Contributory pension: NLC, retirees lament as 26 states fail to join scheme

Only six states and the Federal Capital Territory have fully implemented the Contributory Pension Scheme as of the end of June 2023, according to the National Pension Commission.

According to PenCom’s second quarter report for 2023, apart from the FCT, states fully implementing the CPS are Lagos, Osun, Kaduna, Ekiti, Edo, and Ondo.

No fewer than 26 states have yet to fully join the scheme.

According to report, figures obtained on Wednesday from PenCom’s second quarter report for 2023 indicated that while some states were at different levels of compliance, many were not implementing the CPS established by the National Pension Commission, but continued under the old pension scheme called Defined Benefits Scheme.

Contributory scheme

Under the CPS, the employer and the employee contribute 10 per cent and eight per cent of the workers’ monthly emolument respectively, totalling 18 per cent, which is paid into the Retirement Savings Account of the worker with the Pension Fund Administrator.

The DBS is funded by the government to provide monthly stipends for workers at retirement.

But the organised labour and pension union members in their reactions lambasted the state governments, saying while governors retired into luxury, retirees lived in penury and saw retirement as a death sentence.

The breakdown of PenCom’s report showed that Delta State was substantially implementing the CPS, and Anambra, Benue, and Kebbi were partially implementing the scheme.

Rivers, Ogun, and Niger states extended their transition period to the CPS, according to PenCom.

The states not yet implementing the CPS are Bayelsa, Kogi, Abia, Taraba, Imo, Sokoto, Ebonyi, Nasarawa, Enugu, Bauchi and Oyo.

PenCom disclosed that Jigawa was fully implementing the Contributory Defined Benefits Scheme, while Kano had partial implementation of the CDBS.

Adamawa, Gombe, and Zanfara have not started implementing the CDBS.

According to PenCom, the CDBS, which is hybrid, is contributory but the benefits are defined; every month, pension contributions are deducted from workers, and the money is pulled together and used to pay retirees.

The pension industry regulator disclosed that Plateau, Cross River, Borno, Akwa Ibom, Katsina, Yobe, and Kwara were at the bill stage of adopting the CPS.

PenCom stated, “A key objective of the Pension Reform Act is to establish a uniform set of rules, regulations, and standards for administering and paying retirement benefits for the public and private sectors at the national and sub-national levels.

“Specifically, section 2(1) of the PRA 2014 provides that the CPS applies to any employment in the public service of the federation, the Federal Capital Territory, the states, and local government as well as the private sector.

“However, by the provisions of the 1999 Constitution of the Federal Republic of Nigeria (as amended), state governments can legislate on pension matters; consequently, state governments have to domesticate the CPS within their various jurisdictions by enacting a state pension law.”

It added that the National Council of State in its meeting of August 2006, adopted the CPS for all states and local governments.

Following the scheme’s adoption, a model state pension law was developed for the state governments to adopt and modify based on their peculiarities.

“The transition from the DBS to the CPS or even the CDBS at the state and local government levels is significant in several ways and inevitable eventually, even for the states yet to do away with the DBS,” PenCom stated.

Expert tackles states

The Director of the Centre For Pension Rights Advocacy, Ivor Takor, in an interview expressed concern that 19 years into the pension reforms in Nigeria and the introduction of the CPS under the PRA 2004 which repealed Pension Act 1990 that was of universal application in the federal and state public services, there were still states in the country that had no laws in place to protect the pension rights of their civil servants.

He lamented that some of the states with pension laws for public servants were not fully implementing such laws.

“In some states, pensions are being owned for upward of 35 months. The backlog of gratuities is almost a forgotten case, while death benefits payable to the next-of-kin of the deceased public servants are not mentioned.

“The sad and disheartening situation is that some of these states have life pension laws in favour of former governors and former deputy governors, which guarantee that these former political office holders maintain lives of luxury through generous pension and other benefits.

“Moreover, some of these former governors have planted themselves in the Senate chamber of the National Assembly and as ministers in Abuja drawing salaries and allowances.”

These former governors, he said, were drawing pension and other retirement benefits from the states they governed and at the same time drawing salaries and allowances as either senators or ministers.

“Retired public servants of these states are languishing in abject poverty and destitution with others dying as a result of the non-payment of their pension and gratuities by former governors despite the constitutional guarantee of their pensions.”

Data obtained from the budget implementation report of each state showed that 25 states earned N182.26bn in Q1, 2023.

This was a shortfall of 3.07 per cent or N5.77bn from the N188.03bn made in Q4 2022, based on a quarter-by-quarter analysis.

Although there are 36 states in Nigeria, Rivers and Sokoto have no data for Q1 2023 yet; Akwa Ibom has no data for Q1 2022, while Kwara, Edo, Kaduna, Lagos, Bauchi, Zamfara, Yobe, and Ogun have no data for Q4 2022.

The figure for IGR was limited to 25 out of the 36 states in the country, showing a fall in revenue, which could further hinder the ability of the states to meet their pension obligations, according to stakeholders.

This was according to data from the quarterly statistical bulletin of the Central Bank of Nigeria, which showed that states and LGAs owed banks about N2.21tn as of March 2023.

Reacting to the PenCom data, organised Labour condemned the defaulting states, saying retirement is now seen as a death sentence because of the poor treatment pensioners were subjected to in the country.

The Head of Information of the Nigeria Labour Congress, Benson Upah, described as sad and unacceptable the failure of states to remit the contributory pensions of active workers.

“The situation is sad and unacceptable. Retirees are deserving of their benefits as and when due. It is immoral that this right is being violated. But there are sanctions in the PENCOM Act for a default in remittances. PENCOM should exploit this as a first measure.”

Osun TUC

The Osun State Chairman of the Trade Union Congress, Abimbola Fasasi, said the current administration in the state was remitting the pension of workers, but he described as disheartening the failure of some states to remit the pensions.

“To the best of my knowledge, Osun, especially the present government, is remitting. But I will visit the relevant office in charge based on this discovery by PENCOM. So, whatever I see there will be facts.

“It is saddening and terrible that governments are taking the workers for a ride. It is a terrible thing. Today, people see retirement as a death sentence which should not be after 35 years in service and attainment of 60 years of age. People should be happy to go home and rest but in Nigeria, the reverse is the case.”

The Chairman of the Nigeria Union of Pensioners, Anambra State chapter, and former state chairman of the NLC, Dr Anthony Ugorzor, said the contributory pension scheme had not started in the state.

Ugorzor lamented that a lot of the retirees were being owed their pensions.

“The contributory pension scheme was canvassed in those days, but it has not taken effect in Anambra because there is a need for state legislation to make it a law. The old pension scheme is what we are still observing in Anambra and some parts of the South-East.

“The retirees are not happy about the development, although many of us are sceptical. You know that the contributory pension scheme is discouraging because no one trusts the government.”

The NLC Chairman in Ogun State, Hameed Ademola, said that the situation in the state is no different from what was happening in the defaulting 28 states.

“The contributory pension scheme is still on in the state though the government of Senator Ibikunle Amosun shifted its implementation to July 2025. When Governor Abiodun came, he set up a committee on the review of the scheme in 2020.

‘’The committee had some issues which it later resolved with the intervention of the Secretary to the State Government but the report has yet to be submitted to the governor. We are also feeling the heat like those states and we hope that things will be resolved in such a way that the workers will be happy,’’ the labour leader noted.

Checks also showed that the Kwara State Government has yet to join the contributory pension scheme.

The state NUP Chairman, Saidu Oladimeji, on Wednesday, disclosed that the state had not joined the scheme because the workers opposed it ‘’because