Retirees under the Contributory Pension Scheme (CPS) in Nigeria are entitled to periodic enhancements on their pension payment. However, only retirees who have opted for programmed withdrawal (PW) are eligible for pension enhancement whenever the directive is issued by the National Pension Commission (PenCom). Pension enhancement is not for retirees under Annuity.
To learn more about the major differences between Programmed Withdrawal and Annuity, you can read our publication here.
The enhancement programme is expected to be carried out every 3 years starting from 2017 as directed in the “Framework on Pension Enhancement For Existing Retirees On Programmed Withdrawal Under The Contributory Pension Scheme (CPS)” issued by PenCom .
How it’s going
The periodic pension enhancement started in December 2017 when the National Pension Commission (PenCom) released the framework on pension enhancement directed that retirees who retired between July 2007 and December 2014 were eligible for enhancement.
The enhancement was based on the RSA balance of the retirees as at 31 December 2016. Over ₦303 million was added to the pension payment of 64,076 retirees, who were profiled to be qualified at that time.
The second edition of the enhancement programme was conducted in 2020 for retirees who retired between July 2007 and December 2017, where 86,108 retirees under the PW benefited from a total enhanced pension of ₦444 million. Of the 86,108 retirees, 40,084 had benefited from the maiden edition while the remainder represents new additions. This is a pointer to the remarkable growth and achievement recorded in the administration and management of pension assets under the CPS by the PFAs.
Incidentally, the 3rd edition of the pension enhancement will take place in February 2023 as announced by PenCom in December 2022 in keeping with its promise of enhancement every 3 years. According to retirees’ data, PenCom 111,187 retirees have been profiled as eligible for the 3rd pension enhancement. The enhancement is expected to add additional ₦392.19 million monthly to retirees’ monthly pension, increasing it from ₦6.83 billion to ₦7.22 billion.
As at the end of December 2022, total pension assets have topped ₦14 trillion. The total net asset of all pension fund under the CPS closed at ₦14.99 trillion, out of which the retirees fund (Fund VI) accounted for ₦1.19 trillion (representing 7.9% of total net asset value of pension funds).
Who is Eligible?
Retirees under the CPS who are drawing their monthly or quarterly pensions under the programmed withdrawal (PW) are eligible as long as their RSAs have accumulated significant growth. The rate of growth that qualifies for pension enhancement is communicated to the PFAs and determined by PenCom from time to time.
You should contact your PFA to know if you are qualified for enhancement or not. If you are qualified, it is most likely that your PFA will contact you in order to commence the necessary steps to implement the pension enhancement.
What to do next?
As a retiree under the PW, you should contact your PFA to know your pension enhancement status if you think you are eligible for enhancement due to the growth on your RSA balance. If you are eligible you will be required to sign a consent form that authorizes the new enhanced pension for you.
It is expected that the periodic enhancement will continue to improve the financial position of retirees and help them enjoy a comfortable life at retirement under the CPS.
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