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FG, States Incur Over N450bn Pension Arrears Burden

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While the federal government  ows more than 14 months pension arrears, amounting to over N250 billion under the Contributory Pension Scheme (CPS) and Defined Benefits Scheme (DBS), 20 states  of the federation owe a cumulative N200  billion to their retirees. ZAKA KHALIQ presents industry experts’ perspectives on the way out.

While the achievements so far recorded under the Contributory Pension Scheme (CPS) known as the new pension system is commendable, however, the inability of Federal Government and some state governments to honour pension obligations of their respective workers as and when due has created N450 billion pension arrears for the two tiers of governments, both under the old and the new pension schemes.

To this end, retirees are groaning in pains, for they could not get what they have laboured for during their working career.

Federal government is already owing more than 14 months pension arrears amounting to N250 billion to its workers, while there  has been a decline in the budgetary provision for funding of the Retirement Benefit Bonds Redemption Fund (RBBRF) account and the remittance of monthly contribution from 2014 till date, meaning that retirees would not be able to get their monthly pensions.

Twenty states, especially, the financially strapped ones, are owing as high as 20 months pension arrears amounting to N200 billion,  while pensioners continue to live in penury, with some dying in the process.

Information from the National Pension Commission (PenCom) shows that as against the N91billion needed to offset pension arrears through RBBRF, only N50billion was budgeted for in the 2016 national budget, leaving a shortfall of N41.71 billion.

FG had earlier said it has released N41.5 billion to PenCom as pension arrears under CPS for the year 2014, 2015 and 2016.

Minister of Finance, Mrs. Kemi Adeosun who disclosed this also announced that N12.5 billion being outstanding for January, February and March 2017 has been settled based on 2016 appropriation, bringing the tally to over N54 billion.

States Not Remitting Pension Of Their Workers.

At the state level, only 10 out of the 36 states of the federation have commenced the remittance of contributions into the Retirement Savings Accounts (RSAs) of their employees, while eight have begun funding of their Retirement Benefit Bond Redemption Fund Accounts.

The remaining 26 states, it disclosed, were yet to commence the remittance of contributions into their workers’ RSAs or fund their accrued rights, as retirees in those states were left to their own faith.

A report from PenCom clearly disclosed that only 10 states out of the 26 states that have enacted their Pension Reform Laws and are remitting deducted funds into the RSAs of their employees.

Records also indicated that 673,116 contributors, who are workers of the various state governments, are registered with different Pension Fund Administrators( PFAs.). Lagos, Ogun, Kaduna, Niger, Delta, Osun, Rivers and Anambra states have commenced the remittance of contributions to six PFAs and are funding their accrued rights.

On the other hand, while most of the states are owing between one and three years pension arrears as a result of financial crunch that affected their inability to pay salaries and pensions, only few states are owing between two and 10 months pension entitlements.

Investigation reveal that each of the states owes between N500 million and N1 billion pension on a monthly basis, amounting to about N10 billion annually to some of the states that owed between one to three years pension arrears.

This, our correspondent learnt, translates to about N200 billion for the 20 States, while market observers believe the figure could be more, with some states owing up to three years pension arrears.

The aforementioned amount are arrears owed under the Defined Benefits Scheme(DBS) and the Contributory Pension Scheme(CPS).

The concerned states are; Benue, Kogi, Abia, Oyo, Ondo, Osun and Imo States.

Others are; Bayelsa, Delta Nasarawa, Niger, Taraba, Zamfara, Ekiti, among other States.

To this end, ex-workers of the affected states who have now retired are subjected to hardship after retirement as their pensions were not forthcoming as expected.

Moreover, our correspondent’s investigation revealed that 28 states of the federation are still struggling to fully implement the new pension scheme known as CPS, as only Lagos, Niger, Ogun, Osun, Delta, Rivers and Zamfara States have fully implement the scheme, with Jigawa, Kano, Adamawa,Akwa Ibom, Bayelsa and Edo States partially implementing the new scheme.

Ekiti, Imo, Ondo, Kogi, Oyo, Taraba and Kaduna States, it was learnt, have domesticated the CPS in their respective state law, but are yet to commence implementation even as Borno, Ebonyi, Cross River, Katsina, Kebbi, Gombe, Kwara, Nasarawa, Plateau, Sokoto and Yobe States are in the law making process.  Further investigation shows that Anambra, Abia, Enugu, Bauchi and Benue states are yet to enact any law to subscribe to the new pension scheme, thus, leaving their teeming civil servants to their fate after retirement.

Retirees’ Lamentation

Some months ago, several pensioners in Abia State protested  20 months arrears of pensions and 18 years of unpaid gratuity.

According to the chairman of Abia State Civil/Public Pensioners Association, Dr Emmanuel Okparanta, his members are owed several months of pension arrears. He said: “Pensioners are dying on daily basis as a result of delayed payment of pension and gratuity. Since the beginning of the year, only one month pension has been paid, even that of February, only few received the alert.” Okparanta said they had exhausted all avenues of trying to draw government’s and House of Assembly’s attention to the plight of members without  success.

