Why Retirees Will No Longer Earn 50% Lump Sum
You know most government workers and how much they wait for gratuity.
Everyone working patiently waits for that time when they will retire and get a lump sum totalling 50% of their pension savings, but that may not happen again for retirees.
This is because the National Pension Commission (PenCom) has taking away that clause and has replaced it with something different.
The 50% lump sum payable to retirees as gratuity on retirement from their Retired Saving Account (RSA) has been reduced to enable retirees to earn at least 50% of their last monthly salary as pension.
The spokesperson for PenCom, Mr Peter Aghahowa, made the clarification at the ongoing Pre-retirement Workshop for 2019 retirees on Tuesday at the University of Lagos.
Addressing over 1,500 public servants from the ministries, department and agencies including employees from the academia and the Nigerian Railway Corporation (NRC), Aghahowa said the move became necessary following complaints by retirees that their monthly pension was too meagre to meet theirobligations.
“Initially, retirees were entitled to 50% of their RSA as lump sum (gratuity) after retirement but because of complaints by retirees, PenCom reviewed the template to enable the retiree get 50% of his last salary on retirement as his monthly pension.
“The monthly 50% pension is calculated and deducted from the RSA and the balance is what is paid as gratuity to a retiree as gratuity.
“It is important to understand that lump sum as gratuity means low pension while big monthly pension means low gratuity,” he explained.
Aghahowa said the percentage of the balance paid as gratuity could vary depending on the amount left after the retiree’s monthly pension had been taken care of.
According to him, the 50% lump sum was reviewed by the commission in May this year through a revised template to Pension Fund Administrators (PFAs).