Federated Pension Fund
The federated ension scheme was created to provide social security protection to worker 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 benefits based on age, length of qualifying service and final salary as at the date of retirement from service or on the date of death of the member.
MEMBERSHIP AND REGISTRATION
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 organization established by Acts of parliament from 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 allowances. The completed 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 pensions 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.
HOW THE SCHEME IS FUNDED
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 19%. The employer is liable to make the entire contributions on behalf of the employees.
The retirement age 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 benefit from on behalf of the retiring member. The benefits are computed and paid as follows:– With at least ten years scheme membership, the retiring member receives a gratuity and is also paid a periodic pension.– With less than ten years scheme membership, the retiring member receives a lump sum payment. No periodic pension is paid.
VOLUNTARY RETIREMENT BENEFITS
Members who wish to retire prematurely for immediate benefit may do so at age 45 and must have completed a minimum pensionable services period of ten years.– With at least ten years scheme membership, the retiring member receives a gratuity and a periodic pension.
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 benefits relating to ill health. The benefits 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 benefits. Laid off members who have completed ten years pensionable service will be paid a gratuity and periodic pensions. Those with less than ten years scheme membership will be paid a lump sum.
When a member dies whilst in active service, a survivor’s benefit is paid the dependants. The benefit payable is at least twice terminal annual salary of the deceased member. However, the claim must be supported by the death certificate of the deceased member.
THE PENSION BENEFIT COMPUTATION FORMULA
The benefit computation formula for the pension scheme is as follows: 1/600* completed months of service * terminal salary including fixed allowances.For the purpose of benefit computation the scheme recognizes a maximum of 400 months service.The full pension enjoyed by a retired member is not more than that 2/3 of the salary.
TYPES OF PENSION FULL ANNUAL PENSION
This is the pension when no portion 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 initially paid. The gratuity is the product of commutation of 25% of the pension or one year’s final salary, whichever is greater. The reduced pension is the rest of the value of the portion of the full pension which is not commuted (75%), payable annually but may be drawn at a more frequent period.LUMP SUMThis is the retirement gratuity in the form of a single cash payment in full and final settlement of the benefits claimed. This benefit is payable to retiring members who have less than ten years scheme membership.
AGE IN RELATION TO LEVEL OF BENEFITS AT RETIREMENT
The pension scheme is over and above other considerations an old age scheme guaranteeing some source of income to the member in old age. Retiring at the normal retirement age, a member enjoys maximum benefit. A premature of years by which the member retires earlier.
A member, who has completed not less than five year’s scheme membership but has not reached the age of 45 and wants to retire on his free will, can only be paid his benefits upon attainment of age 45 and on condition that he has completed five years scheme membership.
FORFEITURE OF BENEFITS
When a member is dismissed from service or his service terminated on account of negligence, irregularity or misconduct, he forfeits the benefits.When a member resigns from the job, he forfeits the benefitsWhen a member completes less than five years service and leaves the job on grounds 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, the previous employer must give written approval for the transfer to take effect.
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 admission to the scheme, if such interval exists, the employer will be required to purchase the rights of backdating membership by making back-service contribution to the fund, calculated on the basis of the employee’s salary per annum, the months of the intervening period, and a back service factor dependant on age of member at the point of calculation.
TEMPORARY ABSENCE FROM EMPLOYMENT
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 in both instances the employer continues to pay contribution regularly on the member’s behalf.