The National Pension Commission has directed the Pension Fund Administrators to pay additional five per cent lump sum to retirees that were initially paid 20 per cent of total balance in their Retirement Savings Accounts on retirement.
Those whose lump sum payment was as low as 16 per cent would get extra nine per cent of their RSAs, it was discovered. Pension operators who spoke to our correspondent on the issue said the commission gave the directive after it had directed all PFAs to revert to the old template of 25 per cent minimum lump sum payment.
This, it was learnt, followed the public outcry against PenCom’s reduction of the lump sum payment to retirees under the Contributory Pension Scheme from 25 per cent to 20 per cent.
The commission was said to have suspended the template, which specified a maximum of 20 per cent lump sum payment following the criticisms that greeted the slash.
Last week, the acting Director-General, PenCom, Aisha Dahir-Umar, stated, “As you are aware, the commission introduced a new template for Programmed Withdrawal, which took effect from May 15, 2018. There have, however, been concerns expressed by some stakeholders.
“The commission in its usual responsive and consultative manner has decided to review the template. Consequently, the commission has directed that Pension Fund Administrators to revert to the old template till further notice.”
PenCom in May released the template to the PFAs for the calculation of retirement benefits to the CPS retirees, which led to the reduction in the lump sum payment to the retirees to 20 per cent of the balance in their RSAs, and as low as 16 per cent for some pensioners.
The retirees expressed their displeasure at their inability to access between 25 per cent and 50 per cent of the lump sum of the balance in their RSAs, which the law hitherto allowed.
When our correspondent visited offices of some of the PFAs on Monday, retirees, who were initially granted 20 per cent approval, were seen asking the PFAs to return the five per cent of their RSA balance. However, by Wednesday, some retirees whose applications were still being processed called our correspondent to say they had received calls from their PFAs to come and withdraw their initial application, and submit another that would enable them to get the extra lump sum payment. A source at PenCom told our correspondent that the commission was still deliberating on how to handle the extra lump sum payments of retirees whose money had been paid into their bank accounts, and those whose premiums had been transferred to the insurance companies.