Pencom Begins Payment of 2.5% Differential to Retirees

By Adedapo Adesanya

The National Pension Commission (PenCom) has disclosed that it has commenced the payment of the 2.5 per cent differentials of 2004 and 2014 specified by the Pension Reform Act (PRA) to retirees.

This was disclosed by Mr Saleem Abdulrahman, Head, Contribution and Bond Redemption Department, at the 2021 Journalist Workshop organised by the commission in Lagos with the theme Positioning the Pension Industry in the Post COVID Era on Monday, July 26.

He said the beneficiaries were retirees between 2019 and 2020 of the Federal Government Treasury Funded Ministries, Departments and Agencies (MDA’s).

The 2014 PRA as amended established a Contributory Pension Scheme (CPS) whereby the employers were required to contribute 10 per cent of the employees’ salary to the scheme monthly.

The 10 per cent minimum contribution by employers is an increase of 2.5 per cent over the 7.5 per cent contribution stipulated by the repealed 2004 PRA.

The Act also mandated employees to contribute a minimum of 8 per cent to the scheme monthly.

Mr Abdulrahman explained that the agency had also begun computing the details of retirees between July 1, 2014, to December 2018 and would pay them soon.

“Some of the retirees may likely get additional lumpsum or enhanced annuity or programmed withdrawal.

“We have also begun the computation of the active employees to enable payment,” he said.

Business Post understands that in 2014, which was 10 years after the implementation of the Contributory Pension Scheme (CPS) in Nigeria, the National Assembly repealed the Pension Reform Act of 2004 and enacted the Pension Reform Act (PRA 2014) in order to address implementation challenges and introduce improvements to the Contributory Pension Scheme.