Mrs. Aisha Dahir-Umar, AG D-G, Pencom

By AYOOLA OLAOLUWA

Workers in both the public and private sectors co-opted into the Contributory Pension Scheme (CPS) by their employers have bemoaned their experience with the scheme, insisting it has failed to meet their expectations.
The Federal Government, it would be recalled, had in 2004, introduced the CPS to address the nightmare many workers experienced after their retirement from active service.

Under the old DBS, many retired workers spent years without accessing their gratuity and monthly pension, while many of them died without getting their due benefits.

The massive corruption in the DBS necessitated the government to enact the Pension Reform Act, 2004 (PRA, 2004). An amendment to the act in 2014 created the Pension Transitional Arrangement Directorate (PTAD).

While the original Pension Reform Act 2004 empowered PenCom with the right to regulate the CPS, the Act empowered PTAD to run the Defined Benefit Scheme.

BH checks revealed that the nation currently has 22 Pension Fund Administrators (FFAs), seven Closed Pension Fund Administrators (CPFAs) and four Pension Fund Custodians (PFCs).

Remittances into the RSAs are invested by PFAs in safe financial instruments for modest returns without endangering the safety of the funds.

For instance, a data mined from PenCom’s website indicates that the PFAs have invested in Federal Government bonds worth N7.34trillion, N676.91billion in Federal Government Treasury Bills, N11.91billion in agency bonds and N117.82 billion in state government securities as at February 2021.

Also, N870.30billion has been invested in corporate debt securities, N1.62trillion in local money market securities and N158.96bn in mutual funds during the same period.

Further checks indicate that the value of accumulated pension assets contributed by the registered 9.27 million contributors in their respective Retirement Savings Accounts (RSAs) had surpassed N12.3 trillion at January 30, 2021.

Meanwhile, the concerned workers, in separate interviews with Business Hallmark in Lagos, threatened to quit the scheme if their concerns are not resolved by their employers and Pension Fund Managers (PFAs).

Some of the concerns raised by the workers include undue delays in payment of their accrued pension rights by the federal and state governments, no pension increases for workers’ under the CPS unlike their counterparts in the DBS, as well as the eroding of their investments by galloping inflation.

According to the workers, the scheme does not factor in inflation.

The Chairman, Contributory Pensioners Union of Nigeria (CPUN), South-West Zone, Mr. Joseph Idowu, said PenCom had yet to implement any increment since 2007 and 2010 in spite of various promises.

The CPUN boss said that their counterparts under the Defined Benefit Scheme (DBS) had been enjoying the increment through the proactive stand of Pension Transitional Arrangement Directorate (PTAD).

“The new consequential adjustment in pension due to the latest increase in workers’ salaries and wages are also being enjoyed by pensioners under DBS, neglecting the CPS pensioners.

“No CPS pensioners has received any interest on their accrued benefits since 2007 till date.

“We require your urgent attention to ensure that arrears on this are calculated and paid at the Federal Government official rate, as at the time of retirement.”

The pension union leader lamented that his members were suffering as some of them collect as low as N3, 000 as their monthly pension which he claimed is unacceptable.

He also said his members are not happy with the delay in the payment of their retirement benefits which lucky pensioners get after one year of retirement, contrary to PRA Act 2004.
He argued that Section 16 (5) of PRA Act 2004 says pensioners should be paid not more than three months after retirement.

Some of the workers who spoke with our correspondent appealed to the government to allow them return to the defined benefits scheme as it had been.

A member of CPUN, Mrs. Clara Fumilayo, while calling on the Federal Government to assist the pensioners, said that their monthly pension could no more buy tangible things due to the situation in the country. She called on the Federal Government to assist them live a decent life.

Another labour leader working with the Lagos State government, Lekan Ojo (not real names), claimed that the hiccups experienced with the scheme had confirmed their fears and initial opposition to its implementation.

“We are not going to sit idle while our future is messed up. Our colleagues who have retired wait between two to three years to get their savings.

“We are even lucky in Lagos. Some of our unfortunate colleagues in other states wait for up to five years to be paid from what they saved during 35 years of active service.

“The way the CPS works, a pensioner can exhaust his life savings in ten to fifteen years. Those,who have the grace to live long, are mostly affected”, a worker still in service lamented.

Another worker in the state government employment who identified himself as Bashiru, said after working for 32 years, his fate after retirement hangs in the balance.

“I am a middle level officer and this year is my 32nd year in service. The balance in my CPS account is just over N6million. If my employer adds its own contribution and the three years I have left in service to the N6million, I should be having around N10million to live on.

“If am placed on N30,000 monthly (N360,000) pension on retirement, that means I will earn N7.2million in 20 years when I willbe 72.

“I am 52 years old now. I will retire before 60 because I started early. What this means is that after being paid 25% (N2.5million) of my total savings upfront, including interests, I will be left with nothing if by God’s grace I live beyond 72 years.

“My mother who is now 83 and is earning pension from the DBS after retiring at age 60, is currently earning N42, 339 monthly.

“Every time they increase workers’ salaries, they also increase her own. And she will continue to earn her pension until she breath her last breathe”, Bashiru lamented.

Speaking on the development, the Chairman/Chief Executive Officer, Achor Actuarial Services Limited, Dr. Pius Apere, said most of the workers who seek to exit the contributory pension scheme are doing so because their expectation have not been met by the scheme.

“The public service employees, particularly the third category of membership of the CPS, feel aggrieved and short-changed compared to their counterparts who are exempted from the CPS.

“The retirees in this category always perceive that their expectations have not been met for many following reasons.

“The employees still erroneously believe that 25 per cent of the Retirement Savings Accounts (maximum lump sum allowed) and/or the pension payable from CPS will be close to 300 per cent and 70 per cent of their final salary as prescribed for gratuity and pension in Pay As You Go defined benefit scheme respectively having completed 35 years’ of service.

“The employees’ accrued pension rights calculated at the commencement date of the CPS may not have kept up with inflation due to lack of revaluation.

“In practice, a deferred member’s accrued pension benefits/rights from the date of leaving the PAYG defined benefit scheme are usually expected to be revalued up to the member’s retirement date in order to keep up with inflation.
“The pensions in payment from CPS do not allow for pension increases as compared with the pensions payable from the PAYG defined benefit scheme,” Apere stated.

Also speaking, a source in PenCom, who did not want his identity disclosed for fear of retribution from government, absolved the commission of blame.

According to him, employers, particularly the federal and state governments should be held responsible for the non release of sufficient funds for payment of accrued pension rights of retirees and non-release of full appropriated amounts.

“We are all aware that the country is passing through a serious economic crisis. So, the commission or the PFAs can’t be blamed for the erosion of retirees’ savings through inflation. It affects everyone as it is a national problem.

“However, there is no doubt that if all employers comply with the new minimum statutory rate of pension contribution of 18 per cent, pensioners would receive more funds in their retirement nest.

“Also, if accrued pension rights are paid in full, delays in payment of retirement benefits under the CPS would be eliminated,” the source declared.

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