*Photo: Professor Kehinde Yusuf *
The image of the miserable government pensioner has existed for a very long time now in Nigeria. An extreme manifestation of it has been that of pensioners collapsing, fainting or dying while in queues awaiting verification for the processing of their meagre entitlements years after the effective dates of their retirement.
Presumably to mitigate the suffering of these and other pensioners – people who had spent the most active parts of their lives serving the nation diligently – the Pension Reform Act was established in 2004 and repealed and re-enacted in 2014.
According to a National Pension Commission (PenCom) 2020 Frequently Asked Questions (FAQs) document, “PenCom is the regulator and supervisor of all pension matters in Nigeria. It licenses all pension operators; issues regulations and guidelines; and ensures effective administration of all pension schemes in Nigeria.” The 2014 system is a Contributory Pension Scheme (CPS). About this, the FAQs document states: “Under the CPS, both the employer and employee contribute certain percentages of the employee’s monthly emoluments to build a retirement fund from which benefits are paid at retirement while under the Defined Benefits (DB) Scheme, total pension obligation is borne by the employer.”
Moreover, the PenCom publication notes: “The main objective of the CPS is to ensure that every person that worked in either the public or private sectors in Nigeria, including the self-employed persons, receives his/her retirement benefits as and when due.” Going by the experience of retirees, including one who called as this article was being prepared, “as and when due” is currently around two years of waiting. This is unacceptable. PenCom also declares in its document: “Unlike a bank account, the RSA can only be accessed at retirement, loss of job, medical incapacitation or in the event of death.”
It is important here to note that PENCOM’s promotional is “NATIONAL PENSION COMMISSION … Pension Guaranteed”. However, hardly could a day pass without a personal narration or media report of pension woes. The story has often been that of delay in pension payment leading to the inability to meet basic needs, including cost of healthcare. This is important when it is noted that some workers, for example university Professors, retire at the age of 70. This is the age at which people are most susceptible to debilitating health challenges and weakened capacity to withstand the vagaries of life.
In a country in which life expectancy as at 2022 was fixed at below 60 years by the National Bureau of Statistics, delaying payment of pension entitlements for as long as around two years for federal pensioners is a sure way of committing them to a pitiable existence. At their very vulnerable age, especially those who retire at the age of 70, deaths before the payment of pension entitlements are increasing. The pension entitlements are therefore increasingly becoming more of items of inheritance than facilities for pensioners to live well after service.
It is this worrisome development that motivated the Congress of University Academics (CONUA) to organise a webinar on “Pension Administration in Nigeria: Issues, Challenges and Way Forward” on 26 September, 2024.
Opening the webinar, the President of CONUA, Dr. Niyi Sunmonu of Obafemi Awolowo University, Ile-Ife, noted that it is in its effort to contribute to the general good governance of Nigeria and the welfare of its members and other stakeholders in the Nigerian University System that the Council of National Officers of CONUA has deemed it fit to institute a regular webinar series.
In these webinar series, important national issues are to be identified and brought up for interrogation by panels of specialists and resource persons and opportunities are provided for questions and answers by the concerned stakeholders and participants, and that the issue of retirement and pensions was considered as one of the most pressing issues facing public servants in contemporary Nigeria. The specific aims of the webinar were to prepare active workers for better life in retirement; to tackle obstacles retirees face; to proffer solutions to challenges of gratuities payment; and to ease the process of pensions payment.
The webinar Moderators were Mrs. Romelia Esangbedo who is a Broadcast Journalist with Gemelia Consult Nigeria Ltd; Mr. Nelson Ayaebene-Nelson who is a Senior Programme Editor with TVC; Dr. Michael Awoleye who is a Senior Research Fellow, African Institute for Science Policy and Innovation, OAU, Ile-Ife; and Dr. Niyi Sunmonu who is CONUA’s National President. The Speakers and Resource Persons were Barrister Muhammad Sani Muhammad who is the Secretary and Legal Adviser of PenCom; Mr. Tobiloba Adenuga who is the Regional Manager (South West/South Central) at Stanbic IBTC Pensions; Mr. Femi Fagbohun who is Zonal Manager (South), Stanbic IBTC Pensions; and Mr. Ismaila Abdulsalam who is Head, Business Development (North), Premium Pensions.
