The FCT keyed into the CPS under the PRA 2004 and continued under PRA 2014 and is complying with the provisions of the Act. The regular remittance of contributions based on the rates provided in Section 4(1) of the Act by the FCT, even when the federal government, six (6) years down the line of the commencement of PRA 2014 is yet to implement the new rates is an indication that the FCT is not tied to the apron string of the federal government but independent in line with the provisions of Section 299 of the Constitution.
WE have discussed generally the status of implementation of the Contributory Pension Scheme (CPS) in states as at September 2020, based on information sourced from the website of the National Pension Commission (PenCom), the regulator of the pension industry in the country. Last week, we began in-depth discussion of the status of implementation, state by state, starting with Lagos.
Today, our focus will be beamed on the Federal Capital Territory (FCT), Abuja. The 1999 Constitution (as amended), in Section 299, provides that: “The provisions of this Constitution shall apply to the Federal Capital Territory, Abuja as if it were one of the States of the Federation”.
Status of implementation by FCT
The Pension Reform Act (PRA) 2014, in Section 2(1), provides that: “The provisions of this Act shall apply to any employment in the Public Service of the Federation, The Public Service of the Federal Capital Territory, the Public Service of the State, the Public Service of the Local Governments and the Private Sector”. Consequent upon the above, PRA 2014 is the enabling law for pension in the FCT.
Establishment of Pension Bureaus
The Federal Capital Territory (FCT) has established two Pension Bureaus, one for the FCT and the other for Area Councils.
Registration of employees
FCT has gotten her employees registered with Pension Fund Administrators (PFAs), where they have opened Retirement Savings Accounts (RSA) in compliance with Section 11 of the Act, into which contributions are regularly remitted for employees of FCT and LEAs but irregular for some area councils. The rates of contribution, which are in line with Section 4(1) of PRA 2014 are as follows:
(i) A minimum of ten per cent (10%) by the employer; and
(ii) A minimum of eight per cent (8%) by the employee.
Actuarial valuation
The FCT has carried out actuarial valuation of the scheme. This was with the view to ascertaining its pension liability based on accrued rights of workers who were in service before the commencement of the CPS. Haven ascertained the accrued rights of the workers; FCT is funding the accrued pension rights of these workers.
Retirement Benefits Bond Redemption Fund Account
FCT has established a Retirement Benefits Bond Redemption Fund Account, referred to as “Federal Capital Territory Redemption Fund”. Section 41 provides that: “There shall be opened in the Central Bank of Nigeria, an account for the management and investment of funds to be known as the Federal Capital Territory Retirement Benefits Bond Redemption Fund (in this Act refereed to as “the Federal Capital Territory Redemption Fund”) in respect of the Federal Capital Territory.
Section 41(4) further provides that: “The amount in the Federal Capital Territory Redemption Fund shall be used by the Central Bank of Nigeria, as prescribed by the Commission, to redeem any retirement benefits bonds issued pursuant to Section 15(1) (b) of this Act.
Section 15 (1) (b) of the Act also provides that “in the case of employees of the Federal Capital Territory where the scheme is unfunded, be recognized in the form of an amount acknowledged through the issuance of a bond to be known as Federal Capital Territory Retirement Benefits Bonds, in favour of employees and the bond issued under this subsection shall be redeemed upon retirement of the employee in accordance with Section 39 of this Act and the amount so redeemed shall be added to the balance in the retirement savings account of the employee and applied in accordance with the provisions of Section 7 of this Act”.
Group Life Insurance Policy
In line with the provisions of Section 4(5), PRA 2014, the FCT has taken a Group Life Insurance policy for all employees of FCT and LEAs. The Section provides that: “In addition to the rates specified in subsection (1) of this Section, every employer shall maintain a Group Life Insurance Policy in favour of each employee for a minimum of three times the annual total emolument of the employee and premium shall be paid not later than the date of the commencement of the cover”.
Subsection (6) of the Section provides: “Where the employer fails, refuses, omitted to make payment as and when due, the employer shall make arrangements to effect the payment of claims arising from the death of any staff in its employment during such period.”
Section 8(1) provides: “Where an employee dies, his entitlement under the Life Insurance Policy maintained under Section 4(5) of this Act shall be paid by the underwriter to the named beneficiaries in line with Section 57 of the Insurance Act.” The law provides for the payment of three (3) times the annual total emolument of the employee.
Conclusion
The FCT keyed into the CPS under the PRA 2004 and continued under PRA 2014 and is complying with the provisions of the Act. The regular remittance of contributions based on the rates provided in Section 4(1) of the Act by the FCT, even when the federal government, six (6) years down the line of the commencement of PRA 2014 is yet to implement the new rates is an indication that the FCT is not tied to the apron string of the federal government but independent in line with the provisions of Section 299 of the Constitution.
