During the week, the news broke that a retiree won a court injunction against one of the PFAs on the payment of 50% lumpsum to her against the proposed 31.3% being offered by the PFA and backed by PenCom.
In the suit, PenCom was a co-defendant while the retiree dragged Sigma Pension, the first defendant, to the National Industrial Court.
The judge, Justice Benedict Kanyip, who delivered the judgment also declared that refusing to grant the claimant’s valid request to withdraw 50% of her RSA was a breach and denial of the 1999 Constitution’s provisions.
Kanyip went on to say that the defendants’ actions against the claimant on the basis of gender were discriminatory and in violation of the 1999 Constitution.
The court consequently ordered the defendants to pay the claimant N10 million, which is 50% of her RSA from her entire savings of N20.2 million, within 30 days.
While Sigma Pension had relied on the industry-wide template as issued by PenCom, its regulator, in computing the lumpsum payment which is based on some set parameters top of which is life expectancy, the retiree argued that based on the provisions of the PRA no specific percentage was stated to be paid as lump sum at retirement. She, therefore, demanded that a total sum of 10 million which represents 50% of her RSA balance be paid to her as lumpsum.
Advert: Become a Life Breathing Cash Machine (LBCM). Click here
WHAT DOES THE PRA SAY?
In fact, S7 of the PRA which talks about Retirement Benefits states as follows:
S7(1) A holder of a retirement savings account shall, upon retirement or attaining the age of 50 years, whichever is later, utilize the amount credited to his retirement savings account for the following benefits –
(a) withdrawal of a lump sum from the total amount credited to his retirement savings account provided that the amount left after the lump sum withdrawal shall be sufficient to procure a programmed fund withdrawals or annuity for life in accordance with extant guidelines issued by the Commission, from time to time;
(b) Programmed monthly or quarterly withdrawals calculated on the basis of an expected life span;
(c) annuity for life purchased from a Life Insurance Company licensed by the National Insurance Commission with monthly or quarterly payments in line with guidelines jointly issued by the Commission and National Insurance Commission;
(d) Professors covered by the Universities (Miscellaneous Provisions (Amendment) Act, 2012 shall be according to the University Act; or
(e) other categories of employees entitled, by virtue of their terms and conditions of employment, to retire with full retirement benefits shall still apply.
WHAT IS NEXT?
It is clear from the foregoing that while truly the Act does not specifically state the percentage to be paid as a lump sum, it does give the operator a leeway in determining the mode of calculation as subtly stated in S7(b).
This is what is being challenged in court by the retiree as an infringement on her right to be discriminatory on the grounds of her gender.
Advert: Become a Life Breathing Cash Machine (LBCM). Click here
PenCom and Sigma are claiming that based on her gender, female, she is expected to have a long life expectancy, and as such she is entitled to receive a lump sum of 31.3% while the rest will be used to cater for her during her retirement life. This is based on the lump sum template used in calculating her lump sum as issued by PenCom to PFAs.
The retiree is on the other hand claiming that basing her lumpsum calculation on her gender is discriminatory and that is against the constitution of the country. She also argued that there is nowhere in the PRA where it is stated that 25% should be the basis for a retiree rather the 25% rate is only stated for those who temporarily lost their employment and are not up to the retirement age.
It is left to be seen what the PFA and PenCom will do to this ruling as they have been required to pay the retiree within 30 days of the ruling.
However, it is largely expected that the ruling will be appealed by the defendants and until then, the ruling stands.
