Defending Pension Assets in 2018
President Muhammed Buhari’s administration has a singular additional responsibility to safeguard and protect the 14- year- old pension reform of 2004, as amended in 2014. I bear witness that in 2017, more than ever before pensioners and pension assets came under attack. The dramatic return of Mr. Abdulrasheed Maina, one-time chairman of the presidential Pension Task Force, last year and his televised audacious claim to “innocence” in the face of “cash, cash” ( his words!) trillion Naira pension scam further fueled the notoriety of the attack on pension assets.
Non- payment of the salaries understandably captures the public imagination. But most pensioners, especially in the states, truly constitute, the new non- working poor whose gratuities and terminal benefits and pensions are either denied or paid to no one even when they are already dead.
The point cannot be overstated; every working man and woman must get fatigue one day. Hence the need to prepare for the proverbial raining days by setting aside ample funds that will meet the subsistence needs of the aged workers.
With the collapse of the extended family support and traditional values of historic care, lack of concern for the aged, today’s workers can only ignore the issue of the pension scheme at the instance of their survival after work.
This explains why progressive modern states have defined Pension as a legitimate right of workers. Nigeria has rightly defined pension as a deferred payment, which both the workers and employers must set aside so that workers at old age will not depend on some charity ( in an increasingly uncharitable society!).
Pensioners should be treated as citizens with rights, not as destitute. Apart from corruption, what made the old public sector pension unsustainable was its non-contributory character. It is commendable that Pension Transitional Arrangement Directorate (PTAD) under the leadership of its Executive Secretary Executive Secretary Mrs. Sharon Ikeazor has credibly contained numerous challenges of the old Defined Benefit Scheme (DBS), reversing the complaints on non- payment of monthly pension and short payment of pension and gratuity among others.
PTAD has also dignified the old pensioners with orderly and pensionersfriendly verification exercises. 14 years ago, the Federal Government enacted the Pension Reform Act, PRA 2004 which commendably transformed pension system into a contributory scheme. In 2014, arising out of a comprehensive review of the implementation of the Reform Act, the PRA 2014 repealed the 2004 Act, signed into law by the then President Goodluck Jonathan administration on 1 July, 2014.
The Pension Reform Act 2014 reenacted the fundamental provisions of the repealed PRA 2004, which include the establishment of the senate Contributory Pension Scheme, uniform standards for pension administration as well as the National Pension Commission ( PenCom) as the sole regulator and supervisor of pension matters in Nigeria.
The mission of PenCom is “an effective regulation and supervision of the Nigerian Pension Industry to ensure that retirement benefits are paid as and when due”. In the 2014 amendments, new developments were introduced; upward review of the minimum rate of pension contribution from 15 to 18 percent of the total pay of the workers and new sanctions and penalties against infractions of the provisions of the Act.
The critical question is: how has PenCom fared in realizing its vision? The Contributory pension assets currently stand at N3.6 trillion, a remarkable pool through the contribution of some 7.31 million public and private sector workers - contributors. But the pension assets statistics is miserable compared to the potential of 60 million workforce, coverage inclusive of the informal sector outside of the existing coverage.
PenCom should up its vision as a “pension industry with 20 million contributors delivering measurable impact on the Economy by 2019. While some State Governments have made progress in the implementation of the Contributory Pension Scheme ( CPS), coverage is still low.
As at the third quarter of 2016, 14 years after, twenty- six ( 26) States Governments had enacted their pension Laws, with eleven (11) States reportedly at the Bill stages. Only ten (10) out of the 36 states had commenced remittance of contributions into the RSAs of their employees. Just eight ( 8) States had commenced funding their Retirement Benefit Bond Redemption Fund Accounts ( RBBRFAs).
While the federal agencies have complied with the Pension Act, it is discouraging that many federal ministries, departments and agencies of government refuse to remit deducted pension funds as and when due.
Success of CPS depends on remittance of the deducted pension funds by employers of labour in both the public and private sectors. It is worrisome that 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”.
This development has adversely affected the accrued rights of 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)”.
Some states even reportedly “have outstanding remittances dating back over two years”. The main strength of Pension Reform Act ( PRA) 2004 is that every person who worked in either the Public or Private sectors of the Federation, as well as the Federal Capital Territory, receives his/ her retirement benefits as and when due.
But again what do the pensioners receive in the face of double- digit inflation? There is the need for minimum pension just as we have minimum pay. This then raises the corporate governance of Pencom and its activism in defense of pension assets in 2018.
Pencom should be more vocal and visible to damn pension corruption whether in the old discredited Defined Benefit Scheme ( DBS) or the new Contributory pension scheme. Pencom must also promote pension literacy on a national scale through dissemination of pension industry market statistics just as the CBN does for the money market.
Last year, there were ill- informed private bills by some legislators aimed at encouraging withdrawals of some paramilitary agencies out of the Contributory Pension Scheme/Defined Contributions ( DC). This adverse development must necessarily task the Pencom officials on the need to be more active in defence of pension assets and above all ensure that retirees have value for their savings by promoting adequate pay. The key issue here is income adequacy for pensioners and increasingly pro- active Pencom.