The National Pension Commission (PenCom) has made contributions to the N400 billion Pension Protection Fund a condition for state governments to access the newly introduced N52,500 minimum pension guarantee for their retirees.
Omolola Oloworaran, Director-General of PenCom, disclosed this during an interview with journalists at the launch of the Presidential Pension Security Initiative in Abuja on Tuesday.
She explained that although the minimum pension guarantee covers eligible retirees across the federal public service, state governments and the private sector, participating states must contribute to the Pension Protection Fund before their retirees can benefit.
According to her, the requirement is designed to ensure the sustainability of the scheme and prevent the fund from becoming depleted as more retirees are brought under the arrangement.
“We are making it a requirement that states must contribute to the Pension Protection Fund before they can be eligible for minimum pension. So we work out that modality at state level because we all know the fund needs to be sustainable.
“If people are not contributing, we’ll run out of funds and we can’t start a laudable initiative like this and then five, ten years from now somebody says it has stopped working because people are not contributing,” Oloworaran said
The minimum pension guarantee, formally activated by President Bola Ahmed Tinubu at the event, sets N52,500 as the minimum monthly pension for eligible retirees under the Contributory Pension Scheme (CPS).
The initiative is expected to benefit 173,209 retirees whose monthly pensions fall below the approved threshold, with the government and the pension industry providing funding through the Pension Protection Fund.
Speaking at the launch, Oloworaran said the N52,500 threshold was determined through an actuarial assessment and would be subject to periodic review.
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“The minimum pension in the Federal Republic of Nigeria is N52,500 every month. The figure was not plucked from the air. It has been validated by an actuary and it is subject to review. And it is funded,” she said.
She explained that every eligible retiree under the CPS earning below the minimum threshold would receive an adjustment to bring their monthly pension to N52,500.
“Every eligible retiree who is below N52,500 will be augmented to N52,500. So, of course, like I said, everybody, there’s no discrimination. If you are within the CPS and you’ve been within the CPS, you will get it,” she stated.
The PenCom chief, however, clarified that the requirement for state contributions was part of the eligibility arrangements for state governments and their retirees, while the initiative also covers eligible federal and private-sector pensioners.
Private-sector retirees form major beneficiary group
Oloworaran disclosed that private-sector retirees constitute a significant proportion of those expected to benefit from the minimum pension guarantee.
According to the breakdown she presented at the launch, 54 per cent of the 173,209 identified beneficiaries retired from the private sector, 34 per cent from the federal public service and 12 per cent from state governments.
She further disclosed that more than 65 per cent of private-sector retirees currently earn below the N52,500 minimum pension threshold.
The PenCom DG consequently urged private-sector employers and other stakeholders to contribute to the Pension Protection Fund, stressing that the sustainability of the scheme requires contributions from all relevant parties.
“The federal government has put its money into this fund. The pension industry has put its money into this fund as well. The offering basket for the Pension Protection Fund is now on the private sector’s roll. Please do not let it pass empty. Contribute to the Pension Protection Fund,” she said.
She added that PenCom was engaging state governments to improve the payment of retirement benefits and encourage periodic pension reviews to reflect prevailing economic conditions and inflation.
PenCare healthcare cards available through PFAs
On the healthcare component of the Presidential Pension Security Initiative, Oloworaran said eligible low-income retirees could approach their Pension Fund Administrators (PFAs) to request their PenCare health access cards.
The initiative, funded by the pension industry, has attracted more than N7 billion to provide essential healthcare services for vulnerable retirees.
She disclosed that insurance premiums had already been paid for almost 30,000 beneficiaries, adding that the programme was designed to reduce the financial burden of medical expenses on pensioners.
“Anybody who doesn’t have their cards can go to their PFAs and demand on their cards,” she said.
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