Despite the different strategies employed by the National Pension Commission (PenCom) to persuade and encourage state governments in Nigeria to comply to the provisions of the Pension Reform Act (PRA) 2014, states’ compliance to the Contributory Pension Scheme (CPS) remains inconsistent and worrisome to operators.
With this low compliance from states, there could be hitches with the drive by PenCom to secure a better retirement life for employees of all state governments, as the commission with its mandate to oversee all pension matters in Nigeria remains incapacitated, dealing with issues relating to states’ compliance.
Unlike some private sector employers who get penalties for non compliance to the CPS or non remittance of appropriate contributions to their employees Retirement Savings Accounts (RSA), state governments enjoy the liberty of non-compliance as they have constitutional rights to enact their pension laws.
It could be recalled that during the third quarter 2018 Consultative Forum for States, organised by PenCom in Lagos, the Acting Director-General, PenCom, Aisha Dahir-Umar, represented by PenCom’s Head of State Operations, Dan Ndackson, said that there were constitutional provisions that make states independent to enact their pension laws.
The Pencom boss noted that only three states and the Federal Capital Territory (FCT) have been complying fully to the CPS, while only eight out of the 24 states that have enacted laws to implement the CPS are making remittances, but in an abnormal way.
She said: “Some of the states are making full remittances which are the employer and the employee contributions. Some are remitting only employee contributions, while others remit employer and employee, but in an inconsistent manner, which means that this month they may remit both and next month, they may remit only for employees.
“The commission respects the constitutional rights that have been given to states, however we have a law that empowers the commission to oversee pension matters in all states and this forum is one of the strategies that the commission has adopted in encouraging states to support the CPS.”
While admitting that the commission has no power to force states to adopt a particular pension law, she maintained that PenCom has the power to guide states that want to move from the Defined Benefit Scheme to the CPS and encourage reluctant states to comply to the CPS.
Dahir-Umar noted that the commission had made efforts to seek audience with State Chief Executives, to explain the benefits of the CPS to them, so they could hook up with the scheme. She said that the matter goes beyond state executives to labour unions in all states, as the CPS was designed for workers.
Speaking further, she said: “the workers need to know the benefits of this scheme and for that reason; we also engage labour unions in all the states to explain the scheme to them. In some cases, it is the State’s labour union that encourages their state governments to adopt the scheme.”
Though there are enormous potentials for growth of the Nigerian pension funds to account for a significant proportion of the Nation’s GDP, the slow compliance of states to the CPS might hinder PenCom’s ongoing strategy to contribute at least 10 per cent of the nation’s GDP by 2019.
Meanwhile, as the pension funds appreciate, there are fears of uncertainty as Pension Funds Administrators (PFAs) invested N151.95 billion of pension funds in state government securities in the Second Quarter of 2018 or 1.8 per cent of the total pension funds which stood at N8.23 trillion at the end of June 2018. However, PenCom decried the investment of the increasing funds in state governments’ securities, especially of those yet to comply with the CPS.
Source: G Business