*PESPECTIVES: WILL THE 2.5% ADDITIONAL FROM THE FEDERAL GOVERNMENT AFFECT ALL RETIREES? BEING A CRITICAL ANALYSIS OF THE SUBJECT BY BABATUNDE RAIMI, THE AUTHOR OF PLANNING YOUR RETIREMENT AND BEYOND SALARY. HE IS ALSO A PENSION AND RETIREMENT ENTHUSIAST, A POET, BUSINESS, ENTREPRENEURIAL, POLICY AND ECONOMIC STRATEGIST.*

Let me use this medium to say to every Federal Government Retiree under the Contributory Pension Scheme from July or September 2014 and not those under the Defined Benefits Scheme (Old Scheme) will all receive the 2.5% differential as an alert from their PFA and they will be notified. Please clap for the Federal Government (Applause)

You will recall that under the Obasanjo regime, at the inception of the Contrubutory Pension Scheme, you as an employee contribute(d) 7.5% of your majorly your basic, housing and transport, while the FG also contribute(d) 7.5%. The Pension Reform Act is reviewed every 10years, so the next review was in September 2014 under the Jonathan regime which increased the contribution as will be analysed later in this write up..

Based on paragraph 2 above, you will recall from your Retirement Statement of Account with your Pension Fund Admistrator that your contributions and that of the FG was the same which ought not to be because of the review of September 2014, which increased your own contribution to 8% and that of the FG to 10%. The FG "does not seem" to have been remitting their own additional of 2.5% which is what is now called *DIFFRENTIAL*. It is this differential that the FG has now decided to pay from the pension review of 2014. And to the retired under the CPS, it stops at your date of retirement.

For example, if you were earning N100,000, your contribution as pension as an employee will be (8% of N100,000) which is N8,000. And FG's contribution is suppose to be (10% of N100,000) which is N10,000 instead of the 7.5% that the FG was "supposedly remitting". So, the money you are now expecting as *differential* using the example above is the remaining 2.5% which is N2,500 since September 2014 till your date of retirement, but I heard they will start from July 2014.

*STILL ON THE PROMISED 2.5% DIFFERENRIAL USING STIMULATION*

*Assumption:* ��

Name: Yakubu Bola Chinedu
Ministry: Ministry Of Interior
Year of 1st Appointment: January 2nd, 1985
Date of Retirement: January 1st, 2020

The much talked about 2.5% unremitted herein called *differential* by the FG is from your pension contribution from September 2014 till your last month of retirement

If for instance, using the above example, the above civil servant was earning #400,000 as monthly salary as at September 2014, then his personal pension contributions under the PRA 2014 as amended would be (0.08 × 400,000 = 32,000). By the same amendment, your employers (FG) are supposed to pay (0.10 × #400,000 = #40,000. So, your pension contribution is supposed to be 32,000 + 40,000 totaling *#72,000* But what you will realise is being remitted is still the 7.5% by your employer, under the PRA 2004, instead of 10% from September 2014 thereabout under the amendment of the PRA.

The 2.5% being the differential, for the purpose of specificity, using this example is 40,000 - 32,000 = *#8,000* Now, calculate 8,000 from September 2014 till the month of retirement (I can't really tell if they will start from June 2014) as analysed hereunder:

Sept 2014 to Dec. 2014 = 4months
Jan. to Dec. 2015 = 12months
Jan. to Dec. 2016 = 12months
Jan. to Dec. 2017 = 12months
Jan. to Dec. 2018 = 12months
Jan. to Dec. 2019 = 12months
Total = 64 months.

Now multiply the assumed differential of 2.5% being 8,000 from our example by 64 months. That is (64 × 8,000 = *#512,000* The differential in this case is *Five Hundred and Twelve Thousand Naira* So, if you go back to your payslips from the months quoted herein, you will have a faint idea of what differential you might be expecting. But remember, nothing is absolute and this cannot be predicted to mathematical certainty hence the example here is just a rough guide, which you need to study very well because every civil servant under the the CPS have their own peculiarities. My advice, don't dwell so much on this, it will come when it will come.

I like to say here that, I see this differential is a right and not a privilege. So, if you were in service from the date the increament was made; even if you are retired under the programmed withdrawal or annuity option of retirement, this differential will be paid to you through your PFA and you will be notified, regardless of your choice of retirement plan. Though it took time, but it is better late than never, hence I believe the FG government should be applauded for not only listening to the cries of our Senior Citizens by releasing the back log of accrued rights up to December 2020 and also making provision for the differential as it were. If we are quick to castigate in a state of dis-contentment, dis-enchantment and dis-satisfaction, we should also be quick to celebrate and give the FG a part on the back when they get it right. This development is a big win for the FG, Pencom and the board of Pencom at large. Of a truth, this is a testament that "the labour of our heroes past shall *NEVER* be in vain."

I hope I have been able to explain this to the best of my ability. Remember this will apply to all employees under the Treasiry Funded Account as an employee of the FG under the Contributory Pension Scheme.

I really hope my epistle is was worth reading. So, expect these alert from your PFA, but do not expect too much so that you will not be "somewhat" disappointed in the long run.

Babatunde Raimi has facilitated so many pension and retirement seminars nationwide, helping employees understand their rights duties and obligations especially on pension and retirement matters. He constantly appears on television, grants radio and newspaper interviews especially on the subject of pension, retirement and MDGs. He is an advocate of the *F.I.R.E. Movement* (Financial Independence Retire Early). The Author strongly faults retirement sensitization seminars just a few years to retirement. He believes that pension and retirement trainings should be done often to employees from their first day at work because retirement is a journey and not a destination.

Babatunde Raimi is available as a facilitator on invitation. You can get his books on www.amazon.com or www.lulu.com. Better still, just Google his name (Babatunde Raimi). You can reach him directly on his mobile phones: 08178827380 & 08035063895.

Babatunde Raimi
Pension Coach / Advisor.
Author: Planning Your Retirement and Beyond Salary.
08178827380 & 08035063895


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