Giving the breakdown, Okparanta said: “Unpaid pension arrears from January to October, 2017 (10 months), unpaid accumulated gratuity for 18 years, unpaid backlog of pension arrears for 2013 (12 months) 2014 (8 months) 2015 (10 months) 2016 (9 months)”. According to him, the government has also failed to key into the pension harmonization from 1999 to 2010, saying it is the reason some of the pensioners in the state still receive as little as N500 monthly.

On the other hand,  Ekiti and Oyo states pensioners have pleaded with Governor Ayo Fayose of Ekiti State and his Oyo State counterpart, Abiola Ajimobi, to pay their benefits to save them from untimely death. While some of the pensioners in Oyo State especially the primary schools retirees claimed they have not been paid for over 56 months in addition to gratuities since 2008, those in Ekiti lamented that beside the issue of unpaid pensions, their gratuities have not been paid since 2012.

These pathetic stories cut across virtually all the states of the federation and majority of the retirees affected are those under the old pension scheme, known as Defined Benefits Scheme(DBS).

Experts Reactions

Responding to this development, president, Pension Fund Operators of Nigeria(PenOp), who is also the managing director of AIICO Pension Managers, Mr. Eguarekhide Longe, urged state governments to prioritise the payment of pension of their workers as this will provide a secured future for their employees when they retire. He urged states that are yet to fully key into the new pension scheme to do so, saying, the transparency and accountability enshrined in the CPS makes it the best pension system to adopt.

Director, Centre for Pension Right Advocacy, Mr. Ivor Takor, while charging states governments to perform their civic responsibilities by honouring pension obligations of their employees, said, most illiquid states have suspended pension budget for now, instead, paying salaries without remitting the employer’s monthly pension contributions into their workers Retirement Saving Accounts (RSAs).

Takor, who is a former board member of the National Pension Commission (PenCom), noted that the pension liabilities of some states are so huge, that even if situation improves, it’s going to be difficult to offset them, wondering why some states could owe two to three years pension arrears.

He noted that the federal government was unable to remit pension contributions as and when due  since October 2015, even as state governments are defaulting in the payment of their workers pension contributions.

He observed that it was unfortunate that some state governors left office and made some segmented pension laws that only cover them and their office holders, some of them drawing massively from the purse of the state 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 current governors,” he advised.

Director-general, Lagos Pension Commission(LASPEC), Mrs. Folashade Onanuga, said in spite of the challenges the states are passing through, their inability to priortise pension was responsible for the pension backlog they owe.

“Even though there are a lot of things contending with state funds, I believe if there is a commitment towards pension, we will always find a way to pay it,” she noted.

“The inability to fund the Retirement Savings Accounts (RSAs) of civil servants at the federal and state levels on a regular basis is a concern for the growth of the pension assets,” according to director-general, Ondo State Pension Commission, Mr. Jaiyeola Olowosuko.

Former director-general, PenCom, Mrs. Chinelo Anohu-Amazu, while speaking on this development said the lack of, or low funding of RSAs of civil servants is a serious concern, especially at the state level, stating that PenCom has embarked on a serious awareness and sensitisation campaign in some states of federation in a bid to ensure prompt compliance and full implementation of the CPS.

Some states that opt out of the new scheme initially, she pointed out, are now putting mercenaries in place to subscribe to the scheme, while states which had earlier complied but are not funding the RSAs of their workers, have been persuaded to remit as at when due, although some of them she noted, cited the current financial crisis as a challenge that is limiting their ability to fulfill their pension obligation of workers.

Any Hope?

Whether this issue will be meaningfully addressed or not is a matter of time, but with the country just out of recession, experts say, it is going to be difficult for the two tiers of government to clear this backlog of pension in a short time.

However, it was learnt that the federal government is seriously considering the bond option to offset the over N90 billion accumulated pension liabilities owed workers under the Contributory Pension Scheme (CPS).

Meanwhile, the federal government has pleaded with pensioners to be patient following the delay in the payment of pension and death benefits to beneficiaries.

The Head of the Civil Service of the Federation, Mrs Winifred Ekanem Oyo-Ita, said:  “As a critical stakeholder in the pension administration in Nigeria, the Head of Civil Service is well informed of some of the challenges faced by pensioners. This is either as beneficiaries under the Defined Benefits Scheme (DBS) or the Contributory Pension Scheme (CPS). Worthy to mention is the legion of complaints and challenges faced by pensioners under the DBS.

“Similarly, under the CPS, what has recently been on the front burner is the non- payment of pension to officers who retired from 2015 arising from the delayed funding of their accrued rights. It is imperative to state that President Buhari, through the instrumentality of relevant government agencies saddled with responsibility of pension administration is working hard to evolve more ingenious solution to address the challenges, ‘’ she said.



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