After nearly 20 years of operation, it is disgraceful that public sector workers in the various states face a bleak future because most subnational governments are not faithful in the implementation of the Contributory Pension Scheme. This became topical again after a fresh media report that exposed the infidelity of the state governments to the scheme, aggregating their backlog to about N400 billion. This threatens the welfare of states’and local governments’ public sector workers post-retirement. Therefore, the governors in the affected states should reverse the trend and prioritise the timely remittance of workers’ pensions.
In its 2023 second-quarter report, the National Pension Commission said only 25 of the 36 states have joined. This is ridiculous. It leaves the fate of workers in 11 states hanging precariously. They are Bayelsa, Abia, Kogi, Bauchi, Enugu, Imo, Taraba, Sokoto, Ebonyi, Nasarawa, and Oyo. Of the 25, only six and the Federal Capital Territory are faithfully remitting the pension contributions into their workers’ individual Retirement Savings Accounts with their Pension Fund Administrators. The fully compliant states are Osun, Kaduna, Lagos, Ekiti, Edo and Ondo.
In a country that lacks social safety nets, this is very disturbing. Of the 25 that have joined the CPS, remittance into the workers’ RSAs is inconsistent in 18. While some states are deducting pensions from their employees’ salaries, they are not remitting same into their workers’ RSAs.
To bypass the PRA, some states opted for the Contributory Defined Benefits Scheme. The Pension Reform Act came into being in 2004 to stamp out the agony associated with the defunct Defined Benefits Scheme.
This is a clear violation of the intention of the law that any organisation with three or more employees must sign on to the PRA. It aborts the objective of the pension reform to make retirement less arduous for those who slaved in employment.
In contrast, most governors, after serving for a maximum of eight years, enjoy jumbo pensions for the rest of their lives. Apart from the hefty financial annual rewards, some states would build mansions for them at home and Abuja, replace their fleets of vehicles regularly, give them millions of naira for their medicals and pay for their domestic workforce. Some governors retire to the Senate or become ministers, but public employees retire into penury. This is condemnable.
Out of the morass of the Fourth Republic, the pension reform stands out as a progressive win. Instead of the unfunded DBS that accommodated only public sector workers who suffered and died in queues, the CPS includes private sector employees. A few years back, an amendment incorporated artisans. As of June, PenCom noted that its micro pensions plan had attracted 97,000 contributors to the tune of N435 million.
In all, enrolment in the scheme grew from 2.54 million accounts in 2007 to 10.02 million accounts in July with a pot of N17.37 trillion. These days, retirement account holders exit from work with something to fall back on. In comparison, Statista cites the United States ($40.02 trillion), the United Kingdom ($3.75 trillion), Canada ($3.21 trillion), Australia ($2.29 trillion) and the Netherlands ($2.06 trillion) as having the top five highest pension assets in the world in 2021.
Therefore, employees of the federal, state and even private companies must interrogate their employers to protect their future.
The ball is in the court of the Nigeria Labour Congress, the Trade Union Congress, and others like the transport unions to employ all legitimate weapons to compel governors to dutifully implement the PRA, which was amended in 2014 at a ratio of 10:8 per cent to be paid and remitted monthly by the employer and employee respectively.