The invalidity pension is intended to cushion members against loss of capacity to engage in substantial gainful employment.
Invalidity can occur at any point in one’s working life. Therefore, the minimum criterion to be eligible for this benefit is less than that for the retirement benefit.
A member shall qualify for an individual pension if he is currently insured as described above. However, there is a further condition that a member claiming this benefit must be certified to be disabled by a medical board appointed under the Act. This Board will have to satisfy itself that the claimant is unable to engage in substantial gainful employment. Disability per se is not a sufficient condition for eligibility to an invalidity benefit.
In arriving at a determination of invalidity, the Medial Board will use any means at its disposal including community sources, treating physicians, examining physicians, laboratory tests and psychological tests.
Any invalidity pension will be payable until the member dies. However, an invalidity pension may be terminated when the member reaches the pensionable age of 55 at which point he will be put on retirement pension. NAPSA shall also terminate an invalidity pension if it finds that the person is able to engage in substantial gainful employment.
Who May Receive An Invalidity Pension?
The Authority shall pay an invalidity pension to a member based on his work record.
For someone to qualify for the National Pension Scheme Authority (NAPSA) invalidity pension, he must have to receive credit a minimum of 60 months of contribution to NAPSA, in addition to which he must meet the recency of work test. As invalidity can take place at any time during one’s working life, a member is not required to have reached pensionable age to qualify for the invalidity pension.
It is a further condition for the award of the invalidity benefit that NAPSA would have to determine that the person is unable to engage in substantial gainful employment.
What Is the Recency of Work Test
The recency of work test refers to the relationship of one’s contributory period to the point at which a claim is made. In the context of the National Pension Scheme Regulations, one is deemed to have to meet the recency of work test if he has made at least 12 monthly contributions within the last 36 months prior to the claim.
How Much Is An Invalidity Pension?
The invalidity pension consists of two components: the general pension component and a credit for years presumed lost from work as a result of invalidity. In calculating this credit, NAPSA credits the worker with one-half of one percent of his indexed monthly earnings for each year lost. The number of years lost is reckoned as the number of years that would elapse between the date of his invalidity claim and the day he would reach pensionable age. The invalidity pension is the sum of the credit for lost years and whichever is greater of the standard pension and the minimum pension.
How is the Standard Pension Computed?
The invalidity pension is calculated on the earnings record of a member.
Since nominal earnings have changed substantially over time as a result of inflation, NAPSA adjusts a member’s past earnings (subject to the ceiling) to bring them in line with current earnings before calculating his pension.
This adjustment is made to ensure that the units used to express a member’s monthly pension stands in roughly the same relation to current national average earnings as units used to express his earnings in earlier working years stood to national earnings in the years when they were earned.
If no changes took place in the average national earning, the member’s average indexed monthly earnings would simply be average of his monthly earnings for all the amounts in which he contributed the scheme. Since such changes have taken place, the members’ earnings in each month of pensionable employment are adjusted to reflect the increase in average earnings.
In Arriving the Average Indexed Monthly Earnings the Authority Carries out the Following Steps:
The Invalidity Pension Is Then Calculated As:
P = C + max (G, Pm) where
P is the monthly invalidity pension
C is the compensation for the years lost
Max (G, Pm) is the greater between the member’s standard and minimum pension.
How Is The Credit For Lost Years Computed?
The credit for lost years is equal to 0.005 X AIME X N
Where; AIME = Average Indexed Monthly Earnings
N = the number of years lost from work as a result of invalidity.
As said earlier, the invalidity pension is made up of the credit for lost years and whichever is greater between the standard pension and the minimum pension.
What Happens if a Person Receiving an Invalidity Pension Reaches Pensionable Age?
NAPSA shall convert to a retirement pension the invalidity pension of a member who upon reaching pensionable age remains eligible for an invalidity pension. NAPSA shall pay the pensioner at the rate of his previous invalidity pension or at the rate of the standard pension, if any, for which the member is eligible, whichever is greater.
How Does NAPSA Determine Disability?
For the purpose of an award of an invalidity benefit, the claimant must show that a determinable physical or mental impairment prevents him from engaging in substantial gainful employment and that the outlook is without reasonable expectation of permanent improvement that would allow him to do so.
To meet these criteria, the claimant must have an extreme impairment which makes him clearly unable to do the work he did previously or to engage in any other substantial gainful employment.
In reaching this determination, NAPSA through its medical board, will consider the claimant’s age, education and work experience. NAPSA’s use of the terms disabled or invalidity differs from normal and medical usage.
When NAPSA affirms that a person is not disabled, that is, suffering from invalidity, it is not making a claim about the individual’s physical or mental condition generally, but about the demonstrable impact of specific physical or mental conditions on the individual’s ability to work.
Thus NAPSA does not translate a treating physician’s claim that a person is disabled into an invalidity award, rather it will examine the impact of the condition on the claimant’s capacity for substantial gainful employment. The fact that a physician reports that the claimant is disabled does not mean that NAPSA will find him for purpose of the Act.
What is Substantial Gainful Employment?
Employment is substantial if it involves significant physical of mental effort, it may be part time. It is gainful if it is type of activity that is usually done for pay or profit, whether or not any earnings are actually realized. NAPSA will find that an activity is not gainful unless it can consistently provide monthly earnings in excess of k15, 000.00 or such amount as many from time to time be determined by the Minister through statutory instrument.
What Source of Evidence Will NAPSA Consider N Determining A Case of Disability?
NAPSA shall consider evidence from the claimant himself, from community sources, from treating physicians, from examining physicians from laboratory tests and from psychological tests.
In weighing this evidence, NAPSA shall pay due regard to the depth of the sources’ knowledge of the claimant’s condition, the consistency of the evidence, specialized opinion, findings of fact and contexts in which evidence is adduced.
What Factor Will Not Be Relevant To The Claim Of Invalidity?
In deciding whether a claimant for invalidity benefit is disabled and in particular, deciding whether there is a type of work in the national economy that the claimant can do despite this impairment, NAPSA will not consider whether the claimant can actually find a job or get work, the lack of work on the claimant’s part of the country, the state of the economy or the reluctance to take up a particular type of work.
What Will Happen if Someone is Not Eligible For an Invalidity Pension?
The Authority shall pay a lump sum invalidity benefit to persons who made less than 60 months of contributions and failed to meet the recency of work test prior to the onset of invalidity.
How much is the Invalidity Lump Sum?
The invalidity lump sum is the accumulated total of a member’s indexed contributions plus interest.