Allowing retirees to withdraw 75 per cent of their pension contributions under the Contributory Pension Scheme (CPS) is wrong, Chief Marketing Officer, Premium Pension Limited, Kabir Tijani, has said.
Tijani made this known at a briefing on the proposed bill on lump sum payment of up to 75 per cent to retirees against the 50 per cent being paid now before the National Assembly.
Tijani said if the bill was allowed to sail through, a major objective of the CPS would be defeated.
He noted that a lot of people could not manage money. He said when such retire and take huge amount, they might squander it and later become liabilities to others, adding that the scheme had been designed to avoid such scenarios.
‘’This is why it is arranged that when you retire, you take a lump sum payment to adjust your life and the rest is spread as monthly pension.
“We have seen what is happening in the Senate in the news. The proposal by the distinguished senator that the percentage of the lump sum withdrawal should be increased to 75 per cent.
“Our response to that is we are not going to support it as a Pension Fund Administrator (PFA) because we know that one of the objectives for having the scheme is to ensure that when people retire after they might have exhausted their adulthood in service. They should retire home and have something to live on until they pass on.
“Under the new scheme, a retiree has the option to take lump sum. It is something that is provided under the law as an entitlement for the retiree. The law says you can take between 25 per cent and 50 per cent of the balance of your RSA as lump sum payment and the rest will then be spread as programmed withdrawal or annuity plan.
“However, an employer is free to provide an additional benefit to its employees at retirement,’’ Tijani said.
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