Contributory pension scheme on the rocks

The continued corporate existence of Nigeria is an enigma in light of multiplicity of existential threats – socio-economic, political, ethno-religious, etc., all acting in sync on the body politic. On the socio-economic, President Bola Ahmed Tinubu, as presidential candidate of the All Progressives Congress (APC), repeatedly chanted the slogan, ‘let the poor breadth’, to underscore his concern for the less privileged in society.

Yes, the slogan resonated well for those who trusted his ability to deliver on the general good. It resonated then because the government at the time appeared oblivious of the reported 133 million Nigerians, multi-dimensionally poor, in dire strait. Now, watching Arise THISDAY LIVE on a Sunday, one of the discussants, in exasperation remarked, ‘let it not be said that this government is worse than Buhari’s’, but a manner of speaking, actually said so.

The compelling question is: Does the President care? Is he aware of suffering of the vast majority of Nigerians who are unable to eke out a living amid asphyxiating cost of goods and services? Is he aware of the plight of pensioners who are owed gratuity and pension, some for years and are aged?
On pension, the contributory pension scheme (CPS) was established by the Pension Reform Act (PRA) in June,2004, repealed and re-enacted in July 2014 with the primary objective, ‘to ensure that every person that worked in either the public or private sectors in Nigeria, including self-employed persons, receives his/her retirement benefits as and when due’. This was against the backdrop of failure of a preceding Defined Benefit Pension Scheme by which the total pension obligation to workers is borne by the employer characterised by delayed payment of benefits or no payment at all.

In contradistinction, for the CPS, the Act requires a minimum of 18 per cent of employee’s monthly emolument to be contributed in the proportion, eight and 10 per cent by the employee and employer respectively and remitted to the employee’s retirement savings account (RSA) for management by employee’s pension fund administrator (PFA).

Pursuant to effective implementation of the Pension Reform Act (2014), the National Pension Commission (PENCOM), provided a revised regulation on the administration of retirement and terminal benefits. Section 2.3.1 of the regulation states inter alia: ‘A retiree shall only be entitled to access his/her retirement benefits upon consolidation of his/her RSA’. 2.3.2 : ‘ The component of an RSA at retirement shall consist of accrued pension rights or pre-act benefits (if any) for employees that were in employment before the commencement of the CPS, employer/employee pension contributions, returns on investment and fixed portion of voluntary contribution (if any). 2.3.3 : ‘In consolidating the component of RSA under this section, the PFA shall take necessary steps to liaise with the employer and other relevant parties to ensure that all the entitlements of a retiree or deceased person is credited to his/her RSA for the purpose of determining the final balance before processing benefits’. 2.3.4 : The Commission shall be responsible for the computation of accrued pension benefits due to retiring employees of FGN Treasury-funded MDAs and shall advise the Central Bank of Nigeria (CBN) accordingly’. 2.3.5: ‘The CBN shall credit the accounts of PFAs maintained with the respective PFCs ( Pension Fund Custodians) to enable the PFAs credit the RSAs of the retirees’.

The spirit and letter of this regulation, aimed at facilitating full implementation of pension benefits of retirees are clearly laudable. General Theophilus Danjuma (Retired), in a recent remark at a book launch commended the military authority for timely and regular payment of his pension under the military pension scheme. But outside the military, it is lamentation for many pensioners, some on abysmally low pension, un-reviewed for several years.

For retirees on contributory pension scheme, payment of benefits was envisaged by the Act to be seamless, without encumbrances. In recent years there have been delays in Federal Government failing to provide the defined accrued pension benefits of employees for the period before commencement of the scheme in 2004 thereby making it difficult for PFA to comply with provisions of sections 2.3.2 and 2.3.3.

This is agonising for retirees in this category who have to wait for periods, of over a year for payment of benefits by PFAs without any monthly pension. Is President Tinubu aware that in this category are professors who retired at 70 and other senior academics /non-academics whose savings have been grossly devalued by spiral inflation on goods and services? Is he aware that these professors are on a terminal salary that was widely publicised in the media as ludicrously infra dig and un-sustaining under the Buhari administration that showed no concern?

Regrettably, the political class, in the executive, legislature and now the judiciary are ridding above inflation on humongous emoluments and are naturally not speaking to Mr. President, and if they do, certainly not openly. Why has Mr. President not considered it expedient to extend to the academia increases in emoluments as it was for the judiciary? Would the government wait for industrial action by academics to do so? President Tinubu would do well to direct release of all outstanding FGN obligations on accrued pension rights to PENCOM for expeditious payment of benefits to retirees by PFAs.

In all this, the systemic failure of governance, in manifold manifestations, is structural and should be addressed. The advocacy for true federalism to deal with governance dysfunctions as recently expressed by the Patriots is, unarguably, a patriotic call and President Tinubu would do well to heed the call to save Nigeria on the precipice.
Professor Eromosele is former Deputy Vice- Chancellor (Academic), Federal University of Agriculture, Abeokuta.