Given the immense financial, growth, and funding advantages inherent within the Contributory Pension Scheme (CPS), it’s befuddling that almost all state governments are unwilling to dispose of the cumbersome, burdensome and corrupt-laden non-contributory various. Based on the Performing Director Common of the Nationwide Pension Fee (PenCom), Ms Omolola Oloworaran, solely seven states and the Federal Capital Territory, FCT, Abuja have totally carried out the CPS. That is unhappy, because it merely provides to the retirement anxiousness of staff, whilst their future shouldn’t be assured.
Earlier than the enactment of the Pension Reforms Act of 2004, the pension administration system in Nigeria was shrouded in opaqueness. The earlier regime was laissez-faire as fee of retirement advantages was solely on the whims and caprices of employers. Retirees within the public sector suffered harrowing adversity because of the unethical and fraudulent implementation of the Outlined Advantages Scheme (DBS), whereas most of their personal counterparts had been entitled to minimal or zero gratuity and pension.
The present authorized framework (now embodied in The Pension Reforms Act, 2014) marks a watershed in pension administration in Nigeria. It radically shifted the paradigm with the introduction of the CPS and the institution of a sole regulatory physique, the Nationwide Pension Fee (PenCom). The Act considerably cures the deficiencies within the DBS and ensures a greater post-employment life for staff within the formal sector. Additional, it relieves the federal government in any respect tiers and different employers from bearing the pension burden alone as staff are additionally obligated to contribute their quota.
Regardless of the failure of many states to embrace the fashionable pension system, Oloworaran additional revealed that pension belongings below the CPS have grown to N20.79 trillion as of July 2024. Highlighting the deserves of CPS, she remarked as follows: “It is going to curiosity state governments to notice that one of many vital advantages of adopting the CPS is entry to gathered pension funds for infrastructural growth by issuance of state bonds. Certainly, 5 states, together with Lagos, Niger, Osun, Ekiti, and Delta, have efficiently issued state bonds that had been subscribed by pension funds. Notably, the Lekki-Ikoyi Bridge in Lagos was partly financed by pension funds.”
The failure of some state governments to embrace CPS is untenable. Though, the Pension Reforms Act exempts judicial officers, members of the Armed Forces, the Intelligence and Secret Companies of the Federation; present retirees, and staff who had three or fewer years to retire as of June 30, 2004; it extensively caters to the post-service entitlements of almost each different individual working in a proper setting.
In the principle, CPS gives a uniform system whereby each employee receives his retirement advantages as and when due and assists improvident people to make financial savings for his or her previous age. Specialists assert that CPS is superior to previous pension schemes when it comes to “accountability, accessibility, ease of fee of pension and gratuity, funding, administration of pension fund, transparency, auditor’s management, and company governance.” Moreover, it permits for shared funds management between the Pension Fund Custodian and Pension Fund Administrator (who’re personal actors) with PenCom because the supervisory authority.
Additional, CPS gives monetary safety and stability to hundreds of thousands of staff throughout their retirement years and helps nationwide financial development by mobilising long-term financial savings and channelling them into productive investments. It additionally minimises the chance of non-remittance and fraudulent diversion of pension funds as staff can conveniently monitor the funds of their Retirement Financial savings Account; and select and alter their most well-liked Pension Fund Administrator at will. They’ll additionally elevate the alarm each time their employers fail to remit their month-to-month pension inside the statutorily prescribed timeline.
In distinction, non-contributory advantages are fastened pensions paid to pensioners based mostly on their wage and years of service. The DBS is solely funded and managed by the federal government and different employers and locations no direct duty on them to deduct pensions by way of payroll tax. For example, below this Scheme, the pension advantages for public servants are paid by way of budgetary allocations saved within the Consolidated Income Fund. The Scheme is inclined to mismanagement, fraudulent manipulation and normally noticed in default. The quantity disbursed for public pensions consistently falls wanting the budgetary allocations. Additionally, the federal government scarcely offsets the humongous arrears of unpaid pensions.
This explains why some state governments are nonetheless overwhelmed with excellent pension obligations. Equally worrisome is that pension funds are embezzled by these entrusted with the administration of the identical with out grave penalties. For example, the six-year jail time period imposed by the Supreme Courtroom on a former Police Pension Official, John Yusufu Yakubu, who had initially walked free after paying a paltry N750,000 fantastic ordered by the trial courtroom, shouldn’t be adequately punitive. In the meantime, on the receiving finish are the pensioners who’re condemned to untold hardship, squalor and typically untimely loss of life whereas ready for his or her pensions. Put in easy phrases, the DBS is neither fascinating nor sustainable.
With none gainsaying, each Nigerian employee is extra burdened with post-employment life ideas than ever contemplating the austere realities. Potential retirees are confronted with main challenges of unabating inflation, rising prices, growing well being care prices, and forex fluctuations with its attendant erosion of buying energy, amongst others. Consequently, any scheme that assuages these considerations by way of a secured system of seamless and immediate evaluation of retirement advantages; and contributes to social welfare by assuaging poverty amongst retirees, guaranteeing that they’ve a steady revenue to cowl their fundamental wants and preserve an honest lifestyle ought to be embraced. Basically, the CPS places pensioners in a greater place to navigate the ageing panorama with out (a lot) monetary worries.
So why would any state authorities insist on sustaining absolute management over pension administration and administration if not for ulterior issues? What’s the rationale for sustaining a system that shuts out most personal staff from retirement advantages? Is there any justification for subjecting ‘senior residents’ who’ve served the nation dutifully and meritoriously for many years to undue distress? Pray, the place is the social justice for a category of individuals to take pleasure in life pension and different jumbo allowances, together with homes on the FCT, for occupying the manager seat for 4 or eight years whereas the retirement pursuits of those that sacrificed their productive years in nationwide service are trivialised. The lead organised labour, the Nigerian Labour Congress (NLC), ought to present extra curiosity within the post-work welfare of its members within the Non-CPS states. The involved states are charged to undertake the Contributory Pension Scheme within the overriding pursuits of their folks.
