Executive Secretary Pension Fund Operators Association of Nigeria, Ms Susan Oranye
(5th left); Chief Marketing Officer, Premium Pension Limited Kabir Tijjiani; President, National Association of Insurance and Pension Correspondents, Mrs Omobola Tolu-Kusimo and members of NAIPCO at the event.
BY NKECHI NAECHE —-The Computation of the lump sum payment and periodic (monthly/quarterly) pension withdrawal is based on a Standard Programmed Withdrawal Template/Model issued by the National Pension Commission (PenCom) to all Pension Fund Administrators (PFAs).
This was the position of Pension Fund Operators of Nigeria (PenOp) on Thursday at the 2017 Annual Media Retreat for National Association of Insurance and Pension Correspondents (NAIPCO) organized by PenOp in Abeokuta, the Ogun State.
According to PenOp the inputs/variables in the PWT for the computation are based on the new definition of Annual Emolument (ATE) using the most revised template for calculating lump sum benefit released by PenCom.
Speaking on behalf of the Association, the Chief Marketing Officers, Premium Pension Kabiru Tijjani while delivering his paper titled: “Benefits administration- Processes, Lumpsum computation and challengers with Payment” said the template is follow strictly by all operators in respective of who the retirees are.
According to him the template which is standard and uniform is followed strictly by all operators and must get to the regulator PenCom for approval before funds are paid to retirees.
He assured that the barometers in determining what somebody takes as monthly or quarterly pension is according to what was stipulated by the 2014 Pension Act.
According to him “Section 7 (1) (a) of the PRA 2014 allows for lump sum to be paid to a retiree provided that the amount left after the lump sum withdrawal will be sufficient to fund a programmed withdrawal over expected life span of not far from 50% of his/her annual remuneration as at date of retirement.”
He debunked the allegation made by the National Assembly that the PFAs computes retirees’ benefits using their description.
His words: “There is no issue of description at all, what PFAs use is the same template set by PenCom, the template is in such a way that if apply to a retiree, it will automatically does the computation by itself. The template is very objective. There is no descriptive interpretation, if such occurs, PenCom will not take it”, he assured.
He further identified size or Accrued Rights portion paid into RSA due to grade level and step as at June, 2004; total monthly Contribution is based on individual grade level/ structure from July 2004 to date of retirement and the growth of the investment income is based on the duration in which the contributions stayed in the RSA as factors responsible for the difference in RSA balances of retires.
He added that the difference in benefits of retirees can also be as a result of amount of monthly pension or lump sum varies for individual retires due to age of retirement; gender; RSA balance; Size of Annual Total Emolument (ATE) and Retiree’s choices.
He explained further that in terms of age at Retirement”using two retirees with different ages and other variables being equal, the older retiree will get slightly higher monthly pension than the younger retiree because his expected life span is shorter.”
On gender he said that”The mortality table assumes that women live slightly longer than men: Therefore, a male and female retiree with the same age and other variables being equal at retirement will definitely have differences in their pensions as the template makes provision for the extra years that the female retiree is expected to live.”
“Two retirees with different RSA Balance with other variables remaining the same as retirement will result to higher monthly pension and (or) lump sum for the retiree with the lump sum for the retiree with higher RSA balance while the reverse is the case for the retiree with the lesser RSA balance.
“Differences in ATE with other variables remaining constant will cause differences in monthly pensions and lump sum receivable.
“Based on individual peculiarities, one can choose between zero lump sum and/or maximum lump sum or any amount in between is equal to or lower than the recommended/maximum lump sum in the template in order to boost his monthly pension.”
He also listed none submission of required documents; incomplete documents or error in beneficiary name and technical hitch e.g. server downtime or bank network glitch as reason responsible for the delay in payment of benefits.
She however called on intending retirees to do their documentation six months to their retirement, this according to him will enable all document to be fully processed and approved by both the PFAs and PenCom.
He assured that early documentation will bring about to easy and quick access end of their benefits with the PFAs.