BUSINESS ‘How we’re managing pension funds in Niger State’
Alhaji Usman T. Mohammed is the Director General of Niger State Pension Board. In this interview, he speaks of the many obstacles the state has to surmount in addressing the lingering pension crisis.
Daily Trust: Niger was recently listed as one of the states that owe pensioners, can you explain this? Mohammed: The report came to us as a surprise because from the inception of this administration to date, I know that there is no monthly pension owed by the state government. A few days ago, local governments paid their pension allowances up to June while the state retirees got paid before the Sallah celebration. I am sure that July salaries have not been paid to workers at the moment of this interview. In fact, the governor made it categorically clear, particularly to the ministry of finance, that pension charges or monthly payment should be in first line charge and this directive has been on. As for that publication, we have cause to respond to the highest level because it did not come only from the national dailies but also from the labour office in Geneva. There is a consultant called Budget IT that claimed to have conducted a survey of 912 respondents in Nigeria across the states and came up with that result. I disagreed and argued that if they had surveyed Niger State, which office did they go? I am in the pension board but I have never seen any person that came to conduct a survey interview. We have told them that we do not owe pensioners in the state.
DT: What is then responsible for agitations over pension in the state?
There have been lots of agitations from some permanent secretaries who have unfortunately gone to spread misinformation about the activities of the board. They go about castigating and misinforming people about the activities of the board, because they thought that money has already been released while this is not true. We are doing a lot to ensure that people are well informed about our activities and we have continuously maintained a high level of transparency and honesty in our operations. Like I always said, our doors are open to the public and those who want to make enquiries on our activities should come to the right channel of communication to access authentic and verifiable information.
DT: The Contributory Pension Scheme (CPS) is another delicate and controversial issue, how are you tackling it?
As you are aware, it was suspended in March 2015 before the inception of this administration. That suspension created huge liabilities because there were no deductions and government did not contribute, which resulted in a gap. Therefore those that are retiring now do not know where they belong. However Governor Bello is very worried about this situation. He constituted a committee under the leadership of a former Head of Service, Mohammed Made, to look into the issue. The committee came out with a recommendation that the scheme is desirable because no worker would retire without getting his benefits. However the committee also computed the financial implication, for the state can sustain it if it has to lift the suspension. There are three categories involved if government wants to implement the scheme. The first is the zero category which requires government to set aside N184 billion. The second category is those that have served up to 15 years before the commencement of the scheme which means that they have 20 years before retirement. Government needs to set aside N86 billion for this category of retirees while the third category of 20 years and above was estimated at N46 billion. Government liked the third option but there was controversy The committee came out with a recommendation that the scheme is desirable because no worker would retire without getting his benefits because there was a private member bill enacted by the state House of Assembly that did not have the input of government. The Head of Service committee decided to synergize with the lawmakers to fine tune the bill and discuss its financial implication but it was passed on the day we were at the Assembly to meet with the lawmakers. The chairman labour committee of the Assembly asked us to wait for them at the Assembly gallery but while we were waiting the lawmakers passed the bill. However, the bill did not consider how to fund the implementation. Despite this challenge the governor constituted an implementation committee on the scheme where I served as secretary. We discovered that the private member bill did not take care of the benefits of everybody. The gap created by the two years suspension of the scheme as I mentioned earlier, is now about N9billion. But to save the situation in the interest of workers, government has come out with a new contributory pension bill in which it will pay 10.5% while workers will pay 7.5%. That bill has just been passed by the State House of Assembly.
DT: Pension issues are often associated with fraud. What is the situation here?
Yes, when we thought that we had finished with payments, to my greatest surprise, 168 funny files were uncovered. We examined the files and discovered that they were already enjoying the monthly pension benefits yet there were lots of dusts raised by the people that presented these files. Although they were pocketing the monthly pension salaries amounting to about N165m by virtue of their retirement dates, they fall under the contributory pension scheme and not the old pension scheme.
DT: Did you inherit any liability when you took over?
When we came, there was huge liability in the hand over note. At inception we saw a liability of over N2.66 billion from the local government pensioners that had not been paid over the years. At the state level, we had over N1.2 billion. However, we took serious steps to carefully verify these liabilities. At the end of the exercise there was variable in the balance of debt records. I don’t believe that balance of debt should be much higher than the other retirement benefits and death benefits. That balance of debt benefit that they collect is said to be a benefit of somebody who has died after retirement. That is he has not spent up to five years before he dies. How many people can actually find when you look at the number of retirees but they will say majority of them have qualified for balance of debt? So we struck that out and up to this moment nobody has come forward with balance of debt claims. The advantage we derived from this measure was that the liabilities were drastically reduced at the local and state levels. At the local government level, it was reduced to N1.226 billion while that of the state was reduced to about N830m. This amounted to the N2.06 billion that we presented to Governor Abubakar Sani Bello for approval.
DT: How did you raise the fund to offset these liabilities?
Mohammed: After my presentation to Governor Sani Bello and the approval, we had to look for the source to get the fund to pay the liabilities. There were three sources opened for us from where we could raise the funds for payment. One of them was recovered money from the blocking of leakages in pension matters. A committee was set up on recovery of funds by the board to look at double payments on the retirement savings account under the Contributory Pension Scheme (CPS). In other words government was paying to the PFAs more than two to three times on some accounts. A consultant was employed by the board to recover such funds on 15 percent agency fee agreement. Fortunately, that was part of the money we used and it was about N270m. The second tranche came from the N475m domicile in CBN. It was originally N1.725 billion but already there was a mandate that took about N1billion out on the claims by the previous administration that it was used for the payment of gratuity. I do not agree with this because if such payment was made we could not have gotten this huge liability on ground. The third source was the money we have with the lead PFAs and I advised the governor that this tranche will be difficult to access immediately because PENCOM will come in and we do not have the time for long process to be involved. So we made do with what we have from the two sources to commence payments of the liabilities in batches.