Despite enactment of the Contributory Pension Scheme (CPS) in 25 states of the federation, only five of them have been remitting workers’ pensions as and when due, LEADERSHIP check has shown.
The abysmal remittance level has marred the successful domestication the 2014 Pension Reforms Act(PRA) in these respective states.
This means that though the concerned states have keyed into the CPS, the level of implementation of the provisions of the pension laws means it is not translating to any benefit to workers in the states not remitting consistently.
In the 1st quarter 2022 report of the pension industry released by the National Pension Scheme (PenCom) recently, and accessed by LEADERSHIP, it listed the concerned states as Lagos, FCT, Osun, Kaduna, Delta, Ekiti, Ondo, Edo, Benue, Kebbi, Niger, Rivers, Ogun, Bayelsa, Kogi, Anambra, Abia, Taraba, Imo, Sokoto, Adamawa, Ebonyi, Nasarawa, Enugu and Oyo states.
Of the 25 states, only five states have been outstanding in the monthly remittance of both the employee’s and employer’s portions of the contributions. These include; Lagos, FCT, Osun, Kaduna and Delta states.
The remaining 20 states, LEADERSHIP learnt, are either remitting employee’s portion or employer’s portion, while some have outstanding pension payment of between one year to three years and more, even as some have stopped contribution for a very long time.
The affected states are currently struggling with huge unpaid salaries and have, therefore, suspended monthly pension remittances to the Retirement Savings Accounts (RSAs) of their workers.
Investigation revealed various degrees of non-compliance. While some states were not contributing their 10 per cent, thus creating a huge shortfall in the workers’ RSAs, some were deducting the 7.5 per cent from their workers’ salaries and refusing to remit same to the RSAs.
Similarly, some states have totally neglected both sides of the contributions while others have introduced some amendments to the existing federal legislation and yet refuse to implement their own law.
Consequently, several millions of workers have retired from the states’ civil service without receiving their full entitlements since the CPS regime.
While Kwara, Plateau, Cross Rivers, Borno, Akwa Ibom, Bauchi, Katsina and Yobe States have their pension Act implementation at bill stage, Kebbi and Rivers were only remitting employees’ contributions with Jigawa, Kano, Gombe and Zamfara states having other pension schemes.
Stakeholders are of the opinion that the non-implementation of a pension scheme in these states had pushed retirees into old-age poverty, with workers still in active service gearing up to retire into poverty, coupled with the fact that their family members will not get any compensation in the event of the death of the worker while still in service or out of service due to these non-compliances.
Speaking on this issue in an interview with LEADERSHIP, former head of Corporate Communications, PenCom, Mr Peter Aghaghowa, said the autonomy that states have over their own pension schemes was a challenge bedeviling the smooth operation of pension in states.
Aghaghowa said: “the implementation of pension in states is a different kettle of fish because of the autonomy they have over it. This is unlike what is obtainable in the federal pension scheme where we have a tight grip on.
“Unfortunately it is the workers that will bear the consequences of the default in remitting pension contributions because whatever benefit they are going to get at retirement is dependent on what is in the retirement savings account.
‘‘So imagine how it will be if money is not going into their retirement account now. However, PenCom has not been resting. We have been engaging the state governments on regular basis. We have even gone as far as paying courtesy visits to some of them and taking the issues to the state governors themselves.”
Speaking on what necessitated the reform of the pension industry, executive director of the Centre for Pension Right Advocacy (CPRA), Mr. Ivor Takor, said that the reform was necessitated by many problems that confronted both the public and private sector pension schemes.
He said: “The public sector, federal, states and local governments, operated the ‘Defined Benefits Scheme’ under the Pension Act 1990, which was of universal application in the whole public services in the country.
“The scheme was unsustainable due to lack of adequate and timely budgetary provisions and increases in salaries and pensions.
There were also demographic shifts due to rising life expectancy; thus, pensioners were beginning to live longer. Pension administration in the sector had been largely weak, inefficient, less transparent, very corrupt and cumbersome.
“The reform, therefore, sought to introduce measures aimed at developing a system that is sustainable and has capacity to achieve the ultimate goal of providing a stable, predictable and adequate source of retirement income for each worker in the country. In a nutshell, this was what led to pension reform, which gave birth to the pension industry as we know it today.”
Speaking on the way forward, Takor said: “The governors, past and present of the affected states, have demonstrably shown that they have no regard for the provisions of extant labour laws.
“Moreover, they ran, and continue to run, their states in grave violation or breach of the provisions of the constitution of the country, which they swore to uphold. Section 188(2)(b) provides that a governor or deputy governor may be removed from office if the holder of such office is guilty of gross misconduct in the performance of the functions of his office.”
Subsection 11 of the PRA 2014 provides that: ‘in this section, gross misconduct means a grave violation or a breach of the provisions of this Constitution or a misconduct of such nature as amount in the opinion in the House of Assembly to gross misconduct.’ Failure to come up with a law on pension for state’ workers and withholding of their pension is a grave violation or breach of the provisions of the constitution, which makes it an impeachable offense.”
Only 4 States, FCT Remitting Workers’ Pension Under CPS – PenCom
Meanwhile, the former director general, Lagos State Pension Commission (LASPEC) , Mrs. Folashade Onanuga, said the promise of Defined Benefits Scheme (DBS) is juicy and enticing to civil servants and politicians than the CPS.
Under DBS, she said, government contributes the total pension, but under CPS, the employer contributes 10 per cent while employee contributes 8 per cent of a worker’s monthly salary.
She, however, challenged PenCom to revisit the percentage of lump-sum under the new scheme to make it attractive to contributors, while imploring states to prioritise pension of workers as that is a saving scheme that will be beneficial for them at retirement.
At a recent seminar in Lagos, where she delivered the theme paper, she noted that aside the regulatory awareness, there must be fiscal commitment and consciousness, especially from state governments to ensure prompt compliance to the new pension scheme.
“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 said.
Onanuga urged pension fund operators to increase awareness at the state level to ensure that government enforce the PRA 2014 in their respective state.
