NANFeatures/Vol.11/No.45/2017 (March 15)
Preventing pension scheme from failure
A News Analysis by Femi Ogunshola, News Agency of Nigeria (NAN)
Issues on pension scheme in the country and its management have raised concerns among concerned citizens, especially the pensioners.
Pensioners have, on many occasions, alleged that they are shortchanged, not paid on time, denied payments or delayed in payments of their entitlements, among others.
The National Pension Commission (PenCom) is always at the receiving end of these allegations and efforts have always made by the commission to correct and address the allegations.
The Pension Reform Act 2004 established PenCom to regulate, supervise and ensure the effective administration of pension matters in Nigeria.
Pundits, nevertheless, observe that apart from the complaints from pensioners, pension scheme in Nigeria seemed to have challenges before the enactment of the Pension Reform Act 2004.
They note that the public service operates an unfunded defined benefits scheme by which the payment of retirement benefits is budgeted annually.
“Annual budgetary allocation for pension is often one of the most vulnerable items in budget implementation in the light of resource constraints
“In many cases, even where budgetary provisions are made, inadequate and untimely release of funds result in delays and accumulation of arrears of payment of pension rights.
“Based on this, it is obvious therefore that the defined benefits scheme could not be sustained,’’ Mr Gabriel Toyin, a staff of one of the pension fund administrators, observed.
He alleged that many employees were not even covered by the pension scheme put in place by their employers in private sector and if they were covered, the scheme might not be funded.
He noted that the scenario necessitated a reform in the pension administration in Nigeria by the administration of former President Olusegun Obasanjo, resulting in the enactment into law of the Pension Reform Act 2004.
To ensure unhindered access to their benefits as and when due, pensioners from both public and private sector designed a synergy to ensure that pension scheme does not fail.
Mr Abel Afolayan, President, Nigerian Union of Pensioners (NUP), noted that the synergy became imperative to check fraud and prevent failure in the pension scheme.
“You cannot be investing our money and getting the required interest or profit without accruing benefit sto the original owners of the money, that is ungodly and wicked,’’ he said.
He alleged that the Pension Fund Administrations (PFAs) and PenCom would not specify how pensioners could benefits from returns on the investments accrued from their contributions, leaving the pensioners who were the legitimate owners of the funds in suspicion.
He noted that the union had also observed that there were wrong calculations of their benefits by PFAs, thereby shortchanging them in the disbursement of their pensions.
Afolayan stated that a large number of the relations of the deceased pensioners had not been able to access their entitlements.
“The union has appeared before the Joint Committee on Budget Appropriation at the National Assembly and submitted a memorandum requesting for N183 billion to fund accrued right of retirees from 2015 till date,’’ he said.
He noted that with the synergy, NUP would ensure that efforts were made to ensure that all entitlements of pensioners were paid as and when due.
Mr Bunmi Ogunkolade, the General-Secretary, NUP, insisted that the 2004 Pension Reform Act aimed at ameliorating the suffering of Nigerian pensioners and the scheme must not fail.
He, nonetheless, expressed concern that Nigeria might not be able to sustain the scheme due to the inability of various organs of governments to pay pension entitlements as and when due.
He alleged that many organisations of government and other employers of labour had also been defaulting in the regular remittance of contributions of workers to their PFAs.
“The inability of the Federal Government in releasing this fund has caused pensioners in the scheme to suffer because no retiree was paid since October, 2015,’’ he alleged.
Similarly, Nigeria Labour Congress President Ayuba Wabba argued that about N83 billion worth of pensions issues had yet to be addressed by PenCom, describing it as an albatross of the scheme.
Wabba urged pensioners to collaborate and work with workers union to achieve their demand and salvage the plight of pensioners.
But Mrs Chinelo Anohu-Amazu, the Director-General of PenCom, allayed the fears of the stakeholders, insisting that the commission would sustain credibility.
She, nonetheless, identified coverage of the Contributory Pension Scheme, dearth of investment products, inadequate technological capacity and inadequate knowledge and skills on the part of PFAs to conduct due diligence on developmental projects as some of the operational and regulatory challenges.
She said in spite of these challenges, the commission hoped to raise the number of Retirement Savings Account holders from 6.5 million holders to 20 million holders by 2019 with the introduction of micro-pension.
Anohu-Amazu also said the phenomenal growth of the scheme; nonetheless, many workers had yet to fully understand the initiative and its objectives.
According to her, there are bound to be some concerns and misunderstandings about the initiative that will be addressed by the commission as it is with all reforms.(NANFeatures)
**If used, please credit the writer as well as News Agency of Nigeria (NAN)