IEI-Abchor Boss Opposes 75% Lump Sum Withdrawal by Retirees

Expert in Pension Fund management and Managing Director IEI-Anchor Pensions Managers, Glory Etaduovie has kicked against the ongoing agitation for 75 percent lump sum withdrawal by contributors into the Contributory Pension Scheme (CPS) from their Retirement Savings Account (RSA) as against the 25percent minimum or 50percent maximum stated by the 2014 Pension Reform Act (PRA).

Etaduovie said the 75 percent lump sum withdrawal, if allowed, would destroy the very essence of pension, which is to ensure a steady income for retirees at retirement.

Etaduovie, who made the remark at a recent media forum organised by the National Association of Insurance and Pension Correspondents in Lagos, said the agitation for 75 percent lump sum withdrawal at this initial stage, looks exciting and interesting but would certainly not be good for the future of the retirees.

“This looks exciting on hearing same but not futuristic. Steady pension payment is to both re-settle a retiree into a new life without creating a radical difference, retaining income consistency and considering the length of time one may live, up to 30 years of life after retirement. Children are less dependable as insurance when unemployment and under employment is high” he stressed.

Explaining further the implications he said: “But, many who may agitate for the 75 percent lump sum in the name of business investment or building a house, may lose their money for not being skilled in business. Some may be duped of it. Managing bulk sum is not an easy skill - especially if it looks like your last chance for income at old age. We will all get there. Aging is the alternative to dying. We must not forget. Building a house should really not be with pen.”

Recently, there have been agitations from contributors into the CPS as well sponsorship of bill by Senator Aliyu Wamako from Sokoto North constituency for the amendment of the PRA 2014 to increase the amount collectable by contributors into the CPS at retirement from the current 25 percent minimum or 50 percent maximum to 75percent.

This has raised arguments from different quarters especially from experts in pension fund management who argued that the 25 percent balance after 75 percent lump sum withdrawal, cannot guarantee steady income for the retiree for the rest of his or her life which is the main essence of pension system.

The National Pension Commission (PenCom), also argues in this direction insisting that the bill should not be passed for future interest of the retirees.

Lending his voice in this regard, the IEI-Anchor Pensions boss, who was represented at the event by the Head, Business Development and Strategy of the company, Jolaade Oduntan, said the argument on the 75 percent withdrawal was as a result of total ignorance of pension system.

He said in other parts of the world where contributory Pension System is practiced, none of the countries approved 75 percent lump sum withdrawal.

Furthermore, he explained that recent complaints on delayed payments of retirees’ entitlements are not from the PFAs but the effects of transition from the old scheme to the new one. According to him, government is making efforts to pay up the accumulation of the old scheme to update the individual retiree accounts, hence, a lot of emphasis on using the Paris club fund for Pensions and salaries arrears.