Pension crisis looms in states

Anohu-Amazu

Chuks Udo Okonta

 

Efforts to sanitise the pension system is seriously been resisted by  the refusal of many state governments to enact their laws and embrace the contributory scheme, which is adjudged the best way to eradicate corruption and ensures better lifestyle for retirees at retirement.

Available statistics revealed that only six states - Lagos, Ogun, Niger, Kaduna, Delta and Jigawa are the ones contributing to the scheme.

In the South-East Zone, Abia, Ebonyi and Enugu were yet to enact the law on the CPS. Imo State enacted its law on CPS in 2008 and appointed Pension Fund Administrators (PFAs) to register its employees but information available showed that the State has suspended the implementation of the Scheme.

Anambra State, it was learnt only recently enacted its law on the Scheme and is still expected to carry out the next 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.

States in the South-West Zone have made reasonable progress in the adoption and implementation of the CPS. Lagos State is one of the pioneers in implementation of the CPS, having enacted its law in 2007. The 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.

Furthermore, 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 N4.15 billion 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. I therefore wish to use this occasion to passionately appeal to the States in the Zone that have not completed necessary processes for full implementation of the CPS to renew their commitment and fast track action on all outstanding issues in order to avail their employees of its many benefits.

In the North Central zone, Niger State had fully complied with the scheme.

In the North-West zone, Jigawa state which was the first out of the thirty-six states in the federation to enact its law on the Contributory Pension Scheme (CPS) in 2005, had appointed Pension Fund Administrators (PFAs) to manage the Pension Funds which have a total value of N16.49 billion as at September, 2013.

Kaduna state adopted the CPS and enacted its law in 2007. It has also made significant progress in its implementation of the CPS, having registered 143,722 employees under the Scheme, with Pension Contributions of N9.46 billion as at October, 2013. The state had conducted an actuarial valuation and determined the accrued pension rights of its employees for their service prior to the CPS and established a Retirement Benefits Bond Redemption Fund which currently has a balance of N1.6 billion. The state is however, yet to put in place, a Group Life Insurance Policy for its employees.

Although Zamfara state adopted the CPS, enacted its law in 2005 and registered 63,254 employees under the Scheme and remitted N534.4 million as employee portion of the Pension Contributions as at November, 2013, it is yet to commence remittance of employer portion of Pension Contributions from the commencement of the CPS. It has also not put in place a Group Life Insurance Policy for its employees.

Sokoto state enacted its law on the Contributory Pension Scheme in 2007 and registered 46,808 employees with PFAs under the Scheme. The state is yet to commence remittance of the Pension Contributions.

With regards to Kebbi state, it enacted its law on CPS in 2009 and registered almost 38,000 employees with PFAs under the Scheme. It has however not commenced the remittance of pension contributions.

The status of Kano state shows that it enacted its law on the CPS in 2006. It is however, yet to appoint PFAs and has not transferred pension funds for management.

Kastina state drafted a bill on the Contributory Pension Scheme which was reviewed by the Commission and found to be largely in conformity with the Pension Reform Act 2004 (PRA). It has however not translated the bill into law. The compliance status of the states in the North-West zone as indicated clearly shows the imperative for the states to expedite action on the full implementation of the Contributory Pension Scheme.

Acting Director-General, National Pension Commission (PenCom) Mrs Chinelo Anohu-Amazu, said the PRA 2004 sought to address in a holistic manner, the perennial problems associated with pensions in both the public and private sectors established the new Contributory Pension Scheme (CPS) stressing that the central among the key objectives of the reform are to: stem the growth of outstanding pension liabilities.

 

Others are ensure that every person who has worked in either the public or private sector receives his/her retirement benefits as and when due; establish a uniform set of rules and regulations for the administration and payment of retirement benefits in both the public and private sectors; and promote economic growth through diversification of pension fund investment across financial and productive sectors.