The proposed hike in the minimum wage will definitely have a huge impact on the Nigerian contributory pension industry.
One of such immediate impact is the retirement benefit payment to retirees who are paid Enbloc at retirement.
At the moment, retirees whose calculated pension is not more than 1/3 of the minimum wage (i.e. N10,000) will be paid all the balance in the RSA enbloc.
Enbloc payment is a type of retirement benefit payment that pays the total value in a contributor’s the RSA balance at retirement without further receiving periodic pension payment.
The implication of increasing the minimum pension will have a huge impact in the number of retirees that will be included in the Enbloc net (assuming the regulation is not amended).
So, if for instance the minimum wage is increased to N105,000, it then means that any impending retiree whose calculated pension is not more than N35,000.00 will be paid all the balance in his or her RSA.
This will definitely have a huge impact considering the fact that majority of retirees with low RSA balances will fall into this category.
Another question that begs for an answer is: for those already on pension within this range (N35,000.00), will they be allowed to apply for Enbloc as well?
It is a development that is unfolding and we are closely watching how the regulator (PenCom) will react to this.
PensionTalk
