Federated Pension Scheme
The Federated Pension Scheme was created to provide social security protection to workers in the quasi-government organization. It will be recalled that the founding member institutions initially ran their individual schemes until 1973 when they were federated and administered by SSHFC.
The Pension Fund is one of the constituent funds of SSHFC. It is a final pay scheme in the sense that it pays benefit based on the age, length of qualifying service and final salary as the date of retirement from service or on the date of retirement from service or on the date of death of the member.
Employees in full time employment in an organization registered and recognized as a member institution of the pension Scheme qualify for membership of the scheme. Parastatal organizations established by Acts of parliament form the bulk of the Pension Scheme.
However employees in the private sector whose employers so desire may opt for membership in the Pension Scheme.
Employees are required to complete prescribed registration forms submitting complete and accurate information about them. Particular attention should be paid to details regarding: name, date of birth, date employed/admitted into the scheme and annual salary, including fixed allowance. The complete application form must be supported by a birth certificate or national identification card and passport size photographs.
The following categories are exempted from the scheme :
- civil servants to whom the Pension Act 1950 (Cap.137) applies
- workers below the age of 18 years,
- casual employees on a daily basis upon piece-meal work alone and employed on a fixed term contract not exceeding one month duration; and
- any other category of employees which the Managing Director in his discretion shall determine to be casual employees.
The scheme is funded from contributions at a rate periodically determined. The rate is a proportion of the member’s basic salary and fixed allowances. The current rate is 15%. The employer is liable to make the entire contributions on behalf of the employees.
The retirement is now revised from 55 to 60 years. This revision came about in April 2004.
On attainment of age 60, the employer submits a completed benefits form on behalf of the retiring member. The benefits are computed and paid as follows :
- with at least ten years scheme membership, the retiring member receive a gratuity and is also paid a periodic pension.
- With less than ten years scheme membership, the retiring member receives lump sum payment. No periodic pension is paid.
VOLUNTARY RETIREMENT BENEFIT
Members who wish to retire prematurely for immediate benefit may do so at the age 45 and must have completed a minimum pensionable service period.
- With at least ten years scheme membership, the retiring member receives a gratuity and a periodic pension.
- With at least five years membership, the member receives a lump sum.
RETIREMENT ON GROUNDS OF ILL HEALTH
A member may prematurely be retired on grounds of ill health and disability. However such retirement must be advised by a medical authority. Upon the advice of a medical authority, a member is paid benefit relating to ill health. The benefit payable is proportional to the degree of disability suffered by the member.
When a member institution of the pension scheme is obliged to down-size its workforce or close operations entirely some or all its staff are laid redundant. Staff who may be laid off in such an exercise will be paid redundancy benefit. Lay off members who have completed ten years pensionable service will be paid a gratuity and periodic pensions. Those with less than ten year’s scheme membership will be paid a lump sum.
When a member dies whilst in active service, a survivor’s benefit is paid to the defendants. The benefits payable is at least twice annual salary of the deceased member. However, the claim must be supported by the death certificate of the deceased member.
THE PENSION BENEFITS COMPUTATION FORMULA
The benefit computation formula for the pension scheme is s follows :
- 1/600 x completed months of service x terminal salary; OR
- 1/480 x completed months x terminal salary plus fixed allowances.
FULL ANNUAL PENSION
This is the person when no portion of the pension is exchanged for a lump sum or gratuity. The pensioner receives the maximum pension periodically because he did not exchange any portion of it in the form of gratuity or lump sum.
REDUCED PENSION AND GRATUITY
An initial gratuity is paid and then an annual reduced pension. The full pension is reduced by the portion of the gratuity is the product of commutation of 25% of the full pension or one year’s final salary, whichever is greater. The reduced pension is the rest or the value of the portion of the full pension which is not commuted (75%), payable annually but be drawn periodically.
This is the retirement gratuity in the form of a single cash payment in full and final settlement of the benefits claimed. This benefits is payable to retiring members who have less than ten years scheme membership.
The pension scheme is over and above other considerations an old age scheme guaranteeing some source of income to the members in old age. Retiring at the normal retirement age, a member enjoys maximum benefit. A premature exit from the scheme attracts a lower benefits in proportion to the number of years by which the member retires earlier.
A member, who has completed not less than five years’ scheme membership but has not reached the age of 45 and wants to retire on his own free will, can only be paid his benefits upon attainment of age 45 and on condition that has completed five years scheme membership.
FORFEITURE OF BENEFITS
When a member is dismissed from service or his services terminated on account of negligence, irregularity or misconduct, he forfeits the benefits.
When a member resigns from the job to avoid dismissal, he forfeits the benefits When a member completes less than five years service and leaves the job on ground other than ill-health, disability or death, he forfeits the benefits.
A member may transfer from one member institution to another without the member losing the benefits already secured whilst he was in the service of the previous employer. However employer must give written approval for the transfer to take effects.
When an employer agrees to backdate an employee’s pensionable service which will give the employee benefits secured for the period between his date of employment and his date of formal admission to the scheme, if such interval exist, the employer will be required to purchase the rights of backdating membership by making back-service contributions to the Fund, calculated on the basis of the employee salary per annum, the months of the intervening period, and a back service factor dependant on age of member at the point of calculation.
A member who is absent from his employment as a result of authorized leave of absence or on the grounds of ill-health verified by an officially recognized medical practitioner, or on study leave with pay shall continue to be a member.
A member who is on secondment to another employment or on study leave without pay shall continue to be a member at the discretion of the employer, provided that in both instance the employer continues to pay contributions regularly on the member’s behalf.