‘Gratuity Still Exists Under Pension Scheme’ says PenCom
By Patience Ikpeme
In a recent statement, the National Pension Commission (PenCom) clarified that gratuity payments have not disappeared with the implementation of the Contributory Pension Scheme (CPS). Instead, PenCom emphasized the introduction of Additional Benefits Schemes (ABS) as part of the CPS framework.
Encouraging employers to embrace ABS, PenCom highlighted numerous advantages for both employers and employees. These benefits include the ability to attract and retain talented individuals, boost employees’ morale and loyalty, and enhance an organization’s reputation.
Under the Pension Reform Act (PRA) 2014 and the CPS, retirees and workers now have clearer and more confident retirement planning options, according to PenCom.
Director-General of PenCom, Mrs. Aisha Dahir-Umar, addressed misconceptions surrounding gratuity payments under the CPS. Contrary to popular belief, the CPS not only allows for gratuity but also offers improved retirement benefits through ABS, akin to an upgrade from the traditional system.
Employers have the flexibility to choose whether to offer ABS alongside standard CPS benefits. By opting for ABS, employees can receive a lump sum payment in addition to their retirement savings, providing them with greater financial security in their post-employment years.
Moreover, ABS ensures that employees’ funds are managed securely by licensed professionals, eliminating concerns about the timely receipt of gratuity.
PenCom is equipped with comprehensive guidance for employers interested in establishing ABS within their organizations. Additionally, they offer assistance in exploring further enhancements to employees’ retirement plans.
In essence, gratuity payments have not vanished but evolved within the CPS framework. With the introduction of ABS, employers and employees alike can enjoy enhanced retirement benefits, marking a positive shift in pension provisions under the CPS.
