Non-remittance of pension funds
Fear for the safety of pension funds has mounted following revelations that many federal ministries, departments and agencies of government are not remitting them as and when due. According to the Pension Fund Operators Association of Nigeria’s 2016 Annual Report, the Federal MDAs have since October 2015 been failing to remit the mandatory pension contributions of most of their workers into their Retirement Savings Account (RSAs) as provided for in the Contributory Pension Scheme under the Pension Reform Act of 2014.
Mostly affected by the development are direct employees of the ministries who are not under the parastatals but are being paid by the National Pension Commission (PENCOM) with funds provided by the Central Bank of Nigeria (CBN). Such beneficiary pensioners are therefore living on borrowed money and time, and may be cut off from the welfare stream sooner than later since they are paid with other peoples’ money. As stated in the report, compliance with regard to remittances of pension contributions from the public sector at both the federal and state levels have lagged notably. While remittances from the Federal Government through the PENCOM were last received for September 2015, some states have outstanding remittances dating back over two years. The report however observed that the private sector was more consistent than the public sector, even with the depressed economic climate.
The implication of this development is that prospective pensioners who serve as employees of the federal government may not be paid their pension whenever they retire unless the arrears on their RSAs are processed along with their accrued rights under the Defined Benefits Scheme. In the circumstance only pensioners whose arrears are negligible may be paid pension benefits ahead of the remittances of the arrears on their accounts. Understandably the scathing report on the dishonourable acts of non-remittance by these establishments has attracted concern in various circles in the nation’s public service. The concern derives from the notion that pension funds are expected to enjoy some measure of protection, being the due benefits for diligent service by an employee to an employer which in most cases is the government. More pointedly, the remittances by government as employer of workers is provided for in the Pension Reform Act. Non-remittance of deducted pension funds together with the matching funds is illegal and immoral.
Top public officers in this country have traditionally treated pension funds with disdain. Such funds have over the years been massively pilfered, the worst case being the discovery of massive looting of police pension funds as well as looting by the federal transitional pension administration. While the Police case was restricted to one agency, the present situation is more widespread and it threatens workers throughout the mainstream public service. The dangers that this poses are incalculable. Not only does it mean that millions of workers would be condemned to misery when they retire, but their realisation of this while they are still in service will destroy morale and security and accentuate corruption.
Since last year many state and local governments as well as some federal agencies have found it difficult to pay their workers’ salaries as and when due. It follows therefore that when even salary is not being paid, pension fund remittances are even less likely to be made. The two problems must therefore be tackled together. Even when salaries are being paid but pension fund remittances are not being made, the damage to civil servants’ morale will still be incalculable. We urge the Presidency to regard this issue as another national security emergency that deserves prompt and sustainable solution. No one will offer his best services today if he is not assured of a happy future in retirement.