Retirees leave pension scheme after having less than N5050K in RSA
By Jeph Ajobaju, Chief Copy Editor
A total 131,376 retired workers with less than N550,000 in their Retired Savings Accounts (RSAs) have withdrawn all their money and left the Contributory Pension Scheme (CPS) altogether.
Figures obtained from the National Pension Commission (PenCom) show they withdrew all the contributions in their RSAs amounting to a total N32.58 billion.
PenCom said the retirees had less than N550,000 balance in their RSAs and were not qualified for enrollment in the two retirement options – annuity and programmed withdrawal.
The latest figure of 131,376 retirees is a 14.4 per cent increase from 114,837 retired workers who withdrew N28.46 billion as of the end of June 2020.
Between June 2020 and December 2021, the number of retirees rose by 16,539 who withdrew N4.12 billion, according to PenCom.
It disclosed that some foreign nationals returning to their countries withdrew their savings before they left Nigeria.
Pension Reform Act 2014 says any worker with less than N550,000 in his RSA is expected to be given the entire amount by the Pension Fund Administrator (PFA) and subsequently allowed to quit the pension scheme.
PenCom decried the attitude of employers that deduct monthly contributions from workers’ emolument but fail to remit such to their RSAs with their respective PFAs.
It said it retains the services of recovery agents for the retrieval of outstanding pension contributions and penalties from defaulting employers.
________________________________________________________________
Related articles:
Pension registration rises 2.6% to 9,461,173 nationally
Pension fund assets grow to N13.42tr
Firms remit N4.04b to retirees’ savings accounts
Ex-police officers laud Buhari, IGP, NPF Pensions over improved welfare
__________________________________________________________________
Contributory pension explained
The Pension Funds Operators Association of Nigeria (PenOP) said: “If the employer and employee have contributed consistently over this period of time, then the funds in that individual’s RSA account would be sufficient to have a decent lump sum with enough funds remaining to earn a decent pension for life.
“As a matter of fact, what we need to promote, and the pension industry is leading on that, is to encourage more workers to add to their statutory deductions while working, as this would enable them to shore up their balances over time.
“What we need to advocate more is the consistency and discipline in the contributions that will even remove the need for any large lump sum payout when retired.
“If a worker were to save N20,000 consistently every month for 15 years with an interest rate of 10 per cent per annum compounded for the 15 years, at the end of the period, he would have amassed over N16 million.
“This is the power of consistency and compounding which the current system provides, and which should be encouraged.”
Under the CPS, it is what the worker puts in plus investment returns that he takes out, PenOp explained, according to reporting by The PUNCH.
