The Pension Conundrum and the Enugu Model

By Laurence Ani
Statistics are seldom ever both cheery and grim. But the National Bureau of Statistics’ (NBS) recent report that Nigeria’s Pension Fund Asset in the second quarter currently stands at N8.232 trillion – up from the N7.943 trillion recorded in the first quarter – is one such.

It was cheery as it offers a strong hint of just how successful the contributory pension scheme has been. But its grimness is not immediately deducible. It lies rather in our collective bitter reckoning as we ponder what might have been had states in the federation fully embraced the scheme since its launch in 2004.

The result is that pension bills continue to rise annually in every state as more civil servants join the rank of retirees, putting an extra burden on their resources and, indeed, causing many states (with the exception of a few like Enugu) to fall behind in meeting this important obligation to the country’s senior citizens. The statistics puts further scrutiny on the Defined Benefits Scheme apparently preferred by state governments which, as the Nigerian contemporary experience shows, is mostly not funded as it should besides being susceptible to abuse.

Of course, it’s needless saying the total embrace of this defined scheme that leaves retirees’ pensions to the vagaries of monthły income of states (determined to a large extent by funds accruing from the Federation Accounts Allocation Commission through the NNPC’s oil sale) is the root of the current pensions conundrum in Nigeria.

It is in the light of this that reports that the Enugu State government’s committee on the contributory pension scheme had commenced work on modalities towards its adoption and possible implementation come as welcome news. This emerged during a solidarity visit by pensioners to the Enugu State Government House on August 29, this year. But even more gratifying than the hint of the state government’s robust plans for pensions that emerged from that visit was the import of the action itself, given the usually less-than-salutary relationship between pensioners and the establishment as seen in most states.

The pensioners’ visit was, to all intents and purposes, a massive vote of confidence in Governor Ifeanyi Ugwuanyi for whose re-election they also pledged support. “We are very much convinced that you are one of the foremost pensioner-friendly governors Enugu State has ever produced. Despite all odds, you have continued to pay us pensions regularly. You authorised the release of N100m every month to pay the backlog of accumulated gratuities which you inherited from past administrations,” the chairman of the Nigerian Union of Pensioners’ Enugu State chapter, Comrade Damian Udeani, said during their visit.

A further hint of how despondent the pensioners had been in the period preceding the Ugwuanyi administration could be gleaned from this comment by Mr. Nana Ogbodo, executive secretary of the Local Government Staff Pensions Board. “When we came in, they had even forgotten how to count the arrears they were owed in months. They had, as a matter of fact, taken it for granted that gratuity was not something they were entitled,” he said, adding that pensioners in the state had the best Christmas in years last year as the governor had deployed a substantial part of the state’s share of the Paris Club refund to settling arrears of gratuities.

Even if not clearly stated, the case for adopting the contributory pension scheme is made further compelling from the revelation, during the pensioners’ visit, that the Enugu State monthly pension bill has risen to N500 million. So, it implies the state government pays an estimated N6bn each year to its senior citizens which would roughly translate to a humongous N24bn by the end of the governor’s first term in office.
There is hardly any state that can comfortably bear such burden given the fact that pension bill rises as workers retire every year. This dilemma was succinctly captured by Ogbodo: “And whereas the numbers are rising, the resources are dwindling.”

This high figure, which obviously puts an enormous strain on Enugu’s wage bill is so because the state has one of the highest number of pensioners in the country due to its peculiar status as former capital of Eastern Region, East Central State and old Anambra State that today comprises Anambra, Enugu and a substantial part of Ebonyi.

The old pension scheme – still prevalent today across the country and to which the elderly government retirees are accustomed – has become so prone to manipulation as apparent from frequent reports in the media of “ghost pensioners” unmasked through biometric audits. Gov. Ugwuanyi is optimistic the contributory pension scheme will eliminate the sundry corruption associated with the current mode and enthrone a more transparent system.

Although implementation may be a very long way from now, it yet offers a glimmer of hope that there is end in sight to the endless rounds of verification exercise that pensioners are often subjected, and that they may soon not have to “perpetually chase after their pensions”‘, as the governor rightly noted when the senior citizens came visiting.

• Ani, formerly editor of ThisDay, The Saturday Newspaper and later Saturday Telegraph, is a senior communications aide to the governor of Enugu State