- Management Trainee
Stories by Sola Alabadan
Any State Government seeking to access pension funds through investment in its State Bond is now required to execute an Irrevocable Standing Payment Order (ISPO), investigation by Daily Independent has revealed.
The execution of an ISPO is to mandate the Accountant General of the Federation (AGF) to deduct at source and remit monthly pension contributions from the State’s share of the Federation Account Allocation to the State.
To this effect, our correspondent gathered that the National Pension Commission (PenCom) has issued a circular reviewing the minimum requirements for the inclusion of state bonds as investible instruments in the pension industry
Besides, it is now mandatory that such State Governments must have consistently funded the Retirement Benefits Bond Redemption Fund Account with the Central Bank of Nigeria or any
Pension Fund Administrator (PFA), from the date of commencement of remittance of pension contributions by the State.
Following the increased desire by states to include their state bonds as investible instruments, PenCom in a circular signed by its General Manager (Public Sector Pensions), Mrs. Grace Usoro, prescribed the minimum requirements for the States. This is part of efforts to ensure compliance with the contributory pension scheme now being operated in the country.
Accordingly, any state government seeking to access pension funds through investment in its state bond is required enact a law to establish the Contributory Pension Scheme, which must give pension contributions the same priority as salaries. Such law must also have fully addressed every inconsistency observed by PenCom in its review.
The affected State is also to establish a State Pension Bureau and a Local Government Pension
Bureau to coordinate the implementation of the Pension Scheme and other related pension matters in the State, as well as open Retirement Savings Accounts with PFAs for all the employees in the State.
They must fully remit both employer and employee pension contributions into the employees’ RSAs for a minimum of six consecutive months from the date of commencement of the Scheme in the State.
Again, the State is mandated to secure a group life insurance cover that guarantees a minimum of 300 percent of the annual total emolument of all the employees covered by the Contributory Pension Scheme.