The poor quality of leadership at all levels in Nigeria is evident in recent reports of how the federal, state and local governments have been subverting the Pension Reform Act 2014 by withholding public sector workers’ contributory pension payments. While the National Pension Commission has confirmed deliberate under-payment of the mandated minimum contribution specified by law by federal ministries and agencies, and non-remittance of money deducted from workers by 13 states, diverse accounts show how 23 other states make no pension contribution for their employees at all.
To protect these workers’ future, uphold the law and ensure the sanctity of the increasing pension fund, the government, PENCOM, lawmakers, organised labour and other stakeholders should take immediate steps to compel full adherence to the law.
An infograghic published by PENCOM on the implementation of the Contributory Pension Scheme by the 36 states was disheartening. It showed that only 11 states and the Federal Capital Territory were fully compliant with the PRA by remitting stipulated contributions by employers and employees; two states were remitting only the employee portion; 13 other states had enacted laws aligning with the PRA but were not remitting monthly contributions; eight states had proposed bills to align, while some states had not made any move to legislate and log on to the scheme.
An independent report in this newspaper unearthed further disturbing details. While the PRA 2014 that replaced the Pension Reform Act 2004 raised contribution to the CPS from 7.5 per cent by the employer to a minimum of 10 per cent, and by the employee, from 7.5 per cent to eight per cent minimum, federal ministries, departments and agencies are still using the old template. Only 11 states are funding the individual Retirement Savings Accounts of their workers out of the 26 states that had domesticated pension reform laws.
This sordid state of affairs indicts the three tiers of government: it is gross irresponsibility on their part to jeopardise the future of hundreds of thousands of workers in a jurisdiction where there are no other social security safety nets. In other climes, such misbehaviour would have provoked a national outcry, parliamentary intervention and, possibly, workers’ protest. The National Assembly once again fails the litmus test of empathy with, and genuine representation of, the people, by ignoring this reckless fiddling with pension reform. It also exposes the organised labour movement as shallow and unable to grasp the overriding importance of funded pensions and the looming danger to the future wellbeing of workers. According to the International Labour Organisation, 48 per cent of all persons over pensionable age worldwide have no pension at all, while many of the 52 per cent that have contend with its inadequacy. Nigerians’ past and ongoing pain over pensions should have compelled more responsible behaviour by those in authority. Estimates of public sector pension funds stolen over the past two decades range from N2 trillion to N3 trillion assessed by a task force in 2013, whose head is himself wanted for allegedly stealing N190 billion of recovered loot.
With retirees perpetually scammed and collapsing in verification queues under the old pension scheme, the Olusegun Obasanjo government promoted reforms that ushered in the PRA, stipulating continuous contributions by employer and employee, eliminating thieving civil servants, professionalising pension administration and building up a nest egg of investible funds. The fund rose to N7.51 trillion by December 2017 with 7.92 million contributors today. PENCOM targets 20 million contributors by 2019.
States and LGs have no excuse: the CPS remains the best solution today to the pension crisis and a source of safe funds in an environment lacking social security, where lending to the productive sectors of the economy is thin and lending rates prohibitive. The government has been seeking ways to access more of the fund for infrastructure. Pension Fund Administrators had invested only N6.89 billion in infrastructure bonds by December last year.
Firm action is needed to knock the states into line. The labour movement would be better engaged in agitating for all states to join the CPS; that those that have done so should comply and all lawful forms of pressure deployed to compel full and prompt remittance of pension deductions by all government agencies, instead of demanding higher pay when 23 states owe salaries. It currently appears helpless since it is the government that should provide the strong enforcement arm that is also the chief defaulter. While it realised N2.98 billion in recovered unremitted contributions and penalties last year from private sector defaulters, 231 of which it also prosecuted, the regulator cited no recoveries from public sector offenders.
The National Assembly should be alive to its responsibility to protect Nigerians and grow the economy. A study by the Research Journal of Finance and Accounting credited Singapore’s funded pension scheme, the Central Provident Fund, characterised by mandatory and adequate contributions and covering all Singaporeans, with playing a critical role in its emergence as a successful industrialised economy.
It is incredible that Akwa Ibom and Bayelsa states, two major oil-bearing states, join Kwara, Cross River, Benue, Plateau, Borno, Bauchi and Katsina in the infamy of being outside the pension reform loop.
Reforming and downsizing the over-sized public workforce can no longer be put off; governments should cut waste and end luxury living at public expense by officials. Government should be lean and efficient and Nigeria should join the global trend to create a private sector-led economy.
