How N400bn Pension backlog may disrupt workers’ retirement plan in 5 states

….Only 25 states have joined CPS so far

From LEADERSHIP by allcitynews.ng

Unless urgent steps are taken, the hope and expectations of civil servants towards their retirement in some states may be disrupted.

This is so because workers under the payroll five state governments are having their retirement life
threatened as their employers are
battling with N400 billion pension
backlog under the Contributory
Pension Scheme (CPS) and the
Defined Benefits Scheme (DBS).

The report by LEADERSHIP explained that  the arrears under the CPS and the DBS at about as at the end of second quarter of 2023 stood at N400 billion.

“However, there is no official
data on how much pension backlog
these states are owing, there are five
states with a backlog of pension
remittances, according to the Second
Quarter 2023 Pension industry report
released by the National Pension
Commission (PenCom).”

The affected states are Osun,
Anambra, Delta, Ekiti and Benue.
Anambra State, for instance, is
having a backlog of unremitted
pension contributions for its
employees from January 2018 to
February 2022.

However, the report shows that
the current administration resumed
remittances from March 2022 till
the second quarter of this year when
it was released.

While Gombe, Zamfara and
Adamawa States have laws on
Contributory Defined Benefits
Scheme (CDBS), which is a fusion
of CPS and Defined Benefits Scheme
(DBS), they are yet to commence
the implementation as of the second
quarter of this year.

Rivers State is said to have made a
one-off payment of N300 million in
2012 for accrued rights.

Of the 36 states of the federation,
including the Federal Capital
Territory (FCT), only 25 states have
so far joined the new pension scheme
known as Contributory Pension
Scheme (CPS).

However, of this number, 10
states are remitting employee’s and
employer’s contributions while only
seven states among them are regularly
paying the pension contributions of
their workers monthly.

The seven fully pension compliant
states are Lagos, Lagos, FCT, Osun,
Kaduna, Ekiti, Edo and Info States.

The remaining three states, which
are; Delta, Anambra, Benue and
Kebbi are partially implementing
CPS.

According to PRA 2014,
employers are expected to contribute
10 per cent of their workers’ salary
as monthly pension remittance with
each employee contributing eight
percent, making a cumulative 18 per
cent monthly remittances that should
be remitted by employers into the
Retirement Savings Account (RSAs)
of the employees.

The situation, analysts say,
portends a bleak retirement for
the workers a few years down the
line, as many retirees are currently
suffering the plight of unpaid overdue
pensions.

All the affected states, it was learnt,
have subscribed to CPS.

This, according to investigation, is
currently affecting retirees from the
concerned states whose Retirement
Savings Accounts (RSAs) are either
not credited at all or are waiting on
the government to fulfill its liabilities
before they can have access to
their own pension contributions at
retirement.

To this end, the governors of
the concerned states have left their
workers with a bleak retirement,
unless the state government cleared
the backlog.

Speaking on the development
at an IPEN Insurance and Pension
Roundtable 2023 in Lagos recently,
the Director, Centre for Pension Right
Advocacy (CPRA), Ivor Takor, urged
the states and Federal Government
as well as private sector players to
prioritise pension welfare of their
workers, adding that, this will raise
the level of commitment of workers
towards their employers.

“But when you don’t plan for the
retirement of your workers, especially
in the civil service, what you will see
is people wanting to take whatever
they can now from the system which
is fuelling bribery and corruption in
the civil service,” he said.

Stating that most states still favour
the old pension scheme over the new
pension scheme, and to this end are
reluctant to fully commit to the CPS,
he charged state governments to
perform their civic responsibilities
by honouring pension obligations of
their employees.

He described as unfortunate a
situation where some state governors
left office and made some segmented
pension laws that only cover them
and their office holders, enabling
them to draw massively from the
purse of the state in the name of
pension to build houses and cars,
but refused to make laws for the
state workers or remit their pension
regularly.

He challenged workers’ unions
at the state level to protest “this
maltreatment.”

Speaking on the development,
the zonal head, South West Zonal
Office, PenCom, Mr. Akinsola
Adeseun, said it is disturbing that
some states, having commenced
the implementation, decided to
backtrack, thereby owing several
pension arrears that will affect the
future of civil servants in those
states.

He stated that the commission
had been persuading the concerned
states to meet pension obligations of
their workers as this will ensure civil
servants enjoy retirement. Though,
he said compliance level seems to
have improved, there are still lots of
ground to cover in pension arrears
payment.

On his part, the executive
secretary/chief executive officer
(CEO), Pension Fund Operators
Association of Nigeria (PenOp),
Oguche Agudah, had at a forum,
said pension fund operators have
taken advocacy to state governors
to enlighten them on the need to
prioritise their workers’ pensions,
promising that, operators would
continue to raise awareness on
the need for pension adoption in
states and private sector, thereby,
increasing pension funds bracket.

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