By Babajide Komolafe
A mass exodus of senior and experienced staff is imminent in the Central Bank of Nigeria, CBN following widespread discontent over a new pension system.
Vanguard investigation revealed that the management of the apex bank recently issued a memo to staff suspending the current closed pension scheme arrangement in the bank, repla
cing it with a new one. The new arrangement was, however, rejected by staff who insisted that the current pension scheme is more beneficial than the new one.
Vanguard was, however, informed that the CBN Governor,Â Mallam Lamido Sanusi, at a recent meeting with staff where the position of the staff was officially made known to him, insisted that there is no going back on the new pension arrangement and that any staff that does not want to be part of it is free to retire before it takes off.
Close CBN sources told Vanguard that what followed after the meeting was a mass application for retirement mostly by top staff who believes it is more beneficial for them to retire under the current pension dispensation.
This, it was gathered, compelled the management of the apex bank to postpone the take off of the new pension arrangement to December instead of October 1 which was the initial take off date. According to a source, â€œThe management was overwhelmed by the number of staff that applied to retire especially given the cost implication of their retirement to the apex bank. More worrisome to the management was the huge number of Assistant Directors and Deputy Directors who indicated their intention to retire from the bank. This made the management to prevail on the Governor to delay the take off of the new pension arrangement.
The CBN had always operated a special pension scheme even before the advent of the contributory pension scheme. Initially, the pension scheme was funded from the surplus declared by the bank and invested in treasury bills. Later, it was modified to be funded by deductions from the staff emoluments. Consequently, a certain proportion of the annual entitlement of each staff is deducted to fund the scheme.
It was gathered that while the fund is managed by three asset management companies namely IBTC, Omega and one other company, the administration is done internally by a special committee of staff.Â This committee determines what each staff contributes to the pension fund and also the retirement benefit of each staff.
The management of the bank, however, wants to replace this closed and group pension scheme with an open one as prescribed by the 2004 Pension Act, and it has directed that each staff should go and open a retirement savings account, RSA, with any PFA of choice.
The Act requires that every employee should have retirement savings account with a Pension Fund Administrator of choice in which the monthly pension deductions from staff salary and contribution by employers are paid. And when the staff retires, his/her pension payment is determined by the amount of fund in his/her RSA.
Section 4 (1) of the Pension Act says that, â€œa holder of a retirement savings account upon retirement or attaining the age of 50 years, whichever is later, shall utilise the balance standing to the credit of his retirement savings account for the following benefits:
Programmed monthly or quarterly withdrawals calculated on the basis of expected life span;
Annuity for life purchased from a life insurance company licensed by the National Insurance Commission with monthly or quarterly payments;
A lump sum from the balance standing to the credit of his retirement savings account ; provided that the amount left after that lump sum withdrawal shall be sufficient to procure an annuity or fund programmed withdrawals that will produce an amount not less than 50 per cent of his annual remunerations as at the date of his retirement.â€
Section 4(2) says that, â€œWhere an employee retires under paragraph (c) of subsection 3 of this Act the employee may, on request, withdraw a lump sum of money not more than 25 per cent of the amount standing to the credit of the retirement savings account provided that such withdrawals shall only be made after six months of such retirement and the retired employee does not secure another employment.â€
According to staff who spoke on condition of anonymity, â€œUnder the current dispensation, when you retire from the bank your pension is calculated based on the number of years of service in the bank, your present level and some other things. But in the end, the monthly pensions you receive is almost the same as your last salary and as the bank increases staff salary, your pension also increases.
The new dispensation, however, is based on what is in your RSA and the best you can probably get is 50 per cent of your last salary. But beyond that is the fact that unlike under the current dispensation where your pension increases as staff salary increases, under the new dispensation you canâ€™t enjoy such increase. Once you retire, that is the end. The bank is not responsible for what you get again; it is what is in your RSA and your PFA that pays you.â€