Funding pitfalls that affected the Defined Benefit Scheme (DBS) may threaten the Contributory Pension Scheme (CPS) if the Federal Government does not pay accrued pension rights, experts have said.
They spoke at the 2015 Nigerian Insurance and Pension Awards organised by Inspenonline in Lagos.
The experts condemned a situation where state governments and the private sector do not remit or contribute to the Scheme as expected.
According to the National Pension Commission (PenCom), from 2014 to date, there has been a decline in budgetary provision in funding the Retirement Benefit Bonds Redemption Fund (RBBF) account and the remittance of monthly contribution. The sum of N20.07 billion is required to pay outstanding accrued benefits to deceased and mandatory retirees of the Federal Government for October to December, last year, and N79.16 billion has been computed as the arrears of 15 per cent pension increase owed to 79,961 Federal Government retirees under the CPS as at December 2014.
PenCom noted that N50.20 billion was provided for this year’s FGN Budgetary Appropriation for the Retirement Benefits Bond Redemption Fund (RBBRF) Account presented to the National Assembly, compared to the Commission’s projection of N91.91 billion, a shortfall of N41.71 billion.
A former Pencom director, Ivor Takor, asked the Federal Government to show will to implement the Pension Reform Act (PRA) 2014.
He said that the government’s inability to fund pension accrued rights was seriously affecting the payment of pensions as at when due.
He however urged the government to increase the monthly pension remittances from 15 per cent of the workers’ total emolument to 18 per cent as stipulated in the Act.
He said it was important for the state governments to pay the salaries of their workers regularly because if it was not consistent, it would not be possible for them to remit the workers’contributions to the pension fund.
He said: “The Federal Government should show moral and political will in complying with the provisions of the Pension Reforms Act 2014. They should commence the implementation of the increase in pension contribution from 15 per cent to 18 per cent.
“It is saddening that some states have failed to embrace the CPS aside the Lagos State that is faithfully remitting employees’ contributions as stipulated by law. The greatest problem lies with the state.
“PenCom said only 10 states have keyed into the CPS, but if you look critically, it is only Lagos State that is somehow implementing the new pension scheme. Yes, the states have commissions, bureaus and laws, but are they contributing as and when due?
“The situation is that majority of the states don’t have laws. This means the workers have no form of pensions. If they can’t set out fund, they can’t pay salaries, how will they pay pensioners? That is the situation that needs to be addressed holistically and it’s unfortunate that some of these governors left office and made some segmented pension laws that only cover them and their office holders, some of them drawing massively in the name of pension to build houses and cars and did not make laws for the state workers. This is very bad, it’s immoral and it should be addressed by governors,” he said.
Director-General, Ondo State Pension Commission, Jaiyeola Olowosuko, said the funding challenge was affecting the success of the Scheme.
He is worried that just like the DBS, the CPS is also witnessing funding problems.
