Retirement benefits: States make ‘progress’ on CPS implementation
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.