The Keynote Presentation was made by Barrister Muhammad Sani Muhammad of PenCom. He noted that in carrying out its regulatory role, PenCom carries along all stakeholders such as Nigeria Labour Congress (NLC), Trade Union Congress (TUC), National Union Pensioners (NUP), and so on. He further observed that the Defined Benefit Scheme (DBS) which was operated in Nigeria before 2004 was badly managed and created many problems and liabilities for both the government and pensioners. He also stated that in 2004, the Contributory Pension Scheme (CPS) was introduced through the 2004 Pension Reforms Act. He was of the view that the CPS has been a better, sustainable and fully funded scheme under the regulation of PenCom and activities of registered fund custodians and pension fund administrators (PFAs).
According to him, the use of Retirement Savings Account (RSA) into which the employers pay monthly and the public servants also contribute monthly is one of the features of the CPS, and that the PFAs invest the funds and the accruals are remitted, consolidated and paid to the contributors at retirement. He said that Pensioners in the CPS can continue to draw their pensions while on post-retirement paid jobs. He however declared that pension regulations do not permit more than 25% withdrawal while still in service. He also identified the fact that PenCom is monitoring the investment of pension funds by the PFAs and that the security of the funds is guaranteed by this fact is an advantage of the scheme, but that the CPS is restricted to employees of treasury funded agencies.
Barrister Muhammad also listed some of the notable problems with the implementation of the new pension scheme. These include the fact that (1) over the years, the government has not been up to date in its counterpart contributions, (2) residual legacy problems from the old pension scheme, (3) the National Assembly always cuts the appropriation meant for payment of pensioners, and (4) delay in releasing funds by the appropriate government agencies. Others are the fact that accruing benefits are not being easily harnessed by the contributors, pension accumulation and liabilities, lack of prompt remittance to PFAs, delays in promotions by MDAs, official corruption, and inadequate enlightenment about the Scheme.
During the Question-and-Answer session of the Webinar, the following, among other issues, were interrogated: the need to increase percentage amount that can be withdrawn by RSA holder while still in active service from the existing 25% to 50%; the need for RSA holders to have information and say on the kind of investments that their funds can be utilised for; the need to ensure that PFAs do not cheat the RSA holders from investment returns; the need for elasticity in the pension acts, laws and regulations; the need to consider right/choice of retired person to collect their full money at once after retirement instead of just 50% upfront and 50% as monthly pensions; the fear that the government may fail in the contributory pension scheme the way it failed during the pre-2004 period; and the possibility and ease of changing pension administrators by RSA holders.
The Keynote Speaker from PenCom and representatives of Stanbic IBTC and Premium Pensions responded to these and other questions by allaying the fears of RSA holders. Among other things, it was emphasised that the CPS was introduced to protect the interest of retirees and that it is a work in progress which is open to constructive criticisms and capable of improvements in future amendments of its Act.
The summary of submissions and recommendations at the Webinar include the following: (1) The government (executive and legislature) must treat pension fund appropriation as important as monthly salaries and wages. (2) The government must endeavour to promptly remit its counterpart monthly contributions to prevent failure of the CPS like its predecessor. (3) Wider consultations of stakeholders must be carried out in future pension reforms. (4) There must be voluntary agreement between employers and employees about alternative retirement benefits. (5) There must be regular reviews and reforms of pensions policies and regulations. (6) There must be multiple buckets. (7) There is a need to increase the percentage of retirement savings that can be accessed by contributors while still in active service. (8) There must be prior compilation of details of prospective retirees well ahead of the year of retirement. (9) Severance benefits must be mainstreamed and promoted by employers of labours. (10) All hands must be on deck to address the grey areas in CPS for more effective, seamless and timely payment of gratuities and access to pensions by retiring public servants.
In closing the webinar, the Chairperson of CONUA, Obafemi Awolowo University, Ile-Ife, chapter, Prof. Folasade Hunsu, noted that CONUA is poised for doing unionism with a difference and proffering solutions to problems facing the university education sector in particular and Nigeria in general; and this particular webinar was just the beginning. It is hoped that this town-and-gown effort would be sustained and the academia would continue to make itself more relevant to the efforts to make Nigeria a more livable country.
Meanwhile, all stakeholders should work together to make the noble goals of the 2014 Pension Reform Act more optimally fulfilled so that the motto of PenCom could be readily extended to read: “NATIONAL PENSION COMMISSION … Pension Guaranteed; Pension Timeous.”
