Senator proposes 75% lump sum for retirees

By Abdul Olalekan

Senator Aliyu Magatakada Wamako, has proposed a bill seeking the provision of 75 per cent as pension lump sum for retirees.

The bill seeks amendment of some sections of the Pension Reform Act (PRA)  to accommodate new provisions that are perceived to provide succour to retirees in the delay and other difficulties they are encountering in withdrawing their saving from retirement savings accounts.

Information obtained from the website of the National Assembly, states that the bill was documented on May 10, 2016.

The Bill reads: “A bill for an Act to further amend the Pension Reform Act Cap P4 LFN to provide for definite per cent a retiree can withdraw from his retirement savings account and for other matters related thereto.”

It added: “Enacted by the National Assembly of the Federal Republic of Nigeria. 1. The Pension Reform Act Cap P.4 LFN 2004 (hereafter referred to as the principal Act), is hereby amended as set out in this bill. 2. Section 7 of the principal Act is amended in: (a) Section 7 (1) by inserting the words “or retires, disengages or is disengaged from employment” as provided under Section 16 (2) (a) and (b) PF this Act immediately after the phrase “whichever is later” in line two instead thereof; (b) In 7 (1) (a) by inserting the words “of up to 75 per cent” immediately after the words “a lump sum” instead thereof. (C) In 7 (2) by inserting the words “(c)” immediately after the words 16 (2) in line two instead thereof.”

Lump sum collection has remained a contending issue as some retirees believed what they get as lump sum often falls below their expectations and have continued to agitate for increase. But for the National Pension Commission (PenCom) and pension operators, retirees have to collect a moderate amount as lump sum to enable them have robust monthly or quarterly pension payment.

The Head, Research & Corporate Strategy PenCom, Farouk Aminu, said many retirees have burnt their fingers though wrong appropriation of their lump sum, adding that the quest to withdraw huge amounts at retirement, leaving little in the account is responsible for the little monthly pension some retirees receive.

He called on retirees to take less lump-sum payout if they don’t have need for much financial needs, stressing that less lump-sum will help them keep more money in their accounts.

“People should take less lump sum unless they need it. If they do not need it, they should not take it. It is important people really understand this. The more lump sum you take the less money you leave in your RSA and the lower your pension.

“People take much of their money and blow it and expect the little they left to perform wonders. People should leave a lot of money behind so that they can have huge pension,” he said.

Director-General, Lagos Pension Commission (LASPEC) Mrs. Folashade Onanuga, at different retirement fora, had enjoined retirees to utilise their lump sum well and desist from frivolous spending and entering into ventures that would not afford them peace.

She also advised retirees not to desire quick gains as fraudsters would make offers to defraud them of their benefits.