Delta reduces pension liability from N181b to N50b

The Delta State government has disclosed that it reduced its pensions indebtedness of over N181b to N50b, thereby saving the state N95b after review of the outstanding obligations.

Immediate past Chief Economic Adviser to Governor Ifeanyi Okowa, Dr. Kingsley Emu, explained that the reduction resulted from joint reconciliation exercise with organised labour and pension consultants.

He said the faulty debt profile arose from the state’s transition from the old pension scheme to the Contributory Pension Scheme (CPS) using the N18,000 minimum wage benchmark.

Emu, who led the economic team, pension consultants, representatives of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) to a joint review of the pension liabilities in 2015 shortly after Okowa assumed office, said the parameters for the computations were wrong.

“In computing pension, we use the date of entry, birth and net pay. The earlier computation wrongly assumed that people retire at 45, instead of 60 years. So, it was building on pension, even while employees earn salaries. That amounted to double-counting, which was wrong.

“We inherited N181b as pension laibilities. We did a review with labour and it saved the state N95b. Less than N80b was left after reconciling with labour. It was also an error to have projected salary increase in the computation,” he stressed.

With the reconciliation, Delta State’s pension liability was reduced to about N80b. And as Okowa has been settling the pension liability in phases, Emu said the outstanding debt was now less than N50b, besides the average monthly payment of N600m to retirees.

Chairman, Delta State Council of NLC, Goodluck Ofobruku, who served in the committee, expressed labour’s satisfaction with the outcome of the review, saying labour also convinced the government to review the percentage of accrued pension paid to retired workers.

“The state’s Contributory Pension Law provided that when an employee retires, he should be paid at least 50 per cent of his last salary scale, but when the N7, 500 minimum wage was being used, workers received between 15 and 30 per cent of their last salaries. So, the government approved its implementation.

“This means that instead of the N7, 500 minimum wage used to calculate their entitlement, the government approved N18, 000 minimum wage for those who retired in 2011,” Ofobruku said, adding that Okowa had approved the difference, which labour had been clamouring for.