Introduced in 2004, the Contributory Pension Scheme (CPS) was expected to fully address the challenges of the old defined benefit. But in reality, low contribution is threatening the implementation of the laudable amended Pension Reforms Act 2014, COLLINS OLAYINKA reports.

The cries over non-payment of pensions were the singsong of pensioners before the advent of the CPS in 2004, which gave birth to the Pension Reform Act.

With the new pension law introducing sweeping reforms and the pay-as-you-earn (PAYE) system thrown into the system, the hitherto agitation over non-payment of pension benefits has changed to paltry payment under the CPS.

Perturbed by the cacophony of voices on the harrowing experiences of pensioners, the President Olusegun Obasanjo administration set up the Fola Adeola Committee on Pension. The committee went on to recommend the introduction of a contributory pension scheme, a panacea that would end the misery of pensioners.

From the outset, it was clear to some stakeholders that the abolition of gratuities from the pension lexicon would be problematic shortly.

Civil servants have continued to groan, albeit silently, over this matter; ditto the Nigerian Police Force (NPF), which is now voicing out their frustration over the paltry sum they are paid upon retirement.
On the other hand, there is the argument that while the concerns regarding low pension benefits are germane and valid, exiting the CPS would not be in the interest of the serving and retired personnel of the Force.

Indeed, several concrete steps have been undertaken and practical measures have already been proposed to the Federal Government on how to address the concerns within the CPS framework, which is expected to assuage the agitators.

The stakeholders, comprising the National Pension Commission, Police Management and NPF Pensions Limited, have been vocal on the concerns that have been raised. They have equally proffered solutions on ways and means to enhance the pension of police officers – both serving and retired.

One major disturbance around the low pension of Officers is the issue of salary structures. Pension payment depends solely on the salary; hence, if the salary of officers is not enhanced, the pension adequacy will continue to linger. With this reality, key stakeholders are advocating workable solutions that include an increase in pension contribution rates, additional post-retirement support and implementation of periodic pension reviews accommodated in the CPS.

To a large extent, the CPS has reasonably addressed all the anomalies that characterised the defunct defined benefit scheme (DBS) except the issue of low pension payments.

CPS has brought about sustainability through the programmed withdrawal, and retirees under the CPS, including police retirees, get their pension as and when due from the 14th to 18th of every month, except when it falls on a weekend.

CPS has also addressed the issue of affordability, as all retirees have their retirement savings accounts (RSAs) from where they are paid their monthly pension after retirement, with interest accruing on their balances from the return on investment.

The only pending issue, which is still being addressed, is the adequacy of pension payments. This is the bane of the officers’ agitation, which is a result of the officers’ poor remuneration.

Policemen who are agitating are oblivious to the danger inherent in exiting the CPS. The proposed Police Pension Board could set a dangerous fiscal precedent and reintroduce the economic inefficiencies and payment delays that plagued the defunct DBS.

Returning to the DBS would lead to fiscal burdens, economic instability and likely delays in pension payments, which the CPS was created to address through the amended Pension Reform Act (PRA) 2014.

Also, poised to find a lasting solution to the issue of low pension pay amongst some categories of civil servants, the Federal Government is set to re-introduce the gratuity scheme for workers. Retirees will now receive 100 per cent of their last gross annual remuneration from the government as gratuity. This is a move that will cost the government N35 billion yearly.

This plan was announced by the Director-General of PenCom, Omolola Oloworaran, while on a courtesy visit to the Head of the Civil Service of the Federation, Didi Esther Walson-Jack.

The gratuity scheme is under Section 4(4)(a) of the Pension Reform Act (PRA) 2014.
The estimated cost of N30 billion yearly, she explained, was based on the calculation of 100 per cent of the last gross annual remuneration of retiring Federal employees, which has been confirmed by the 2024 stakeholders committee on outstanding pension liabilities.

Also, the President has approved N758 billion to clear the longstanding pension liabilities of government workers. This will herald a significant boost for all retirees’ pensions, including those already on a pension.

When implemented, this will address the issues of all pension arrears, shortfalls and in-applied pension enhancement from 2007 to date. Pension is likely to increase upwards on average between 10 to 50 per cent from what is currently obtainable.

In the same vein, effective June 18, 2025, monthly Pension payments will rise from N8.3 billion to N11.9 billion, benefitting the over 233,000 retirees on Programmed Withdrawal under the CPS.

Accrued Pension rights of workers before 2004, when the CPS debuted, will now be computed and paid into their RSAs as a one-time payment so that they can earn investment returns on the funds, which will be an additional boost to their RSAs’ balance.

Before now, workers used to wait for up to two years for their accrued pension rights. But now, the accrued right for retiring workers has been paid till March 2025, and in the weeks ahead, payment is expected for retiring workers till July 2025.

On his part, the national chairman of the Nigeria Union of Pensioners Contributory Pension Scheme Sector, Sylva Nwaiwu, said the pension scheme should be amended to encourage increments in pension.

Also, Sani Mustapha, the executive director of the Contributory Pension and Happy Retirement Advocacy (COPEHRA), observed that the pension scheme has proven resilient, transparent, and sustainable.

He added that it also effectively addressed the shortcomings of the previous pension system.
He maintained that keeping the NPF within the CPS aligns with best practices in pension management, ensuring their financial security while supporting Nigeria’s broader economic development.

The need for adequate pension for the Police is a rightful thing to do, Vice Chairman/Chairman Human Rights Committee of the Nigerian Bar Association (NBA) Epe Branch and Director, Centre for Pension Right Advocacy, Ivo Takor, has said.

Takor, who is also a former President of the Non-Academic Staff Union of Educational and Associated Institutions (NASU), stated that adequate pension and retirement benefits to officers and men of the NPF are rooted in the fundamental principles of social justice, equity, constitutionalism and national security.

“Section 173(1) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) provides that the right of a person in the public service of the Federation to receive pension or gratuity shall be regulated by law. This unequivocally places members of the Nigeria Police Force who are constitutionally recognised under the Third Schedule, Part I, Item L as entitled beneficiaries of pension rights, equal in stature to other public service employees,” he explained.

Takor observed that the doctrine of non-discrimination and equal protection under the law requires that police officers, who are public servants, should not be subjected to inferior retirement conditions when compared to their counterparts in the armed forces.

He added that the denial of adequate pensions to police personnel commensurate with what is obtained in the armed forces amounts to a violation of the constitutional guarantee of equal treatment under the law (Section 42 of the 1999 Constitution).

He further disclosed that globally, policing is recognised as an occupation requiring early retirement benefits due to the physical and mental toll it exacts.

However, in granting Policemen and women dignified pensions, Takor cautioned against their exiting the pension contributory scheme, saying, “Nigeria’s law enforcement officers deserve more than just gratitude they deserve a retirement system that is transparent, secure, and sustainable. That is why the current Contributory Pension Scheme (CPS) is the right path for managing police pensions, rather than returning control to the police command structure.”

He submitted that under the CPS, pension funds are managed by licensed Pension Fund Administrators (PFAs) and regulated by the National Pension Commission (PenCom).

“This independent oversight ensures that funds are professionally handled, with regular audits, clear reporting systems, and safeguards against mismanagement,” he added.