Contributory pension scheme: Why SGF, police, others oppose paramilitary’s exit
The Nigerian Police Force, the Office of the Secretary to the Federation (OSGF), the Nigerian Labour Congress (NRC) and the Trade Union Congress (TUC) have unanimously rejected the proposed legislation that will see all paramilitary establishment exit the contributory pension scheme (CPS).
Others who rejected the proposed amendment to the Pension Reform Act include the National Union of Pensioners, the National Pension Commission (PenCom), the Pension Funds Operators Association of Nigeria (PenOp), the National Insurance Commission, The Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) and among others.
On May 16, 2017, Rep. Oluwole Oke again sponsored a Bill seeking to “Amend the Pension Reform Act 2014 To Exclude Members of The Nigeria Police, The Nigerian Security and Civil Defence Corps, Nigeria Customs Service, Nigeria Prison Service, Nigeria Immigration Service and The Economic and Financial Crimes Commission from the Application of the Contributory Pension Scheme and Other Related Matters”.
The Bill which had passed its second reading came up for public hearing Thursday at the House of Representatives.
All the paramilitary leadership except the police have opted to go back to the defined benefit scheme where the federal government will bear their pension liabilities 100 per cent just like the military. They raised security issues and the hazard of their jobs as their major motivations.
The police have their own separate Pension Fund Administrator (PFA).
Over 30 interest groups made their submissions at the public hearing but the dominant proposition was that the Bill will jeopardize the economic and social benefits that the Contributory Pension Scheme had fixed since 2004.
The CPSA has over N6 trillion in assets which represents a huge departure from the N1.6 trillion liabilities the old defined benefit scheme accumulated with all the corruption that went with it.
The NLC President, Comrade Ayuba Wabba, who spoke on behalf of the labour unions, said on the surface the Bill looks good but deep down it is against the interest of workers.
He said several corruptions that characterized the defined benefit scheme which led to President Olusegun Obasanjo seeking for a more sustainable system that will ensure retirees get their benefits as at when due and in dignity after retirement.
He said the FG is still owing about N300bn in accrued rights of federal pensioners which it has been unable to fund due to lack of funds and wondered where the FG will get the resources to fund pensions 100 per cent for paramilitary officers.
The NLC said the Bill is an unnecessary distraction and should be thrown.
He asked the lawmakers should considered the financial implication and the economic cost of their propose amendment.
The National President of the National Union of Pensioners Dr. Abel Afolayan said while workers were suffering under the old pension scheme, other people were feeding fat on their monies and wondered why the National Assembly would want workers to return to that old tradition that was corruption ridden.
The Pension Transitional Arrangement Directorate (PTAD) Executive Secretary, Sharon Ikeazor, also kicked against the planned exit of paramilitary from the contributory pension scheme. She said the financial implications are huge and unsustainable considering that the FG is still battling to clear the backlog of accrued rights under the old scheme 12 years after.
The Securities and Exchange Commission (SEC) indicated that removing the paramilitary will jeopardize the huge investments with which the pension funds have been deployed in the capital market, FGN bonds and other investments instruments.
SEC also noted that the pension funds have been a useful pool of funds with which the FG can tap into to build viable infrastructure and depleting the funds will do no one any good.