Govt’s Pension Liability Climbs To N67bn
It definitely sounds alarming, but it’s not fake news. The Federal Government’s liability on accrued pension to its employees has risen to about N67 billion, the Head, Research and Corporate Strategy, National Pension Commission (PenCom), Dr. Farouk Aminu, has stated.
He disclosed this at a retreat organised by Pension Fund Operators Association of Nigeria (PenOp) for reporters, in Lagos, at the weekend.
Farouk, said the Commission’s inability to pay the pensions of the Federal Government’s retirees started from January 2014 when PenCom’s budget was cut. He said the last payment the Federal Government made to retirees was in June, last year.
He said the problem became compounded this year after the National Assembly reduced pension budget in the year, saying the Federal Government was working to offset the liabilities through the supplementary budget it planned to submit to the National Assembly.
The PenCom spokesperson explained that the law requires the Debt Management Office (DMO) to provide the money by issuing bonds.
Aminu said: “Some retirees have not been paid pension from 2017 till date largely because we don’t have the accrued pension to pay them. You will observe that we have been having problems with the bond for payment on accrued benefits. The Debt Management Office was given the responsibility to issue bonds that will cover retirement benefits that accrued under the old pension scheme. What the new provision in the law now says, is that DMO should be providing the money.
“It is not that the Federal Government has not been providing the money but it is not good enough. We go round every year to do enrolment of people retiring in a year’s time, we capture their information and calculate their accrued benefits and then we advise government,” he said, adding that this enables government to make provision in the next year’s budget. However, the government will not pay accrued benefits until somebody retires, so they release them monthly.
He said: “For instance, if we need like N60 billion, they divide the N60 billion by 12 and give us N5billion monthly. However, the N5 billion was again slashed by half. So, they were giving us N2.5 billion from January 2014 and by the end of 2014, we were only able to pay till June 2014. Since then, we are yet to recover. We have also not been receiving the accrued benefits because the National Assembly just passed the budget in June and signed in July. So, it is when we are able to get these monies that we will be able to pay.
“In essence the Federal Government has been paying but it is only that the money is not good enough. The pension liability is about N67 billion. This is the outstanding. But we know that the Federal Government is working to offset the liability. Part of the supplementary budget the government said it would submit, would include the shortfall. The National Assembly cut a lot from the 2018 budget; so the President said he would send supplementary budget and this money is part of what they will send. When they do that we will be able to offset the outstanding liability.”