12 As Niger eases pension headache
The pension headache which had distressed the administration of Governor Abubakar Sani Bello in Niger State is somehow easing. There is no doubt that one of the complex challenges inherited by the present administration in Niger State from 2015, is the mounting pension and gratuity arrears owed retirees in the state.
There were three segments to the problem -the retirees who fell within the old scheme; those in the Contributory Pension Scheme (CPS) and gratuities. Each of the segments, with its peculiar complexity, was compounded by massive irregularities which was hitherto the norm.
When direct approach to solving the problem was becoming too difficult and provoking anger and resentment for the government, Governor Abubakar Sani Bello reconstituted the state pension board led by Usman Tinau Mohammed in March 2016. When the new board settled to work, it learnt that a staggering liability of N4.3 billion was due to retirees. However, it discovered obvious shady deals and under dealings in the past transitions. It was to arrive at a final figure of N2.06 billion after a careful analysis and perusal of the books representing N1.2 billion for the state and N795 million for the local governments under the Defined Benefit Scheme (DBS).
The board then wrote to Governor Bello requesting for approval to settle the outstanding liabilities. With the consequent approval of the memo, the payment was then phased out into five batches for state and local government beneficiaries. According to the Director General, N1.28 billion was paid as gratuity to 456 retired workers in batches from the state and another N1.6bn to 1,143 beneficiaries from the local government as well as 50 Judges and Grand Khadis, and 42 permanent secretaries who retired long ago.
Expectedly, the gesture had elicited commendation from stakeholders including the labour union and families of the retirees in the old regime even as it rekindled hope for those under the CPS.
However, it is the CPS that threw up even bigger challenges. As those in the old scheme smiled to the bank, beneficiaries under the CPS became disillusioned with consequent speculations and misconceptions.
The misconception has always been attributed to the way the scheme was handled in the past where, for instance, the remittance of the contribution was stopped by the previous administration at a time. Under the suspended CPS, retirees in the scheme were left for years without either pension or gratuity as some of them died while the controversial scheme was been re-assessed.
The stoppage had also led to the agitation by the state civil servants demanding for the refund of their own contributions of 7.5 percent, necessitating the executive and the legislative arms to find a way of reviewing the existing legislation on the matter. The new legislation, that is the Amended Niger State Pension Reform Law 2017, was passed by the state assembly and subsequently assented to by Governor Bello.
Armed with the new law, the board set to work by categorizing the retirees into three. First were the retirees who exited service under the CPS, but have not been paid their accrued rights. In other words, they are retirees who have been reverted to the old pension scheme but have not been paid their entitlements.
Alhaji Muhammad said the board decided to start with them, adding that there are about 70 percent of retirees in this category. He said their 7.5 percent refund is in the ratio of 50.50 with 50 percent of their contribution and 50 from their employer.
According to him, the same formula also applies to the second category of employees who are still in service but by virtue of the Amended law 2017, are reverted to the old scheme.
The third category are those under the CPS but were also reverted to the old scheme as stipulated by the new law. “This group had been paid lump sums at retirement. The sharing formula for the amount remaining in their Retirement Saving Account is in the ratio of 70:30, that is, 7 percent to the employer and 30 percent to the retire,” the DG explained.
He said a formula for calculating the refunds was provided by the National Pension Commission (PENCOM) vide a letter dated 16th November, 2017. “The board in the last three months has been collating bank account details of categories of beneficiaries as instructed by PENCOM, and has so far forwarded over 8,000 lists of retirees and employees to the 19 Pension Fund Administrators (PFAs) for refunds to be effected,” he noted.
learnt that there have been some delays on the part of the PFAs who the board said, have been deliberately dragging the process of the payment of the refunds to the beneficiaries. Following the anomaly, the board had to alert PENCOM in some of its correspondences to report the matter, even as it has on many occasions met the PFAs representatives and sometimes threatened them, with a view to putting pressure on them to stop further delay in fulfilling their obligations to the retirees.
The efforts seem to be paying off with about 10 PFAs receiving approval from PENCOM to commence payment. Alhaji Muhammad confirmed that many beneficiaries have been receiving refunds within the last four weeks. “Trustfund Pensions Limited, IBTC, ARM Pensions and OAK Pensions are at the forefront of making refunds to their clients,” he said.
He also said the board is now receiving updates of approval given to the PFAs by PENCOM to keep it abreast of all approvals made.
As the headache arising from the delicate issue of CPS eases, the attention would have to shift to other components of entitlements and liabilities which have accumulated in the past. These include retirement benefits and death gratuities as well as augmentation for both state and local government retirees.
Looking at the liability for gratuities, the state has 2,125 beneficiaries with backlog amounting to N5.92bn while the local governments have 2,923 beneficiaries amounting to 6.9bn while death gratuity for state is N1.06bn and N1.04bn for the local governments.
This therefore, puts the total liability of gratuity for the state government at N15.2bn. The amount continues to increase as many more retire yearly.
In between these challenges, there was the issue of 142 percent pension increase in which the previous government agreed with the organized labour to pay 50 percent but which did not come to fruition. This outstanding arrears was paid by the administration to 216 beneficiaries.
There was also the 6 percent, 15 percent and 33 percent pensions increase in 2003, 2007, and 2010 respectively in which the administration also negotiated and paid 20 percent across the board to the pensioners in June last year.
Alhaji Muhammad said the board is taking steps with the support of various stakeholders to also overcome the challenges, and with the computerization of its activities which allows for seamless flow in record keeping and file tracking, its many headaches would ease with time.