For the majority of the civil servants across 32 states of the federation, the growing backlogs of unremitted pension arrears expected from their Retirement Savings Accounts under the Contributory Pension Scheme remains a major battle they have to confront many years after retirement, report Ibrahim Apekhade Yusuf Charles Okonji and Moses Emorinken
For Mr. Adewale Samuel (not real name), 70 years plus, who retired from the employement of the Oyo state civil service few years ago, his dream of enjoying life in retirement did not materialised so soon compared to Amoo Rafiu, his kinsman, who retired almost the same time he did from the Lagos state government employment.
While Rafiu received his severance benefits and pensions one year after disengagement, Samuel was unlucky for the most part as he barely scrapped by the meager savings and sheer goodwill from friends and relations for the simple reason that his employers were still trying to compute his entitlements almost six years after his retirement.
Like Samuel, Emmanuel Chikodi (not real name), who retired a Principal in one of the government secondary schools in Imo state 11 years ago was yet to received his accrued benefits even after completing all the documentation as required.
“I voluntarily retired from the Imo state civil service to pursue other interests about 12 years ago. After waiting endlessly for my pension and other accrued benefits to no avail, I decided to go back to my first love of civil engineering. But for that stroke of luck, only God knows how I would have been able to survive with my family, “Chikodi of his experience.
Chikodi and Samuel’s experiences aptly capture the agonies of most civil servants who have to endure long, tortuous wait for their pension several years after retirement.
Pension remittance at state nothing to cheer about
Investigation by The Nation revealed that most retired civil servants in the country have harrowing experiences to share as they suffer either outright non-payment or endure unending nightmare to collect their pension benefits under the Contributory Pension Scheme (CPS).
Checks by The Nation revealed that the status of implementation of the CPS, in states as of June 30 showed that only four states and the Federal Capital Territory Administration had high level of compliance according to the National Pension Commission.
The commission listed theses five states that were funding the accrued rights of their workers regularly and commenced payment of pensions as Lagos, Kaduna, FCT, Osun and Delta.
Despite their higher level of compliance, these four states and the FCT still delayed in commencing pension payments to their retirees.
Lagos State, for instance, that received the National Pension Commission’s award on compliance has not started paying retirees that retired in 2018, 2019 and 2020.
The complying states blamed the delay in payment to backlog of arrears that needed to be cleared.
Anambra was funding the accrued rights of Local Government workers but not paying pensions under the CPS according to PenCom’s compliance list.
Five states with other pension schemes apart from the CPS are Jigawa, Kano, Yobe, Gombe and Zamfara.
The states at bill stage of joining the CPS are listed as Kwara, Plateau, Cross River, Borno, Akwa Ibom, Bauchi and Katsina.
The second quarter 2020 report of PenCom stated that 25 states had enacted pension laws on the Contributory Pension Scheme while seven states were at the bill stage.
Out of the five states operating other pension schemes, four states had adopted the Contributory Defined Benefits Scheme while one operates the Defined Benefits Scheme.
Among the states that had enacted laws on CPS was Niger State which suspended the implementation of the CPS in April, 2015.
However, the state governor recently approved the resumption of the scheme with effect from June 2020.
Among the states that adopted CDBS, Jigawa State was the only state that was fully implementing the scheme by consistently remitting employee pension contributions to selected PFAs to manage and had conducted actuarial valuation to ascertain any shortfall in the fund.
Kano State was yet to transfer its pension funds to licensed operators, and had huge arrears of pension liabilities as of the end of the review period.
Zamfara and Gombe states were yet to commence implementation of the CDBS as of the end of the quarter.
What matters most to the average worker?
Amongst the nine parameters by PenCom for a fully compliant state to the CPS, remittance by the states for both employer and employee pension contributions takes a chief position because it goes a long way to not only ensure the payment of pensions, but also ensure that the contributors get dividends on their contributions.
These dividends according to the Commission can go as high as 150% depending on the timely and accurate remittance of pension contributions by the states.
Pension assets networth
According to the Acting Director-General of the Commission, Hajia Aisha Dahir-Umar, “This industry has assets worth about N8.9 trillion as at February this year. Registered membership as at February this year is also about 8.5 million.”
