Experts have called for implementation of Guaranteed Minimum Pension(GMP) to guarantee decent standard of living for pensioners at retirement.
The experts, who spoke at different fora, urged the pension industry regulator, to as a matter of urgency, ensure that this was done to make the new pension scheme attractive to contributors across the country. An actuarial scientist, Dr Pius Apere, in his paper titled: ‘The Enhanced Pension as a Means of Cushioning the Effect of Non Implementation of Guaranteed Minimum Pension under PRA 2014,’ said, Enhanced Pension (EP) should not be seen as a substitute of GMP, therefore, calling for urgency in the implementation of Guaranteed Minimum Pension for the benefit of all eligible pensioners and not only the Programmed Withdrawal(PW) pensioners alone. He believes this would improve the living condition of retirees, particularly, in this period of serious economic hardship facing the country. Stating that the recent implementation of Enhanced Pension for only Programmed Withdrawal (PW) pensioners would no doubt create a natural tendency for more new retirees to choose Programmed Withdrawal (PW)product at the expense of Life Annuity (LA) product in the future without the PFAs deliberately de-marketing the Life Insurers, he pointed out that the number of retirees under PW was likely to increase exponentially over time than those retiring as annuitants.
The GMP, according to him, was usually to protect the Retirement Savings Account(RSA) holders against some of the risks of low investment returns and the erosion of pensioners’ incomes by inflation during a period of economic downturns, leading to having a low standard of living in retirement. Thus, it could be seen as a redistribution of resources to act as a safety net for pensioners, he stressed.
The delay in the implementation of GMP, he said, could be considered to be the main reason for the National Pension Commission (PenCom)’s attention being drawn to the clamour for periodic enhancement of the pension for retirees on Programmed Withdrawal under the Contributory Pension Scheme (CPS) “The grumbling may arise mainly due to the contributors and/or new retirees demanding for huge initial lump sum payment, leaving them with reduced RSA balances for investment which in turn has reduced the monthly income to live on in retirement,” he said.
He disclosed that the guaranteed minimum pension as stated in section 84(1) of Pension Reform Act (PRA) 2014, remains the best option to guarantee sustainable standard of living for retirees in retirement and their benefits paid as at when due. This , he said, was necessary to assist retirees with small Retirement Savings Account (RSA) balances, because they have not accumulated enough as at the date of retirement to, have a decent standard of living in retirement. The delay in the implementation of GMP by PenCom for 14 years after the CPS was established in 2004, he pointed out, has resulted in growing sense of disenchantment among current pensioners with relatively small RSA balances at retirement. This is because of the small monthly pension they have been receiving over the years relative to the huge gains from investment returns and/or dividends the pension fund administrators (PFAs) were currently making, he pointed out. He said the GMP, if implemented, would have eliminated the disenchantment among the current pensioners.
To him, ‘the recent implementation of Enhanced Pension (EP) programme by PenCom effective from December 2017, is aimed at providing sustainable standard of living in retirement for the Programmed Withdrawal (PW) pensioners and therefore it could be seen as cushioning the effect of the non-implementation of GMP for these PW pensioners.” Earlier at the 3rd Quarter 2018 Consultative Forum for States, which was held in Lagos recently, the head of service, Lagos State, Mrs. Folasade Adesoye, said, 14 years after the commencement of the new pension scheme, its ideals of providing pension benefits to retirees as and when due, has not been defeated. Stating that there were areas in the PRA 2014 yet to be implemented, Adesoye said the issue of transfer window that would allow an employee to change from one pension fund administrator(PFA) to another has remained outstanding since 2005, while the issues of Guaranteed Minimum Pension(GMP) and Pension Protection Fund(PPF) in the PRA 2014 were yet to be resolved. “These matters, in our opinion, are matters that bothers on the welfare of retirees in old age and should guarantee comfort while out of office. There is the need for urgency on these outstanding issues and stakeholders must work towards comprehensive guidelines aimed at ensuring the full implementation of the content of the law,” she suggested.