PenCom, Lagos Begin Talks On Pension Increases
By Patience Ikpeme
The National Pension Commission (PenCom) has begun discussions with the Lagos State Government and the Lagos State Pension Commission (LASPEC) over complaints by retirees under the Contributory Pension Scheme (CPS) concerning delayed pension increases and wage awards.
The commission said it was working with the relevant authorities to resolve the matter and ensure that retirees who qualify for the adjustments receive the benefits due to them.
The development comes amid growing concerns among Lagos State pensioners over the implementation of pension increases approved by the state government. PenCom, in a statement, acknowledged the concerns raised by the retirees and said it understood the importance of ensuring that pensioners receive their legitimate entitlements.
“PenCom recognises the importance of ensuring that retirees receive all benefits legitimately due to them,” the commission said, adding that it was aware of concerns arising from delays in putting approved pension adjustments into effect.
The regulator said it had engaged the Lagos State Government and LASPEC on the administration of pensions under the CPS, including the need to extend appropriate pension adjustments to eligible retirees.
PenCom’s intervention is significant because pension increases under the CPS require a number of issues to be settled before additional payments can be made to beneficiaries.
According to the commission, the process involves identifying the retirees who qualify for the adjustment, determining the appropriate level of increase, calculating the financial liability arising from the adjustment and establishing how the additional obligation will be funded.
The relevant data and instructions must also be provided to Pension Fund Administrators (PFAs) responsible for managing the Retirement Savings Accounts of CPS retirees.
PenCom said these issues were being discussed with the relevant stakeholders to ensure that the process was properly handled.
“Implementing pension enhancements involves determining eligibility, applicable adjustments, actuarial liability, funding, and providing relevant data and instructions to the pension operators,” the commission said.
The commission said it would continue to work with the Lagos State Government, LASPEC, PFAs and representatives of the affected pensioners in seeking a solution to the concerns.
It said the aim was to achieve a process that would be transparent, orderly and sustainable, rather than simply making adjustments without addressing the financial and administrative obligations that come with them.
The statement did not, however, give a specific date for the commencement of payment of the pension increases or wage awards. It also did not disclose the amount of money involved or state that every CPS retiree in Lagos would automatically qualify for the same adjustment.
Instead, PenCom said the question of eligibility and the level of adjustment would have to be properly established before the pension operators could be given the necessary instructions.
The development also brings renewed attention to the difference between the Defined Benefit Scheme (DBS) and the CPS in Lagos.
PenCom had previously urged the Lagos State Government to extend periodic pension increases enjoyed by retirees under the DBS to their counterparts under the CPS. The commission said at the time that CPS retirees had been left out of the periodic increases granted to DBS pensioners in the state.
The issue is particularly important because the CPS operates on a different funding structure from the old pension system. Under the contributory arrangement, employees and employers make contributions into individual Retirement Savings Accounts, with pension benefits calculated according to the accumulated funds and applicable rules.
This means that any additional pension obligation arising from a government-approved increase has to be properly assessed, funded and communicated to the pension operators before implementation.
PenCom said its engagement with Lagos was aimed at ensuring that these requirements were properly addressed while protecting the interests of the affected retirees.
The commission also said it remained committed to protecting the interests of both pension contributors and retirees and would continue to use its regulatory and supervisory powers to ensure compliance with pension laws and regulations.
“PenCom remains committed to protecting the interests of pension contributors and retirees,” it said.
