Of Police Pension Board and CPS Balkanisation

Ebere Nwoji posits that the Police Pension Bill, if  signined into law by President Bola Ahmed Tinubu,  will be a majore setback for the Contributory Pension Scheme

The senate in collaboration with the Federal House of Representatives, last week, passed the bill for the establishment of a Police Pension Board, a move that  will exempt the Nigeria Police Force (NPF) workers from the Contributory Pension Scheme(CPS).

The bill, if assented to by the president, will mean that police pension is now under the federal government non funded Defined Benefit Pension scheme.(DBS) 

What this means is that retiring police officers will now receive their pension benefits through government budgetary allocation like the military and other federal government workers exempted from the CPS. The police pension board bill since its passage last week has elicited some comments, some in favour and some against.

It was learnt that police officers engineered the exit from the CPS which for them is not favorable because at retirement, the lump sum payable to them by their pension fund managers is nothing to write home about when compared with the gratuity payable to them by government under the Defined Benefit  Pension scheme.

For an average police  officer, anybody saying anything against signing of the bill is not talking in their best interest and should not speak further.

Evidence of this is glaring in a recent alleged threat to a veteran journalist and Arise TV  presenter and host,  Oseni Ruffai who in a recent post through his twitter handle shared the threat message he allegedly received from a Nigerian Police Officer  over his statement that the President should not sign the police pension board bill.

According to Refai, the treat read:  “Rufai Oseni or whatever you call your name, we all know you have collected bribe as usual from the fraudulent PenCom DG  to come on air and vomit nonsense about the government not to sign the bill. If you love yourself, we give you 72 hours to withdraw or retract those nobsense you vomited. A word is enough for the wise Idiot, animal like you.”

Reacting to the statement, the Gombe State Police Public Relations Officer, Marhid Muazu Abubakar released a statement through his twitter handle telling Oseni Rufai to kindly report his threat case to the nearest police station for necessary action. This shows how desperate the police is to exit from the CPS.

Drive to Exit from CPS

The police agitation for exit from CPS did not start today. It started way back in 2011 when a bill to exit six paramilitary agencies of government was presented to the sixth National Assembly. The bill, which was  similar in context to that of the armed forces and intelligent agencies, had been put up in 2011, but was not passed by the sixth National Assembly. It has passed its second reading before the then National Assembly turned it own.

Again in 2016, similar bill sponsored by Hon. Oluwolu Oke on exemption of police and other paramilitary agencies of government was put up.

Oke, had in May that year, sponsored a bill seeking the exemption of the following six paramilitary agencies of government namely members of Nigerian police, the Nigerian Security and Civil Defence Corpse, Nigerian Customs Service, Nigerian Prisons Service, Nigerian Immigration Service and the Economic and Financial crimes Commission from the CPS.

He pointed out that the identities, data, addresses and family ties of security personnel were  best handled internally by the relevant services and not kept in civilian custody which might be easily compromised .

He also argued that the nature of the services provided by the paramilitary were  unique and hazardous and the burden of paying their pensions therefore should be borne by government so also is the reason for the delay in the payment of their entitlements among others.

Stakeholders’ Reactions

But in a swift reaction, both the pension sector regulatory agency, the National Pension Commission (PenCom) and Pension Fund Operators Association of Nigeria (PenOp), stood against it  highlighting the negative implications of passing the bill.

According to PenOp, the reasons for its non-passage by sixth National Assembly, despite the argument and reasons adduced for such action were still valid and were further reinforced by many more economic, fiscal, social and public policy reasons.

The then PenOp Chairman, Longe Eguarekhide speaking to this effect at a media gathering in Abeokuta, Ogun State, said the argument against the exemption of the above paramilitary government agencies was further reinforced by many other economic, fiscal, social and public policy reasons such as constituting additional financial burden on federal government by way of unsustainable pension obligations, exposing government to high allocation of resources to fund their retirement benefits, dismantling of the institutions, systems and processes put in place by government, amounting to unsettling of government’s fiscal policy and financial system stability as well as resulting in erosion of pool of long term investible funds accumulated under the CPS among others.

In his words, “In the last 10 years, the number of FGN employees that retired under the CPS from the six paramilitary agencies sought to be exempted are 50,730 the total accrued benefits of these personnel amounted to N208.22 billion which had been redeemed by the federal government paid into their respective Retirement Savings Accounts and consolidated with their monthly pension contributions to fund their retirement benefits.”

“These retirees are currently receiving their retirement benefits promptly as and when due. Exempting them from the CPS, would imply that government would shoulder the huge financial obligation of payment of their pensions as well as that of future retirees through budgetary provisions with no guarantee of availability of funding and timeliness of payment”, Longe warned.

He argued further that the federal government already overburdened with the payment of pensions as illustrated by the year’s  Appropriation Act which made a provision under service wide vote for the use of N2.170billion as total pension and gratuities allocation, adding that the allocation was still insufficient to fund the pension liabilities of the federal government.

