commenced funding of their retirement benefit bond redemption fund account.?
The records also reveal that 673,116 contributors from various states of the federation were registered with different PFAs.
According to the report, Lagos, Ogun, Kaduna, Niger, Delta, Osun, Rivers and Anambra have commenced remittance of contributions to six PFAs and were already funding their accrued rights.
It explained that Imo was yet to commence remittance of pension contributions, adding that the Imo State University was currently implementing the CPS but not yet funding its accrued rights.
Zamfara had also commenced remittance of contributions into the PFAs but was not yet funding its accrued rights.
PenCom stated that Jigawa had transferred its pension assets to six PFAs for management, while Kano was yet to transfer its assets to the PFAs.
According to the report, the remaining 26 states were yet to commence remittance of funds into their workers PFA or fund their accrued rights.
Before the commencement of the CPS, the country was operating only the Defined Benefits Scheme popularly known as the Pay-as-You-Go scheme.
The failure of the scheme to meet the needs of Nigerian pensioners, with mounting liabilities as retirees could not get their pensions and were subjected to hardship, led to the enactment of the PRA 2004.
Ten years after, the PRA 2004 was amended and replaced with the PRA 2014.
After several reforms of the old scheme, the management of the DB was transferred to a new department known as the Pension Transitional Arrangement Directorate in 2013.
Statistics reveal that 217,619 Federal Government retirees under the management of the Pension Transitional Arrangement Directorate currently earn N6.24bn pensions monthly.
Analysis of the returns revealed that PTAD had a total of 217,619 pensioners on its payroll with a monthly pension bill of N6.24bn as of 31 March, 2016.
The Chief Executive Officer, Stanbic IBTC Pension Managers Limited, Eric Fajemisin, said the pension reform had been largely successful given the ground that has been covered in the last 12 years.
He said, ?The 2004 Pension Reform Act was repealed and replaced with the 2014 Act to address most of the deficiencies observed in the former.?
Fajemisin said there were issues that were not addressed in the 2004 Act but were addressed in the 2014 Act. These include applying a portion of pension assets towards the payment of equity for a residential mortgage by the RSA holder and the inclusion of the informal sector, among others.
The CEO said it was necessary to appreciate the primary objectives of the scheme which include assisting individuals by ensuring that they save in order to cater for their livelihood in old age and to ensure that persons who are employed in the various sectors of the economy receive their retirement benefits as and when due.
According to him, these objectives drive the rules of engagement in the scheme.
He said, ?Individuals, for instance, should ideally only have access to his/their retirement benefits when they are no longer capable of engaging in gainful employment such as when they are old and retired or due to incapacitation as a result of health challenges.?
The Executive Secretary, Pension Fund Operators Association of Nigeria, Ms. Susan Oranye, said the industry was focused on achieving a target of 20 million contributors by 2025.
She said it was necessary for all employers to join the CPS and maintain RSAs for their employees.