Only relatives of deceased workers in the public and private sectors whose monthly pensions were remitted regularly by their employers were paid death claims under the Contributory Pension Scheme.
Since inception of the Contributory Pension Scheme, the Pension Fund Administrators and life underwriters providing group life cover have paid N205.12bn death benefits to 62,596 deceased workers’ relatives.
Statistics obtained from the National Pension Commission on approval of death benefits for the fourth quarter confirmed this.
The CPS which was introduced by the Pension Reform Act in 2014 mandates the employers in public and private sectors to ensure their workers open Retirement Savings Accounts with PFAs.
It also mandates the employers to remit a total of 18 per cent of the monthly emoluments of the employees, comprising 10 per cent employer and eight per cent employee contributions into the respective RSAs.
This is in addition to having a group life insurance cover for the workers, which guarantees three times annual emolument as death settlement.
PenCom stated that in the fourth quarter of 2019, “The commission approved the payment of N4.28bn as death benefits to the beneficiaries of the 1,586 deceased employees during the quarter under review, which brought the total number of deceased employees from both public and private sectors to 55,820.
“The amount paid during the quarter moved the total payments of death benefits to N173.86bn.”
It added that in Q1, 2020, “The commission approved the payment of N9.34bn as death benefits to the beneficiaries of the 2,086 deceased employees during the quarter under review.
In Q2, 2020, “The commission approved the payment of N2.58bn as death benefits to the beneficiaries of the 591 deceased employees during the quarter under review.
“The commission approved the payment of N8.56bn as death benefits to the beneficiaries of 1,821 deceased employees during the Q3, 2020.
In Q4, 2020, “During the quarter under review, approvals were granted for payment of death benefits amounting to N10.78bbn to the legal named beneficiaries/administrators of 2,278 deceased employees and retirees, (comprising 1,582 public (FGN and states) and 696 private sectors).
These brought the total death figure and death settlements to 62,596 cases and N205.12bn respectively.
According to the commission, the contributors under the CPS rose slightly to 9.24 million in January from 9.22 million in December.
The commission disclosed that out of the employers that applied, a total of 1,877 organisations got its clearance for putting in place appropriate pension and insurance covers for their employees in the fourth quarter of 2020.
This qualified them to do business with the Federal Government.
It stated, “The commission received a total of 1,900 applications from private sector organisations for the issuance of pension clearance certificates.
“Out of this number, PCCs were issued to 1,877 organisations while 23 applications were declined due to inability of the organisations to meet the requirements for issuance of certificates.
“The records show that a total sum of N9.88bn was remitted into the RSAs of 41,923 employees of the 1,877 organisations.”
PenCom in its compliance guidelines for life insurance policy for employees and submission of insurance certificate issued to employers stated that companies that had no insurance covers for their workers would no longer be allowed to do any government business.
The bulk of the funds were invested in the Federal Government’s securities.
According to the figures, in January, N8.1tn was invested in FGN securities including FGN bonds, treasury bills, agency bonds SUKUK and green bonds.
Other investment portfolios were domestic and foreign ordinary shares; corporate debt securities comprising of corporate bonds, corporate infrastructure bonds, corporate green bonds and supra-national bonds.
The funds were also invested in local money market securities comprising of bank placements, commercial papers and foreign money market securities.
The PFAs invested the rest in mutual funds comprising open/close-end funds, REITs, real estate properties, private equity funds, infrastructure funds, cash and other assets.
Despite the negative impact of COVID-19 pandemic on the economy, the CPS assets rose by N2.1tn to N12.3tn as of 2020 from N10.2tn as of the end 2019.
The Director, Centre for Pension Rights Advocacy, Ivor Takor, urged state and local governments to comply fully with the regulations in the CPS.
The director said this in a report titled ‘The lacuna in the Pension Reform Act 2004 that left employees of states and local governments without pension laws’.
The CPS unlike the old Defined Benefit Scheme it replaced, he explained, had inbuilt safeguards meant to protect the fund from mismanagement and fraudulent practices.
He said the scheme was fully funded through monthly contributions, which were put into RSAs owned by employees.
The director said, “Employers cannot access the funds.
“The funds are warehoused by Pension Fund Custodians and managed by Pension Fund Administrators.
“The law established the National Pension Commission, among other objectives, to regulate, supervise and ensure the effective administration of pension matters and retirement benefits in Nigeria.”
He worried that most states were yet to comply with the law that would help to give their workers good retirement plans.
However, the Director-General, PenCom, Aisha Dahir-Umar, said the commission had continued to engage the state governments on compliance through interactive sessions, trainings and workshops.
