The Federal Government is currently unable to meet obligations to its retirees, because it cannot cash back the Federal Government Retirement Benefits Bonds currently sitting at the Central Bank of Nigeria.
Findings by the News Agency of Nigeria (NAN) show that the Federal Government currently owes former workers accrued rights from January 2016 till date.
Accrued pension rights is the term used to describe
what the Federal Government owes its workers, who
have been in service before the commencement of
the Pension Reform Act, 2004.
All Federal Government workers were “retired” and
then reemployed to join the service and their
pension funded monthly, according to the Pension
Reform Act, 2004.
The money the Federal Government now owes its workers before the commencement of the act is recognised in form of an amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds.
Upon retirement of an employee, the bonds are to be liquidated and added to the balance of the retirement savings account of an employee to get the total amount he or she is entitled to.
To ensure that government settles backlog of
accrued rights, PFAs are not allowed to give access
to their retirement savings, until the Federal
Government releases the accrued rights component.
So, Public Service Workers, who migrated to the
Contributory Pension Scheme (CPS) in 2004
shortly before they retired, were entitled to two
components of retirement benefits.
A source at the office of the Accountant General of the Federation said due to the present economic challenges, the government was finding it difficult to cash back the bonds, adding that the setback was in the liquidation of the bonds issued by the DMO and domiciled at CBN.
A source at PENCOM told NAN that a lot of retirees blamed the commission because they did not understand that the funds were not managed by the commission, thus its not its fault.
He clarified that only people that worked for the Federal Government before 2004 had such set back, thus it did not affect the private sector retirees.
