Some of the 25 States including the Federal Capital Territory (FCT) who have enacted pension laws on the Contributory Pension Scheme (CPS), have paid N236.7 billion pension contributions into the Retirement Savings Accounts (RSAs) of their respective workers in the last four years, it was learnt.
The pension contributions, by design, is to ensure every worker captured in the new pension scheme known as Contributory Pension Scheme(CPS), has a good retirement life, leveraging on the monthly contributions he or she and employer made cumulatively, while in active service.
The Pension Reforms Act (PRA) 2014 makes provision for employees to remit eight per cent of his or her salary and employer is to make 10 per cent of his or her worker’s salary, making a cumulative 18 per cent that should be remitted into the RSA of each worker on a monthly basis.
However, States who have made most of these pension contributions for their workers, according to LEADERSHIP investigation, include; Lagos, FCT, Osun, Kaduna, Ekiti, Edo, Delta and Anambra.
Confirming this development at the ‘3rd Quarter 2024 Consultative Forum for States and FCT’ sponsored by the National Pension Commission(PenCom), in Alausa, Ikeja, Lagos on Wednesday, the acting director general, PenCom, Ms. Omolola Oloworaran said, the N236.7 billion remitted occurred between January 2020 and the second quarter of 2024.
According to her, “based on our record as at today, 25 States including the FCT have enacted pension laws on the CPS, while six are at the Bill stage. Six other States have adopted the Contributory Defined Benefits Scheme (CDBS), a hybrid of the CPS and DBS. However, only eight States are fully implementing the CPS, out of the 25 States that have enacted pension laws.”
Disclosing the benefits of adopting CPS to State governments, Oloworaran noted that one of the significant benefits of adopting the CPS is access to accumulated pension funds for infrastructural development through issuance of state bonds.
She disclosed that five States, including Lagos, Niger, Osun, Ekiti, and Delta States have successfully leveraged the platform of CPS to issue state bonds that were subscribed by pension funds. Notably, the Lekki-Ikoyi Bridge in Lagos was partly financed by pension funds, she said.
Promising that the commission, under her leadership, is committed to ensuring that all retirees, from both the public and private sectors, receive their retirement benefits as and when due, he added that the commission shall focus on 26 States with CPS or CDBS laws, but are yet to commence implementation.
“Our focus will be to constructively engage these States in a sustained manner and work towards expanding the coverage of CPS at the subnational level. We will also intensify our efforts with relevant State Government Agencies to resolve the backlog in accrued rights payments to CPS retirees. In addition, we are working to ensure that pensioners under the CPS and other pension arrangements benefit from pension increments provided for in the Constitution of the Federal Republic of Nigeria, 1999 (as amended),” she added.
As part of our strategy towards pension reforms in greater number of States, she encouraged some flexibility in the adoption of Contributory Pension arrangements in a manner that suits each state.
She proposed that states adopt the CPS for new employees and/or those employed for 10 years or less as this would substantially reduce the burden of accrued pension rights payable upon retirement under the CPS.
Saying the Forum was last held in the 4th quarter of 2019, she was delighted to reconvene the Forum, promising continuity in the organisation of the quarterly consultative forum.
Similarly, the Head of Service (HoS), Lagos State, Olabode Agoro said, it is very critical that pension administration be given serious attention to safeguard workers’ contributions towards their retirement , saying, “In Lagos State, we also recognize the need for protection of workers’ rights and as such, channel our commitment to promoting transparency, accountability, and efficiency in pension administration and management.
Agoro, who was represented by the permanent secretary in the Head of Service, Sunkanmi Oyegbola, said, “the welfare of our workforce and the retirees has always been our priority, and we have continually aligned our policies with the aims of the Contributory Pension Scheme (CPS) under the Pension Reform Act.”
Lagos State was one of the pioneer States to adopt the Contributory Pension Scheme, and since then, we have taken steps to ensure the full implementation of the Scheme across all Ministries, Departments, and Agencies (MDAs) as we are committed to ensuring that all pension contributions are regularly remitted, and retirees receive their entitlements promptly and without delays, she pointed out.
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