How State Governments toy with workers’ pension

Mrs Anohu – Amazu

Chuks Udo Okonta

 

It is worrisome that workers in most states will continue to queue at pension offices after their retirement, as their governments have refused to embrace the Contributory Pension Scheme (CPS) nine years that it became operational.

 

The National Pension Commission (PenCom) said only 12 states have so far passed their pension laws, while  – Lagos, Ogun, Osun, Niger, Kaduna, Delta and Jigawa are the ones contributing.

The Acting Director–General PenCom, Mrs Anohu – Amazu, who expressed misgivings on attitude of most states, regretted that the South-East Zone known to be highly industrious and possessing enterprising intellectuals was yet to take its rightful place in the adoption and implementation of the scheme.

 She noted that three states - Abia, Ebonyi and Enugu were yet to enact the law on the CPS, adding that Imo State enacted its law in 2008 and appointed Pension Fund Administrators (PFAs) to register its employees but has suspended the implementation of the Scheme. Anambra State, she stated, only recently enacted its law on the scheme and is still expected to carry out the necessary steps like setting up administration structure, appointment of PFAs, registration of employees by the PFAs, remittance of pension contributions and determination of accrued pension liabilities of workers among others.

Report from the South-West Zonal shows that Lagos state had fully implemented the CPS with a total of 45,730 employees registered and pension contributions remittance of N46.50billion as at July, 2013. The State had issued retirement benefit bonds of N18.9billion to its retirees and these bonds have been fully redeemed and proceeds paid into the employees’ individual RSAs; while 2,242 employees from the State have retired under the Scheme as at August, 2013.  

 

In the case of Osun State, it adopted the CPS and enacted its law in 2009. It had also made significant progress in its implementation of the CPS, having so far registered 45,106 employees under the Scheme. It had also remitted N4.15billion as pension contributions, while the sum of N1.90billion had been remitted into the Retirement Benefits Bond Redemption Fund Account.

 

However, the State is yet to renew the Group Life Insurance Policy for its employees in 2013 and had also not carried out an actuarial valuation to determine accrued pension rights of employees. 

 

With regards to Ogun State, it adopted the CPS and enacted its law in 2007. It had also made significant progress in its implementation of the CPS having so far registered 24,902 employees under the Scheme and remitted N10.90billion as pension contributions, while the sum of N3billion had been remitted into the Retirement Benefits Bond Redemption Fund Account held at the Central Bank of Nigeria. However, the State is yet to put in place a Group Life Insurance Policy for its employees.

 

In the case of Ekiti State, it enacted its law on the CPS in January, 2011 and has also 37,676 employees registered under the Scheme. Ekiti has conducted an actuarial valuation to determine pension liabilities under the old scheme and put in place a Group Life Insurance Policy for its employees. However, the State is yet to commence remittance of pension contributions into employees RSAs with PFAs.

 

Oyo State has enacted its law on the CPS in January, 2010. However, it is yet to commence the full implementation of the CPS. Ondo State has only drafted a Bill on the CPS, a copy of which had been reviewed by the Commission and comments duly forwarded to the State.

Defined contribution take-up in Nigeria is still fraught with challenges. Under the constitution, the 36 states that make up Nigeria’s federation are now responsible for introducing the new scheme. The government reformed the system in 2004 but only six states have signed up although 12 “are in the process” of doing so. Nor does the new pension scheme tap Nigeria’s vast informal work force.

PenCom estimates that 60 per cent of Nigeria’s 80 million-strong working population is actually in the informal sector; it is planning how best to draw these potential savers into the scheme through attaching benefits to paying into schemes and using technology such as mobile phones.