Respite for pensioners as Kaduna pays contributory benefits

Kaduna State government has started paying its retirees their pension benefits for the first time under the Contributory Pension Scheme (CPS).

The development of the CPS in the state has not been a smooth ride with the state government at one time repealing the CPS law even as backlog of unpaid pensions mounted.

The CPS was introduced in Nigeria in 2004 but the scope of the Pension Reform Act (PRA) 2004 was restricted to federal and FCT employees as well as private sector organisations with five or more employees.

An amendment to the act in 2014 extended the coverage of the CPS to states and local governments.

The state government keyed in with the enactment of the CPS law in 2007 and the start of contributions in March, 2008.

Nine years after the start of the contributions, the Kaduna State Pension Bureau kicked off payment of pension benefits to contributors.

At a ceremony to mark the launch of the commencement of payment of the pension benefits under the CPS in the state held recently, the Executive Secretary of the Bureau, Dan Ndackson, said as at February, 2017, there were 9,655 pensioners in the payroll of state pensioners and 6,728 in that of local government councils compared to 11,531 and 6,734 respectively in the payrolls as at July, 2015.

A find by Daily Trust reveals that Kaduna State has one of the juiciest pension payouts under the contributory scheme as its contribution rate is 20 per cent of total emolument, being the highest rate by any employer in the country.

Information from the state pension bureau showed that the state has put the Group Life Insurance Policy in place for its employees and the state public sector has been opened to all Pension Fund Administrators (PFAs) to scout for Retirement Savings Account (RSA) business.

Daily Trust also learnt that the Retirement Benefits Bond Redemption Fund (RBBRF) Account has been opened at the CBN by the state.

In his speech at the event, Ndackson revealed that the bureau had engaged a firm of actuarial valuers, HR Nigeria Limited, to conduct an actuarial valuation to determine the pension liabilities that accrued in favour of the state’s employees in accordance with the requirements of the state pension law.

Speaking at the event for the maiden payouts, the Director General of the National Pension Commission (PenCom), Chinelo Anohu-Amazu, said the current economic challenges in Nigeria provide an opportunity to implement strategies for effective financial management by the states.

She said the huge liabilities which usually build up in the old pension Defined Benefits Scheme (DPS) could be mitigated by the adoption and implementation of the CPS by states in the federation.

“The CPS provides a mechanism for eliminating these liabilities while the regular contributions into the scheme are undoubtedly less burdensome,” the DG said.

Over the years, the Kaduna State government had struggled to comply with the CPS, but the implementation was not in total conformity with the provisions of the law.

In many cases, the employer, both at the state and local governments, did not remit the employer’s portion of the contribution into the RSAs of their employees as provided in the law.

“For those whose contributions were deducted, not the whole amounts were remitted into the employees’ Retirement Savings Accounts (RSAs) in some cases. The savings to fund accrued rights of employees were not made as required under the law,” the state’s pension bureau chief said.

The implantation setbacks led to the repeal of the 2007 State Pension Law as amended and a new State Pension Law named the Kaduna State Pension Reform Law, 2016, which was enacted in March, 2016.

Even with the new law, and the progress made so far as evidenced in commencement of payment benefits, total compliance with the pension law in Kaduna State remains far from total compliance.

“One of the major challenges facing the implementation of the CPS in Kaduna State is ignorance,” Ndackson.