Pension stipends received by professors and permanent secretaries will be augmented by the Federal Government when the new Pension Reform Act is eventually passed into law, investigation has revealed.
This development will enable them to continue to earn their full salaries in retirement even when they don’t have enough funds in their Retirement Savings Accounts, unlike other retirees under the Contributory Pension Scheme.
The National Pension Commission had told the Senate Committee on Establishment and Public Service and the House of Representatives Committee on Pension that some categories of workers were unable to get sufficient pension stipends as provided by the law.
These include top public servants like permanent secretaries, police officers, professors and others whose conditions of service prior to the enactment of the Pension Reform Act, 2004 allowed them to enjoy 100 per cent of their final pay as pension for life.
PenCom recommended to the Senate that the Federal Government should establish a severance package for them in addition to their retirement benefits under the CPS.
The memorandum submitted by PenCom to the Senate Committee on Pensions on the bill to repeal the PRA 2004 and enact the Pension Reform Act, 2013 made provisions for adjustments.
The Acting-Director General, PenCom, Mrs. Chinelo Anohu-Amazu, noted that Section 5(1) of the PRA 2013 included under the list of persons exempted from the scheme, professors covered by the Universities (Miscellaneous Provisions) Amendment Act, 2012 and categories of employees entitled by virtue of their terms and conditions of service to retire with full retirement benefits.
According to her, this is not the intention of the amendment.
“These two categories of persons are not meant to be exempted from the Contributory Pension Scheme. Rather, they will continue to be under the CPS but will, upon retirement, get their full retirement benefits,” she said.
PenCom recommended that this should be rectified to reflect the true intention of the amendment.
The amended bill has passed through the necessary readings and is being harmonised prior to being passed into law by legislature and assented to by the President.
However, not all professors may enjoy this privilege because its implementation may be limited to those who became professors at least 20 years before retirement.
While the PRA requires that they should continue to contribute part of their monthly emolument into their RSAs, their pension benefits will not be dependent on the level of their contributions because the Federal Government will cover whatever shortage may occur.
The payment of retirement benefits under Section 4(1) (c) of the PRA 2004 allows for a lump sum payment to a retiree, provided that the amount left after the lump sum withdrawal will be sufficient to fund a programmed withdrawal over an expected life span or annuity for life, of not less than 50 per cent of his annual remuneration as of the date of retirement.
This therefore makes the monthly pension withdrawals to be a first charge on the RSA balance, while the residual, after providing for the monthly withdrawals, will be paid as lump sum.