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National Industrial Court declares limiting retirees above 50 years to 25% lump sum payment unlawful

NICN declares on payment of retirees above 50 years

The National Industrial Court of Nigeria (NICN or “the Court”), Abuja Judicial Division, recently delivered judgement in the case between Mr. Maroof Abdul Giwa (“the Claimant”) and ARM Pension Managers (PFA) Ltd. (ARM Pensions) & National Pension Commission (PenCom) (“the Defendants”) on the legality of the basis for computing the lump sum payable to the Claimant by ARM Pension in line with the guidelines issued by PenCom.

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Wole Obayomi

Partner & Head, Tax, Regulatory & People Services

KPMG in Nigeria

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Retirees

The crux of the matter was whether the 25% benchmark for lump sum withdrawal provided in the Pension Reform Act (PRA or “the Act”) applies to a policyholder who retires mandatorily at an age above 50 years.

Facts of the case

The Claimant retired from public service on 24 December
2017 at the age of 60 years and applied for the withdrawal of
a lump sum representing 50% or 75% from his retirement
savings account (RSA) domiciled with ARM Pensions, in line
with the provisions of the PRA. However, ARM Pensions
computed the lump sum at 25% which the Claimant refused
to accept. Consequently, the Claimant filed a lawsuit at the
NICN seeking a declaration that the offer of 25% of the RSA
balance was contrary to the express provisions of Section
7(1) of the Act and, therefore, unlawful, null and void.

Issues for determination

Based on the prayers of the parties, the Court formulated
the following issues for determination:

  1. whether or not the Claimant is entitled to a lump sum of
    his accrued pension at the time of retirement at 60 years;
    and
  2. whether or not the Defendants can prevent the Claimant
    from accessing his pension.

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