NATIONAL ASSEMBLY AND PENSION REFORM  

President Tinubu must do everything to save the pension reform from reversal  

 The recent passage of the Bill for the Establishment of a Police Pension Board by the National Assembly has, justifiably, raised eyebrows because of its far-reaching implications. If signed into law by President Bola Ahmed Tinubu, the bill will remove the Nigeria Police Force (NPF) from the Contributory Pension Scheme (CPS) and return them to the dysfunctional Defined Benefit Scheme (DBS).  

Until the pension reform act of 2004, the failure of government to meet the pension expectation of retirees had shattered the plans of many as well as inducing economic trauma, which in some cases have led to fatalities. Stories abound of senior citizens who had collapsed and died while on queues while waiting for their pensions. Across the country, former public servants bemoaned pension fraud, and government neglect while battling debilitating changes to their health and lack of funds to attend to their most basic needs.    

However, the Pension Reform Act (PRA) took the country into a new era. The Act covers both public and private sector employees. The Contributory Pension Scheme (CPS) was introduced to replace the Defined Benefit Scheme (DBS). Under the new regime, both the government/companies and the workers themselves are to save up a given amount of their earnings towards building up an accumulated funds reserve which they could fall back on after retirement. Under the PRA, which was repealed and re-enacted in 2014, the contribution from monthly emoluments is stipulated at a minimum of 10 per cent by the employer and a minimum of eight per cent by the employee. Pension under the CPS is now a function of savings and no longer vulnerable to unstable budgetary releases.  

   The justification offered by the police, and other government bodies, in seeking to exit the contributory scheme is that it offers low benefits compared to the defined scheme. While this may be true on the face value, the National Pension Commission (PenCom), which regulates the pension industry, explained to the National Assembly during its public hearings that what the Act stipulates is minimum contribution, not maximum. That means the Police Force can take over the entire pension contributions of its employees. Also, PenCom said the employer can provide bigger gratuities.  

By having a Police Pension Board which will not be subject to oversight by an external body, the authorities may end up setting the stage for a return to the culture of impunity that prevailed before the reform. In recent years, there have been reports of pension scandals running into billions of naira. These are pension funds that are outside the purvey of regulatory oversight. That is why Nigerians must be wary of this exemption moves.  

It is also worrisome that some of those exempted from the contributory scheme are now being owed arrears of pensions, as it used to be before the reform. There are reports that retired military personnel, whose pensions are now managed by the Military Pension Board after they were exempted from the contributory scheme in 2014, are being owed, either because of insufficient budgetary releases or because of unwholesome practices. Conversely, retired public servants under the contributory scheme are not being owed. In the end, the latest legislation is not in the interest of the police personnel as they will now be at the mercy of the force’s authorities.  

Most importantly, allowing the police to exit the CPS may be an open invitation for other government agencies to follow suit. Paramilitary bodies will be encouraged to start their own agitations. Other public servants too will start a campaign for exemption. This is a clear and present danger to the pension reform. President Tinubu must do everything within his power to save the pension reform from reversal.