The Urgency Of Implementing The Pension Scheme

Recently, the National Pension Commission (PenCom) disclosed that, as at December 2024, only 11 out of the nation’s 36 states and the FCT had fully implemented the Contributory Pension Scheme (CPS).

We recall that 21 years ago, in 2004, the Nigerian government enacted the Pension Reform Act (PRA), which presumably revolutionised pension administration in the country by introducing the Contributory Pension Scheme.

The law requires employees and employers to jointly contribute to a retirement savings account for each worker, making pensions more sustainable. The PRA initiative strives to ensure a sustainable pension administration while ensuring retirees receive their entitlements promptly.

By its provisions, workers who have spent their productive years in the service of a government or an organisation expect to get nothing short of a better life after retirement. Understandably, retirement is often characterised by ageing and age-related ailments, which require money to address. Under those circumstances, employers of labour in the public and private sectors consider it a duty of their employers to help them plan their lives after retirement.

It is, therefore, curious that only Lagos, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, Jigawa States, and the Federal Capital Territory have implemented the CPS two decades after the legislation came into effect.

It must be noted that Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba and Zamfara. have enacted the law to adopt the CPS but have yet to take significant steps towards implementation.

While these states’ moves are plausible, nothing beats full implementation. Therefore, merely taking steps through the enactment of a law is not enough. To the extent that a law is as good as its implementation, these states need to be reminded that implementation is the key and is long overdue.

Adopting the CPS would provide long-term benefits and address issues related to pension arrears and past service liabilities. The governors of states that have failed to implement the CPS are aware of this. We are appalled that more than 20 years after the PRA came into effect, states are still foot-dragging on this issue, making lives after retirement seem like a frightening nightmare.

It is a matter of conjecture that perhaps the fear of life after retirement and the uncertainty it portends are part of the reason, though not a justification, why some workers indulge in corrupt practices as they look forward to life after retirement. Some even dread retirement and falsify their service records to stay longer in employment for the fear of the unknown.  But that ought not to be the case. One way to help workers appreciate the prospect of retirement is by assisting them in preparing well for it. The intention of the CPS may have been to guide employers and employees through this process that could hopefully guarantee a joyful living after retirement.

The CPS replaced the old defined benefit scheme, which had many inadequacies, including a dearth of a vibrant regulatory framework, funding, mismanagement, and corruption. Because the old system relied on budgetary provision, there is the challenge of unpaid pension arrears, as the budgets are often insufficient to cover all retirees.

As should be expected, these challenges led to delays and, most often, non-payment of pensions. Workers who retired under the defined benefit scheme have some sad tales to tell as they contend with financial hardship. The government enacted the PRA to address this.

Sadly, despite its numerous positives, some states have continued to display a very lukewarm attitude towards fully implementing the CPS. Curiously, organised labour has not been sufficiently vigorous in demanding a full implementation of the PRA as if it is not a priority. If the mere fact that every worker is a potential retiree is not enough incentive for the nation’s labour leaders to insist on the complete implementation of the CPS, then nothing else will.

In our opinion, the task ahead of PenCom and other critical players is to ensure complete onboarding of all states and the FCT into the CPS. Fundamentally, there is no justification for the state government’s cold attitude towards fully implementing this plausible scheme.

PenCom must also take all necessary measures to ensure complete and unconditional compliance with the PRA by all labour employers, whether public or private. Workers deserve a decent life after retirement, guaranteed through a workable pension scheme. There is no substitute for the unconditional onboarding of all state and private labour employers into the CPS. It is an appropriate thing to do to ensure a healthy social life for pensioners.