Where is the retirement benefit redemption fund?

Overall the Pension Reform Act 2004 (as amended in 2014) is ordinarily a good piece of legislation that changed the way the right and privileges of retirees who become pensioners are managed, but beneficial as it is, the Act has a major loophole that put retirees awaiting to be pensioners at a serious precarious financial position.

Section 40 (1) of the PRA 2014 stated that “Government obligation to the Federal Government Retirement Benefit Redemption Fund shall be a charge on the Consolidated Revenue Fund of the Federation,” which is apparently good for retirees.

However, Section 40 (2) of the Act which says “The Accountant General of the Federation shall effect the deductions and payments into the Redemption Fund specified in subsection (1) of this section,” is probably deficient in that it did not specify a timeline for making the deductions and payments into the Fund.

The effect of the failure to specify a timeline implies that it is open-ended and could only be made at the “convenience” of the Federal Government, regardless of the impact that would have on the lives of retirees under the Contributory Pension Scheme (CPS). And it has a very serious negative impact, resulting in the recent near-riots by CPS pensioners in some states in the South West. So, where is the Government Retirement Benefit Redemption Fund? It should be deployed to rescue the restive pensioners. After all, President Muhammadu Buhari has emphatically made it clear that payment of pensions is a priority matter for his administration.

A situation whereby retirees cannot become effective pensioners under the Scheme before the Federal Government redeems the accumulated retirement benefits is awkward and punishing to them. While Pension Fund Administrators and Custodians are busy trading with the money and deriving their comfort from the returns on its investment, the owners of the cash pot are unable to benefit from it. And the CPS is so inflexible.

The appeal of this writer to those in charge on behalf of all retirees who are not benefiting from their savings in the Retirement Savings Accounts is simple: Allow them some access to their money to meet basic needs of life pending the redemption of the accumulated benefit. This can be 10 per cent of the balance in their RSAs which should be counted as part of the 20 per cent lump sum they can take after redeeming the theoretical Bond. This arrangement or a better one forged by the elite of the pension industry and government bureaucrats will bring succor to many retirees, especially those who are sick, lonely, aged, disabled, were junior staff while in service or are in debt.

A more enduring solution, which is technically and legally feasible, is inserting a clause in the Act fixing a timeline for the redemption of the accumulated pension as a matter of national priority and show of concern for the welfare of those who contributed to the growth of the country when they were most energetic. Some may argue that the uncertainties in cash flow to the Consolidated Revenue Fund and competing demand for budgetary allocations based on priority may be a constraint. And I will say that the highest priority for any government constitutionally, is the promotion of the welfare or wellbeing of citizens. A pensioner is a citizen.

Retirees who were automatically made contributors to the National Housing Fund domiciled in the Federal Mortgage Bank of Nigeria (FMBN) are facing endless delay in recovering their money. The system of recouping the contribution, which took years to accumulate, is taking more years (to a retiree an hour’s delay is like a delay for one year) to claim. Even after a contributor is certified to be free of any FMBN debt, getting the money back is not seamless. This should not be so. Debt-free retirees should recover their money without tears.