Analysts’ View

Industry analysts pointed out that government’s delay in release of fund for payment of accrued rights of its workers often constitute problem to payment of retiring  workers’ retirement benefits under the CPS .

Questioning  how  the same government which could not release funds for the  payment of accrued rights of its retiring workers could conveniently bear the entire burden of paying police pension without further delays and accumulation of arrears of pensions.

They therefore cautioned the agitating police officers to look well before they leap.

In their own view, pension sector  critics have absolved the agitating police officers desperate to exit from CPS from total blame.

Their point of argument is this, the major reason for restructuring Nigeria’s pension system and transiting from DBS to CPS is to clear the over N2 trillion pension deficit hanging on government’s shoulders.

According to them, the  beauty  of CPS is its funded nature which supposed to have guarded against any form of delay in payment of benefit to retirees.

They argued that contrary to this, most contributors into the CPS still experience the same delay in receiving their retirement benefits because of the rigidity of PenCom in letting go and approving these benefits and no PFA is authorised to pay any contributor any benefit with out PenCom’s approval.

One of the critiques cited an example of a retiree under the CPS who is entitled to N10 million benefit including his accrued right .It was said that the  retiree was coming for his benefit to go for treatment abroad but remittance of his accrued right remained N29000, he was ready to forego it and collect his other benefit but PenCom refused to sign the paper for collecting the benefit insisting that he must wait until the N29,000 accrued rights drops in his account.

This means that even if  it will take the federal government another three years to pay the accrued right, this contributor must postpone his foreign treatment trip till PenCom signs his paper  and this can only happen when the accrued right drops.

Again the critics argued that one of the reasons police is agitating to exit is heightened inflation rate which so much affects the contributed funds.

According to them, the lump sum payment to contributors as permitted by the   Pension Reform Acts makes the bulk of the pension money to reside with the Custodians for investment with the result that what the law permits the PFAs to pay as lump sum at retirement cannot build a house for a retired police officer.

An average police officer’s take home package, they added,  is so small that he cannot achieve anything with it while in  service; “therefore, he needs bulk money from his pension to put up a roof on his head before collecting the remaining as programme withdrawal or as annuity. But the sacrosanct nature of the PRA 2014 cannot allow them do this, They argued that even the mortgage financing that the commission has been announcing is not easily available.”

PenCom’s Weakness

On the other hand they argued that the present management of PenCom is very weak and non proactive when it comes to implementing the laws guiding the operations of the CPS.

According to them a proactive regulator would have gone through the books, feel the pulse of the people and know why the various contributors agitating for exit were doing so and consider immediate review of those stringent aspects of the laws that cointributors were not comfortable with which made them to agitate for exit.

They argued that unlike the regime of Muhammad Ahmad and Chinelo Anohu Amazu who were very much awake to complaints of the contributors monitoring how to balance the laws to protect the funds, but the current management is a ministerial personnel short sighted in view and very parochial in outlook with little or no knowledge of lobbying strategy.

The critics said if these qualities were not lacking, the CPS wouldn’t have lost both the National Assembly Workers and the police within the space of two months.

They expressed fears that if something is not done urgently, other paramilitary agencies and workers would  start their own agitations and this way the hitherto smooth working CPS would be balkanized.

PenOp View

Speaking to THISDAY on the signed bill, Chief Executive officer PenOp, an umbrella body of pension fund administrators, Mr Oguche Agudah, has this to say, “The Police pension Bill that was recently passed by the Senate was passed in bad faith and without all the facts in consideration. This is the height of legislative highhandedness and abuse. When making laws on behalf of the whole country, basic questions should be asked, like – What problem is this bill trying to solve ? How is that problem being solved currently? Will the passing of this bill create another problem down the road? What is the cost of passing this bill on the Nigerian people? How will it be funded? Have we thought through the funding and gotten input on this?”

According to him, “Clearly  all these questions were not asked or thought through in detail. If we are honest with ourselves, we know what pension boards mean- We just need to look at the examples of some states to see.  They are shrouded in secrecy; they have little governance and no accountability; the pensioners are at the whim of the people running the board; funds are paid only when there is a cash backing or the controller of the purse is lobbied; No transparency or efficiency. The bill seeks to reverse the gains of the pension reforms.

“Let’s be dispassionate about this for a minute, and ask- How many Nigerians want to go back to the days of NITEL ? How many Nigerians want to go back to community banks and People’s bank of the past years? The pension reforms effectively put pension administration and management in the hands of private sector players regulated by a Supervisory agency. 

He concluded by saying that the bill if signed into law would  take us back to public sector managed institutions with no efficiency and accountability. The law seeks to take money out of government coffers, while the current system is actually putting money in the hands of the government.”

 Other pension stakeholders said police exemption from the CPS though may look like best solution but it will at the long run not be because the federal government is broke and may not afford to pay them on regular bases that their desired lump sum as soon as they retire.

They submitted that PenCom should review the PRA2014 to relax some stringent  sections like percentage payable as lump sum.

They further recommended that in reviewing the act, consideration should be geiven to quantum of money a retiring worker goes home with than quantum of invisible funds accumulated as pension assets.