Accrued rights are the benefits which the workers who worked for the government prior to 2004 when the CPS was introduced are entitled to
November and December 2015 had been released by the federal government.
“Pension Fund Administrator’s (PFA’s) of respective FGN retirees affected have been instructed to credit the RSA accounts accordingly,” PenCom said in a notice.
Sources within PFAs said the two months paid so far can only enable workers who retired in or before December 2015 to access their retirement benefits, leaving the fate of those who retired between January 2016 to date uncertain.
In what appears to be a deliberate policy to ensure that the federal government settles the backlog of accrued rights, however, the National Pension Commission (PenCom) directed PFAs not to allow the retirees access to their retirement savings until the federal government released the accrued rights component.
For public service workers who migrated to the Contributory Pension Scheme (CPS) in 2004, shortly before they retired, they are entitled to two components of retirement benefits: the contributions accumulated in their Retirement Savings Accounts (RSA) and their accrued rights from the time they joined the service to the time they migrated to the CPS.
In addition to the retirees’ contributions from 2004 to date, the federal government must pay the retirees their accrued rights before the total benefits can be paid out.
On the two months paid recently by the government, PenCom said it is “working hard to resolve outstanding accrued rights with the relevant agencies of the government despite the current economic situation of the country. The goal is to prioritise pensioners’ dues amidst competing demands and we are working hard to make this happen.”
The 2004 Pension Reform Act (now amended 2014) provides that if an employee retires at the age of 50 years or more he or she can have immediate access to the RSA.
The Act also says if an employee retires before the age of 50 years due to mental or physical incapacity, he or she can have immediate access to his or her RSA but if an employee retires under the age of 50 years in accordance with the terms and conditions of employment, he or she will not access the RSA until after six months of such retirement if he or she does not secure another employment.
However, findings have shown that PenCom is worried that accrued rights dents the image of the CPS and makes the scheme appear like the old system where pension benefits were delayed.
The Managing Director of Premium Pension Limited, Mr Wilson Ideva, had last year urged the federal government to raise bonds to settle the accumulated accrued rights.
Ideva said the bonds could help the federal government to raise the funds needed to settle the accrued rights of workers before the introduction of the contributory pension scheme.
He said the option was in the best interest of the country to avoid going back to the past when retirees spent long periods of time before accessing their retirement benefits.