Lagos Government Earmarks N6.5billion for Accrued Pension Rights

The Lagos State Government has voted N6.5 billion in this 2016 budget for the payment of accrued pension rights to its retirees under the Contributory Pension Scheme (CPS).

The Director-General, Lagos State Pension Board (LASPEB), Folashade Onanuga, who revealed this, said the government has also increased its Retirement Bond Redemption Account funding rate from five per cent to 10 per cent of employees monthly wage bill.

Onanuga also said Lagos is the only state in the country that does not owe retirees pension contributions paid into their Retirement Savings Account (RSA) and workers under the CPS.

“For the payment of accrued pension rights, that is, State Government’s Liabilities to employees in service, before the commencement of the CPS, the state government has increased its Retirement Bond Redemption Account funding rate from five per cent to 10 per cent of employees monthly wage bill,”she said.

“Also, the state government has set aside N6.5 billion in the 2016 budget to augment the funding of the Retirement Bond Redemption fund Account.”
Onanuga said based on this, the government was recognised as a top contributor by the Trustfund Pensions Plc, which presented her with an award.

She said: “The state government is the only one to issue Retirement Benefit Bond Certificates and the only state government that is paying accrued pension rights into the RSA of her retirees regularly. The state today has all her workers registered under the CPS.

“It is the right of retirees having served the state meritoriously to receive their terminal benefits on time. All over the world, funding of terminal benefits of retirees remain a herculean task. As a country, Nigeria moved away from the Pay As You Go Pension Scheme dispensation to the CPS dispensation to ensure availability of funds to pay terminal dues at exit of an employee.

“While Nigeria subscribed to the CPS in June 2004, Lagos State joined the Scheme on the April 1, 2007 and today, Lagos State is the role model of effective pension scheme administration in Nigeria. ”

She said the state started the CPS in 2007 with only six pension fund operators, adding that eight years later, it has added five insurance firms as Life Annuity Service providers and four Pension Fund Administrators (PFAs).

The four PFAs are PAL Pensions, Premium Pensions, AIICO and Fidelity Pensions. This is, ultimately, to expand the choices available to the workers and retirees, she added.

She advised all beneficiaries to be careful when deciding what to do after retirement.

“You will all agree with me that appropriate utilisation of money turns it to assets. You are advised to consider your individual circumstance before choosing any of the two exit options of the Programmed Withdrawal and the Annuity. However, whichever of the two options you choose, you are assured of the safety of your benefits as provided under the pension reform law. This is the beginning of your financial Independence,” she added.