The agony of retirees from the Federal Civil Service appears to be getting worse as the Federal Government has failed to release funds for payment of accrued pension rights in the first half of 2024, which ended on Sunday ay.
The FG had reneged for the full year 2023, FY’23, as no funds were released despite budgetary provisions.
The release made in the first quarter of 2023, was for outstanding payments in 2022.
This comes against the backdrop of FG’s failure to implement its policy on
the upward review of pension amounts under the Contributory Pension Scheme, CPS, for 15 years, against policy prescriptions of upward review every five years as stipulated by law.
While the law stipulates that pensions shall be reviewed every five years or together with any federal civil service salary reviews, whichever is earlier, the FG has failed to implement pension adjustments under the Contributory Pension Scheme, CPS, since the scheme’s inception in 2004.
The FG’s indebtedness to retirees on accrued pension rights in the last 16 months is estimated at N230 billion.
Some pensioner groups have called for a boycott of investing pension assets in FG securities since the government borrowing comes mainly from pension assets. At the same time, the FG has always been found wanting in complying with the extant pension scheme.
Accrued rights represent an employee’s benefits for the past years of service up to June 2004, when the Pension Reform Act (PRA) that birthed the Contributory Pension Scheme (CPS) came into effect.
According to a report by the National Pension Commission, PenCom, in 2021, the FG released a total of N100.29 billion for payment of accrued rights which brought the total amount released by the FG from inception to N980.18 billion.
In March 2022, the FG released N14.92 billion for payment of accrued rights.
However, according to the Pension Fund Operators Association of Nigeria, PenOp, the FG has released funds up till February 2023, with no payment made after then.
According to experts, the delay in the release of funds for payment of accrued rights was inevitable as the provision for pensions, gratuities and retirees benefits in the 2024 Appropriation Act declined by 21.3 per cent.
According to the 2024 Appropriation Act, provision for Pensions, Gratuities & Retirees Benefits declined to N673.01 billion from N854.81 billion budgeted in 2023.
Further analysis shows that in the first quarter of 2024, Q1’24, 62.03 per cent of the total pension assets were invested in FGN securities amounting to N12.2 trillion against total pension fund assets of N19.7 trillion.
Further analysis shows that in Q4’23, 64.94 per cent of total pension assets was invested in federal government securities amounting to N11.9 trillion against a total pension fund assets of N18.4 trillion. Worsen
