By INWALOMHE Donald
IT took Edo State 13 years to join contributory pension scheme after the law was passed in 2004 during the administration of former President Olusegun Obasanjo. Governor Godwin Obaseki has worked tirelessly in the last three months to key into the scheme and break the barrier for 13 years. It is on record that retired civil servants, under the Nigeria Union of Pensioners, staged protests in Benin, the Edo State capital, against the non-payment of their pension arrears by the state government almost on daily basis during campaigns for the September 28th 2016 governorship election in Edo State. The aggrieved protesters, many of whom were dressed in black attires, carried placards with different inscriptions. The retirees decried what they described as clandestine delay in the pay of their entitlements spanning between seven and 42 months.
The governor introduced 2017 Edo State contributory pension scheme in line with his plan of governance activities which have typically focused on operational activities, driven by the desire to minimise the risks of administrative errors. The Governor has considered the changing legislative and regulatory environment which has also led to this scheme operational focus, taking up time that could otherwise be spent on more strategic areas. He identified attributes of good pension scheme governance – largely derived from an examination of leading global pension schemes. Some of these attributes could be regarded as being within the reach of most funds – the core best-practice factors.
He also promised that the state government, effective from January 1, 2017, will commence the contributory pension scheme for state workers to mitigate the challenges being faced by pensioners. According to him, , “the issue of pension is one that we will deal with. So, in this year’s budget, what I have said is, effective January 1, all of us will now move into the contributory pension arrangement. That is, the pension money is already there and. it’is automatic. You know the money that is to be converted to annuities and there are liabilities while the bulk sum is paid to them. “I was part of that arrangement when Obasanjo set up the pension committee to review the pension system. So, by the grace of God, effective January 1, we are cutting everybody over’’.
Edo is today among the states that enacted their laws on the Contributory Pension Scheme in the first quarter of 2017, According to the commission, more than 24 states are at the various stages of implementing the scheme, while one state has yet to commence the process.
Many states including Edo in Nigeria are implementing the Contributory Pension Scheme (CPS) now in operation in the country, the National Pension Commission (PenCom) has confirmed. For 13 years since the law on contributory pensions scheme was passed, Edo State under Governor Obaseki has regularized its pension system in line with global pensions demand.
Obaseki has assured the Pensions Fund Managers of his administration’s support in ensuring quality service delivery to the Edo State workforce. Edo State has engaged the services of about 15 Pensions Fund Administrators saddled with the responsibility of enrolling the employees in the state public service. He admonished the managers to ensure they secure offices in Benin City, adding that the state government intends set up service centres in designated areas across the State, and constitute a new Pension Board that is expected to work side by side with the PFMs in terms of support and sharing of experience. The pension managers are Trust Fund Pension plc, Alico Pensions Managers Limited, Arm Pension Managers Limited, Crusade Starling Pension Limited, Fidelity Pensions Managers Limited, First Guarantee Pensions Limited, Future Unity, and Glanvils Pensions Limited, Leadway Pensions PFA Limited, Legacy Pensions Managers Limited, Pensions Alliance Limited(PAL), Sigma Pensions Limited and Stanbic BTC Pensions Managers Limited among others.
The governor has said that “Edo State has made a provision in the budget for monthly contribution. I think the contribution is 15% – 10% on behalf of government and 5% on behalf of you. So, of everything you earn, we put 15% aside every month until you retire. And that money is being managed.” The state has already earmarked the sum of N6 billion for the pension scheme.
“The governor said the goal of his administration is to eliminate outstanding pension arrears before the end of his term. The government started implementing the contributory pension scheme in January 2017 and has set up a technical committee which is expected to create a smooth take off of the scheme. Members of the committee are drawn from the state government, labour and representatives from PFMs.
Edo State in 2017 amended contributory pension scheme act in harmony with the amended Pension Reform Act as signed by former President Goodluck Jonathan. as gazetted, to commence 1 July 2014. Some of the key changes include increase in the minimum number of employees required to make mandatory contributions under the Act, increase in the minimum contribution into the Scheme and the imposition of fines and penalties on Pension Fund Administrators (PFA) for failure to meet their obligations to contributors and violation of the provisions of the Act.
One of the advantages of the Scheme is the freedom to choose a PFA. Under the new contributory scheme, the choice of a PFA rests solely on the employee, and he has the option to remain with the fund manager even when he changes jobs.
The scheme is also designed in such a way that employees can transfer their RSAs to other PFAs if they are dissatisfied with any PFA?s services. However, this aspect of the scheme is yet to be implemented. It is more user-friendly. The new system allows contributors access to their account balances through the Internet and other technology-driven platforms.
Efficient customer service and good investment returns are at the heart of the scheme, and the PFAs have had to put systems in place, as well as personnel and services that will ensure that contributors can gain easy access to their accounts, maximize returns to be earned on their retirement benefits over time, and receive their retirement benefits with ease.
What this signifies for the Nigerian worker is the absence of queues. It also means that they do not have to travel long distances to get their pension payments or even to present themselves for periodic pay parades since pension payments are made directly to retirees’ accounts through banks of their choice on a monthly basis.
Donald writes from Benin City, [email protected]