Re­tire­ment ben­e­fits: States make ‘progress’ on CPS im­ple­men­ta­tion

Daily Trust - - BUSINESS - By Fran­cis Arinze Iloani

Un­like in the past when state gov­ern­ments were re­luc­tant in adopt­ing the Con­trib­u­tory Pen­sion Scheme (CPS), there are in­di­ca­tions that states are mak­ing progress in the im­ple­men­ta­tion of the scheme.

Doc­u­ment seen by the Daily Trust showed that as at the end of the first quar­ter of this year, 673,116 contributors un­der the em­ploy­ment of states were reg­is­tered with Pen­sion Fund Ad­min­is­tra­tors (PFAs).

How­ever, out of the to­tal num­ber of reg­is­tered Re­tire­ment Sav­ings Ac­counts (RSAs), only 62.07 per­cent, be­ing 417,834 of the RSAs, were cur­rently funded.

The doc­u­ment showed that over the pe­riod, 26 state gov­ern­ments had en­acted their pen­sion laws while 10 states at the Bill stage.

Apart from en­act­ing laws on the CPS, data an­a­lysed by this re­porter re­vealed that 10 out of the 36 states had started re­mit­ting con­tri­bu­tions into the RSAs of their em­ploy­ees as at first quar­ter of 2016.

The Daily Trust had re­ported that as at the end of 2014, only eight states had started re­mit­ting pen­sion con­tri­bu­tions and those states were Lagos, Osun, Ogun, Kaduna, Zam­fara, Niger, Delta and Rivers.

Lat­est data ob­tained from the PenCom showed that Anam­bra State had joined the league of states re­mit­ting pen­sion con­tri­bu­tions into RSAs of ifs work­ers while the Imo State Univer­sity is also do­ing same even as the Imo State gov­ern­ment has not started.

Cur­rent data showed that eight states have started the fund­ing of their Re­tire­ment Ben­e­fit Bond Re­demp­tion Fund Ac­counts (RBBRFAs) with the Cen­tral Bank of Nige­ria (CBN).

PenCom has de­vel­oped a 12 to 18 months roadmap for the en­gage­ment of labour unions, state em­ploy­ees, state gov­ern­ment of­fi­cials and other stake­hold­ers in­flu­enc­ing state com­pli­ance with the con­trib­u­tory scheme.

“In or­der to en­sure smooth im­ple­men­ta­tion of the ac­tion plans in the road map, tech­ni­cal sup­port and guid­ance would con­tinue to be given to all states in the ar­eas of ac­tu­ar­ial val­u­a­tion, em­ploy­ment ver­i­fi­ca­tion (i.e. pay­roll cleanup); evolv­ing vi­able fund­ing plans for im­ple­men­ta­tion of the CPS; reg­is­tra­tion of em­ploy­ees; and IT in­te­gra­tion,” the Com­mis­sion started in its first quar­ter 2016 re­port.

In­ves­ti­ga­tion has re­vealed that most of these states are still op­er­at­ing the old de­fined ben­e­fits pen­sion scheme hinged on Pay As You Go (PAYG) which has re­sulted to huge deficits owed to pen­sion­ers.

It could be re­called that at the fed­eral level, N 2 tril­lion ac­cu­mu­lated as deficit be­fore the in­tro­duc­tion of the CPS.

Ex­perts are of the opin­ion that in­ad­e­quate aware­ness of the op­er­a­tion of the scheme, lethargy in com­pli­ance by states, as­so­ci­ated costs of mi­gra­tion to the CPS, low wages re­sult­ing in so low ac­cu­mu­la­tion of ben­e­fits in the RSA, re­sis­tance by labour and fears by top level civil ser­vants are among the rea­sons some states have not keyed in fully into the scheme.

While it is im­per­a­tive to note that there has been a con­sid­er­able buy-in by states, more ef­forts are re­quired by states and in­de­pen­dent agen­cies of states to fully key in. For in­stance, while Imo State has not yet com­menced re­mit­tance of pen­sion con­tri­bu­tions, the Imo State Univer­sity is cur­rently im­ple­ment­ing the CPS un­der Pen­sion Re­form Act 2014.

The PenCom also main­tains that em­ploy­ees with RSAs could ben­e­fit from ini­tia­tives on in­vest­ing pen­sion fund as­sets in af­ford­able hous­ing de­vel­op­ment.

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