The federal government and the 36 States of the country, including the Federal Capital Territory (FCT) are yet to implement the new 18 per cent monthly pension contributions of their workers, four years after the Pension Reforms Act (PRA) 2014 was established, LEADERSHIP can now reveal.
Although, 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, investigation revealed that none of the 10 states have so far commenced implementation of the new monthly pension contribution.
The PRA 2014 had since replaced the PRA 2004 that allowed 15 per cent monthly pension contribution to be shared between an employee and an employer at 7.5 per cent each. Unlike the PRA 2004, PRA 2014 mandates an employer to contribute 10 per cent on behalf of its employees while the employee contributes eight per cent of his monthly salary, making a cumulative 18 per cent monthly contribution paid into the RSA of the workers.
However, findings revealed that the two tiers of government are still using the annulled PRA 2004 to remit the pension of their workers on a monthly basis, thereby, short-changing the employees in the process. This, it was learnt, will also reduce investment income that is supposed to accrue from investment of their pension contributions by Pension Fund Administrators (PFAs).
Investigation shows that the new increase places further financial burden on employers of which, in this case, are Federal and state governments who are not ready to shoulder this additional financial responsibility.
Insider source revealed that the federal government, through the Ministry of Finance, is aware of this increase but has refused to make budgetary provision for it, for fear that it will jack up government expenditure at a time it is still battling to offset its pension arrears.
With some states still battling salaries and pension arrears, insider source revealed that they are not ready to commence the new monthly contributions any time soon, especially, with most states yet to domesticate the PRA 2014.
However, LEADERSHIP findings revealed that about 70 per cent of players in the private sector have commenced implementation of the new 18 per cent monthly pension contribution, meaning that private sector employees could have more in their RSAs at retirement than their counterparts in civil service.
A credible source in the pension industry, who wants to be anonymous, said since federal government has failed to make provision for such increase in the national budget, there is no way implementation can commence, stating that, the economic scenario of the country plays a big role in the failure of the government to comply with this new pension contribution.
Speaking to LEADERSHIP yesterday, the director, Centre for Pension Right Advocacy (CPRA), Mr. Takor Ivor, said, it is rather unfortunate that the federal government, as the maker of the law, is not complying with it, urging the trade unions to mount pressure on government to comply with the new 18 per cent monthly pension contributions.
If the trade groups refuse to push for enforcement, he said, they are only short-changing themselves and that at retirement, they won’t have much in their RSAs as opposed to workers whose employers complied with the new directive.
Most states, he said, are yet to adopt the Contributory Pension Scheme (CPS) and as such, could not have complied with the new directive, pleading on states to domesticate and adopt the new pension scheme.
Meanwhile, the president, Trade Union Congress of Nigeria(TUC), Bobboi Kaigama, had in 2017, said the labour union has always been on the board of the National Pension Commission(PenCom) and that it was concerned about the under payment into the workers’ RSAs.
He, however, expressed worry that the board of PenCom had not been constituted for a long time, a development he noted was dragging back many decisions that should have been taken.
Kaigama attributed the failure of the government to fulfill its obligation to the workers to the inability of PenCom to play its role due to the failure to constitute its board.
The TUC president equally called on the government to make gratuity compulsory for all retirees in the public sector in order to augment the lump sum they were entitled to at retirement.
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