The Pension Fund Operators Association of Nigeria (PenOp) has faulted plan by the Nigeria Police Force (NPF) to exit the Contributory Pension Scheme (CPS) for the Defined Benefits Scheme (DBS).

The group said the ‘unsustainable’ move would require N3.5 trillion yearly to fund pensions for approximately 400,000 personnel, in a budget already burdened by deficits.

The position was enunciated by Chief Executive Officer of PenOp, Oguche Agudah, in Abuja, at the public hearing on a bill for an Act to establish a police pension board, cautioning that it would erode the value of assets and destabilise the financial system.

Agudah argued that transitioning to the DBS would not solve the police’s challenges, but “will, rather, create deeper financial and operational challenges for the country’s financial system.”

According to him, reverting to the DBS model, which relies on government budgetary allocations, would lead to fiscal unsustainability and delayed payments for pensioners.

“It will also divert resources from other critical needs, including minimum wage adjustments and public services,” he said.

Agudah explained that pension funds under the CPS were currently invested in bonds, infrastructure and other critical sectors that contribute to the country’s economic growth.

He said the CPS currently holds over N21 trillion in assets and remains a critical component of the country’s economic infrastructure.

The CEO stated that maintaining the police within the CPS would ensure long-term sustainability, equity and economic stability.

According to Chairman of the Senate Committee on Establishment and Public Service, Cyril Fasuyi, the bill was to create an enabling environment for retired police officers.