By Funmi Komolafe
With almost a decade of the Contributory Pension Scheme, (CPS), not a few retirees still attribute the challenges of the old non contributory scheme to the CPS. To allay such fears and enlighten its contributors, Trustfund Pensions organized a pre-retirement seminar for those enrolled with it.
This edition of Pension & You is not just a report of the event but also one that enlightens all contributors.
The pre-retirement seminar for potential retirees enrolled with Trust Fund took off with an address by Regional Manager, Abuja North Central, Mr. Maurice Ogar, who said it had been observed that some employees still associate deficiencies of the old scheme (non-contributory) with the new contributory pension scheme.
Ogar who said those fears are unfounded, explained that checks and balances, guidelines and the supervisory role of the National Pension Commission (Pencom) have been put in place to prevent mismanagement and fraudulent practices in the contributory pension scheme.
He explained that the contributory pension was introduced to completely wipe out challenges associated with the old scheme.
Mr. Ogar noted: “10 years down the line, there are still many Nigerians who are confusing the old scheme with the new one. The massive difference that the contributory pension has made to the system is still lost on many. It is common these days to hear people still associating the fraud that bedeviled the old scheme with the new scheme. The new pension scheme is almost fraud proof because of the many checks and balances put in place by Pencom to ensure integrity of the scheme”.
He emphasized: “The new pension scheme came up as a result of the challenges that the old scheme had”.
To further assure Trustfund contributors, Mr. Ogar said: “In setting up the new scheme, so many safeguards were introduced to prevent fraud and other sharp practices. If there is any news of fraud at all, it has to do with the old scheme and not the new one.”
Ogar also said payment of what is regarded as “low lump sum payment to retirees” is informed by the scheme’s infancy.
He said what retirees get at the point of exit is determined by what has been contributed within that period. In Mr. Ogar’s words, “I do not agree that retirees now earn less than under the old scheme. Where people are getting the issue wrong is that the new scheme took effect from July 2004 and people who have put in many years into service will be able to contribute enough from 2004 to when they are retiring. As the scheme grows, the benefit will rise because there will be more people retiring under it with many years in service and will therefore be able to contribute for a long time in order to earn a substantial amount upon exit. The truth of the matter is that the scheme is more beneficial to people who were employed under the new scheme than people who spent most of their years under the old scheme.”
He said the pre-retirement seminar organized for contributors by Trustfund is a fulfilment of the organization’s pledge for added value to contributors.
Continuing, he said: “This seminar is one of our value added services which we pledged to our customers. Our duty is to constantly remind them of what they should do before they retire and expose them to other opportunities existing outside paid employment.”
On her part, Customer Relationship Manager, Mrs. Maha Longe, said the seminar is for contributors who have between six months and one year to retire.
She explained that that the seminar was essentially to expose contributors to what they need to do to have a smooth transition into retirement.
Her words: “Since they are still in service, we told them they have to monitor their Retirement Saving Account (RSA) and check properly to see if they have unremitted contributions because the law says once they are retired all their contributions must be intact. So, this is the best time for them to check and if there is any unremitted fund, they can find out what really happened so that the money can then be remitted. Some enrollees also forget to update their records. Enrollees must update their records so that they can have their current RSA delivered to them. Also, many enrollees do not understand how important next-of-kin is in the whole set-up. There are some that got employed when they were single and they got married but then forgot to effect changes to their next-of-kin. The name of next-of-kin and phone numbers are very important. We have stressed the importance of that at this seminar.”
Educating enrollees on the what determines how much they receive when retire, Mrs. Longe said:
“Many enrollees still believe that they are entitled to 50% of their RSA at the point of exit. Some insist on collecting all their contribution. Workers still believe erroneously that the defined scheme is better than the contributory scheme simply because of the amount they collect at the point of exit. Contributors get exactly what they contribute under the contributory scheme but a template determines how much is collected by contributors that Pencom designed. There are five variables involved in the computing of benefits. These variables include: total RSA balance, gender, date of birth, date of retirement, final salary. Contributors get between 25 and 50% depending on how much contributors have in their RSA balance”.