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States And Pension Payment



A recent report by the National Pension Commission (PENCOM)  shows that 30 states across Nigeria’s six geopolitical zones are yet to fully implement the federal government’s Contributory Pension Scheme (CPS).

The report hinted that only seven states, including the Federal Capital Territory (FCT), have fully implemented the scheme with regular and up-to-date remittance of pension contributions, the establishment of a pension bureau, and enactment of pension law.

The report issued by PENCOM’s spokesman, Peter Aghahowa, listed the complying states as at September 2019 as Kaduna, Anambra, Ekiti, Ondo, Edo and Delta.

In the North Central zone, only the FCT has established a pension bureau and is up-to-date with remittances of pension contributions, while Benue, Kogi and Nasarawa have enacted CPS laws but have no pension bureaus in place. Although Niger State has established a pension bureau, it suspended the implementation of the CPS in April 2015 and has since stopped remitting pension contributions. Kwara and Plateau States are yet to enact the CPS law.

According to the report, five states in the North East zone: Borno, Adamawa, Bauchi, Gombe and Taraba, are yet to commence remitting pension contributions, while Yobe is still operating the Defined Benefits Scheme. Also in North East zone, only Adamawa, Gombe and Taraba have enacted CPS laws but none has established a pension bureau.

In the North-West Zone, only Kaduna has fully implemented CPS with regular and up-to-date remittance of pension contributions, establishment of pension bureau, registration of employees with PFAs and consistent funding of accrued rights with five per cent of total monthly bill. Of all the North-West states, only Katsina has neither enacted CPS law nor established pension bureau, while Jigawa and Kebbi which had pension bureaus were only remitting portions of the pension contributions.

Kano State, without a pension board, deducts pension contributions under the management of the board of trustees but is yet to transfer the pension asset to a licensed pension operator. In the South East region, PENCOM said that except for Anambra State which fully complies with the implementation of the CPS scheme, Abia, Ebonyi, Enugu and Imo were defaulting. The commission said that Ekiti and Ondo States in the South West region were remitting pension contributions while Ogun and Osun had huge backlogs. Lagos did not provide information on its remittance, while Oyo was yet to commence the remittance of pension contributions.

PENCOM stated that all the South West states had enacted CPS laws and established pension bureaus. In the South-South, Edo and Delta States are up-to-date in their pension contributions, while Rivers and Bayelsa were yet to commence the remittance of pension contributions. In Rivers, contributions made under the repealed law were being refunded to exempted employees, while Akwa Ibom and Cross River did not even have a CPS law, PENCOM said.

Fifteen years after the contributory pension scheme came into being through pension reform act of 2004, the scheme is still suffering low penetration as many public and private organisations are yet to key into it.

Confronted with the monstrosity of corruption in the old pension fund management – the Defined Benefit Scheme (DBS), the Olusegun Obasanjo administration carried out a fundamental overhaul of the system to enable it meet up with its core responsibilities to Nigeria’s retirees. This effort became institutionalised in the Pension Reform Act of 2004, which introduced the innovation of the Contributory Pension Scheme (CPS) and the establishment of the National Pension Commission (PenCom) as the pension fund manager through pension fund custodians (PFCs) and pension fund administrators (PFAs). By August this year, the assets had risen to N9.4 trillion, said Aisha Dahir-Umar, the PenCom acting director-general.

It is worrisome that some state governments have not subscribed to the contributory pension scheme. This, in our view, calls for urgent attention because a thick black cloud hangs precipitously over the future of public sector workers in many states of the country.

We understand that some defaulting states give as excuse the current poor state of the economy. But even during the buoyant years and long before the oil income nosedived in mid-2014, these state governments were not remitting the deductions from workers’ salaries into their RSAs.

As a newspaper, we urge PENCOM to wield the big stick on the non-compliant states and private companies defaulting in remitting pension payments after deducting from their salaries  by sanctioning them regularly.