She revealed that one of the key purpose and intention of the Pension Reform Act 2014 was to ensure the domestication of the Contributory Pension Scheme (CPS) at the sub-national level in Nigeria.
Regulated by PenCom, the CPS took over the old, dysfunctional and moribund Defined Benefits Scheme which was fraught with payment issues.
The sad reality is that, for a scheme as structured, monitored, and regulated as the CPS, a lot of states are yet to fully key into it in terms of compliance.
This failure to ‘completely’ embrace and engage the scheme leaves only a ‘factor of production’ at grave risk – labour (workers).
‘Haphazard remittances kills system ‘
In an interview with our correspondent, the Head of Corporate Communications of PenCom, Mr. Peter Aghahowa, the Nigerian worker is very concerned about the timely and complete remittance of his or her pension contributions.
The effect of haphazard remittances by states on the Commission is tertiary, the primary effect is that it is affecting the contributor directly, he stressed.
Pressed further, he said, “It is not good enough for you to tell me ‘don’t worry we will pay’, that is not the way this scheme is designed to work; it is designed to work in a manner that seven days after you pay salaries, you remit complete pension contributions (employer/employee).
“Once remittances by states are done in a timely and complete manner, the workers in turn will reap very good dividends and returns on their investments.
“According to our findings, in 2011–2017, a number of PFAs returned 100%; double of what was given to them in 2011.We also found out that, as at February this year, the amount of uncredited contributions from Akure was over N1.2billion (that is, funds still hanging somewhere). Port Harcourt figure for December 2018 was N1.4billion. When the Commission raised the issue, few states appeared to have done some reconciliations and there was a token reduction.”
Furore over unremitted states’ pensions
The Chairman, Trade Union Congress, Ogun state, Olubumi Fajobi, decried the backlog of arrears of pension and long waits suffered by retirees under the CPS.
He said, “Take Ogun state for example; we have a very large backlog running to almost N40bn that has not been remitted and that is for about 107 months.
He worried that the governments were not committed in terms of remitting the contributions of workers.
Fajobi said, “The waiting period is also of concern for those who are accessing it. We have people waiting for two, three years before they can access any fund from the CPS after retirement.
“This makes a whole nonsense of the scheme from the 2004 reform and also for 2014 laws.”
The President, Association of Senior Civil Servants of Nigeria, Bola Audu, said any state that was not ready for the CPS should not start it, and those who started should endeavour to run it properly and not frustrate retirees.
“Pension is something somebody has worked all his life for and he intends to earn it when he is no longer able to work. So when you now play politics with those who are in pension, I don’t think it is a good idea at all,” he said.
With such state of affairs, it is not any surprising that the Allianz Global Pension Report 2020 recently ranked Nigeria 64th place, especially because of the insufficient adequacy of its pension system.
Lack of political will reason for non-remittance
Speaking in a chat with The Nation, Director, Centre for Pension Rights Advocacy, Ivor Takor, the Pension Reform Act in 2004 is partly to blame for the parlous state of the pension scheme.
Takor said the mischief that found its way into the PRA 2004 was cured in the PRA 2014, which made the provisions of the Act to apply to any employment in public service of the Federation, Federal Capital Territory, states, local governments and the private sector.
Takor said, “The exclusion was not an oversight by the committee that carried out the reform, neither were sates and local government employees not covered in the executive bill that was sent to the National Assembly.
“Employees of states and local governments were covered in the executive bill sent by the President to the National Assembly.
“On the bill reaching the National Assembly, governors mobilised representatives of their states in both chambers of the National Assembly to remove employees of states and local governments from the bill before it was passed into law.
“Their reason was that the country was under civil rule; therefore, there must be the practice of true federalism, which does not allow the National Assembly to make laws for the states on an issue such as pension, which does not fall in the exclusive legislative list of the constitution.”
Commenting on why state governments are not remitting pension contributions as stated by the PenCom Act, he said most state governors are not interested in making the scheme work.
“In this new pension contributory fund, there is no case of fraud or embezzlements so far. The state governors don’t care about the welfare of their workers.”