Unremitted contributions threatening pension scheme -By Mrs. Chinelo Anohu-Amazu

Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu

With just 11 years of administering the exemplary Contributory Pension Scheme in the country, it appears to have run into a headwind, as the Pension Act is observed mostly in the breach. Barefacedly, the Federal Government, as usual, is in the lead. Its ministries, agencies and departments have failed to remit N35 billion already deducted from workers salaries to their Retirement Savings Accounts.

The Director-General, National Pension Commission, Chinelo Anohu-Amazu, says it is a serious problem. According to her, both the PenCom’s department on enforcement and compliance and hired recovery agents will go after stakeholders who “made deductions from their salaries and have not remitted into their Retirement Savings Account” and “those who had not even complied with the Pension Act at all by opening a pension account.”

Saving for retirement comprises the accumulation phase in which people build up assets that will be used in the pay-out (decumulation) phase to finance retirement. There is no doubt that the best way to improve the chances of achieving a robust retirement income is to enrol and contribute for long-periods. As of December 2014, the total pension contribution was N4.7 trillion. Given the rank indifference of government agencies to the law’s implementation, the scheme might be a non-starter for most in the private sector.

Certainly, PenCom must go beyond rhetoric and enforce the pension law. Unfortunately, the Federal Government has not been forthcoming with its own counterpart contributions. Its ugly footprints are also being followed by 23 states, according to PenCom’s First Quarter Report. Only Lagos, Rivers and Osun states are of good compliance behaviour.

The contributory pension scheme is now a global phenomenon following the success stories of the Chilean pension reform of 1981. But even regarded as better than the Chilean model where employers are not generally required to contribute to employees’ accounts, the Nigerian scheme makes employers’ contribution mandatory.

Initially, the Act provided for 15 per cent monthly contribution, shared equally between the employer and the employee. But economic realities imposed an upward review, which brought the total monthly contribution to 18 per cent: 10 per cent for the employer and eight per cent for the employee, as enshrined in the Pension Reform Act 2014. The Act states that remittance to the Pension Fund Custodian shall be done not later than seven working days from the day an employee’s salary is paid, for onward transfer to his/her chosen Pension Fund Administrator.

Contributory pension in Nigeria is a child of necessity, introduced by the Olusegun Obasanjo administration to supplant the era when workers retired from service without being paid their gratuities and pensions as and when due. As a result, many died without enjoying their benefits, while a few that were lucky to be paid had to wait for many years. For instance, the chairman of the Nigeria Union of Pensioners, Imo State chapter, Gideon Ezeji, said recently that arrears of gratuities date back to 1998. It is a credit to the 2004 law that it has brought a measure of transparency to bear on pension funds administration.

However, the fraudulent practice of padding payrolls with ghost pensioners, over the years, has overwhelmed pension administration, just as corrupt bureaucrats connive with organised syndicates to fix funds at negotiated interest rates in banks for long periods of time before they are released to the beneficiaries. We have had the N27.2 billion stolen pension case in 2012, and it seems its shoddy judicial handling has buoyed other thieves in the system to continue with the crime. In July, the Pension Transition Directorate said it discovered that 3,000 out of 18,000 pensioners in the Nigeria Police pension payroll were ghost names, a fraud that creams off N100 million monthly from public treasury.

But retirement should not be made a dreaded phase in life. We believe that people who used a greater part of their youth and energy to serve their country should not be subjected to terminal suffering, deprivation and penury.

Therefore, those still in service cannot afford to face the ordeals their counterparts who retired under the old system are currently experiencing throughout the country. In June, retired civil servants in Oyo State demonstrated, among them retired primary school teachers, reportedly owed between eight and 25 months pension arrears. This last-resort strategy was also adopted by some pensioners in Owerri, Imo State, late in August. This is frustrating indeed!

Abuja should buck the trend of being a serial negative influence on the states, especially in the flagrant violation of the constitution and other extant laws of the land. The practice is not healthy for our fledgling democracy. When laws made for the good of the society are disregarded or not enforced, entrenching the rule of law and democratic values becomes an arduous, if not an impossible, task.

To consolidate on the gains recorded so far, the obvious common-sense solution is to invoke the provisions of the Pension Act that deal with breaches against defaulters. It is just as well that the Nigeria Labour Congress has petitioned President Muhammadu Buhari on the matter. Labour should co-operate with PenCom in discharging the full range of its enforcement options.