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Omoniyi Salaudeen, Lagos and Isaac Anumihe, Abuja
Access to retirement benefits is one major issue that spikes the anxiety of an average Nigerian worker either in public or private employment. And it is for no other reason than the old narrative about the agonizing experience of senior citizens who had had to wait for several years to obtain clearance for access to their gratuity and entitlements. In the worst scenario, cases abound of victims who had collapsed in the course of documentation and never lived to enjoy the fruits of their labour.
In order to change the narrative, the administration of former President Olusegun Obasanjo introduced a new Pension Reform Act 2004 otherwise known as Contributory Pension Scheme.
It was designed to address the problem of late payment of pensions and gratuities to retirees. As stated in the Act, “the objectives of the Scheme shall be to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due, assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age and establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the Public Service of the Federation, Federal Capital Territory and the Private Sector.”
Exclusive of those who had three years left in service, all Public and private sector workers were accommodated in the new scheme. To ensure easy access to entitlements of workers upon the attainment of mandatory 50 years or retirement age of 60, the act further stipulates guidelines for withdrawal from Retirement Savings Account (RSA) of beneficiaries. It reads: “A holder of a retirement savings account upon retirement or attaining the age of 50 years, whichever is later, shall utilise the balance standing to the credit of his retirement savings account for the following benefits: programmed monthly or quarterly withdrawals calculated on the basis of an expected life span; annuity for life purchased from a life insurance company licensed by the National Insurance Commission” with monthly or quarterly payments; and a lump sum from the balance standing to the credit of his retirement savings account: provided that the amount left after that lump sum withdrawal shall be sufficient to procure an annuity or fund programmed withdrawals that will produce an amount not less than 50 per cent of his annual remuneration as at the date of his retirement.”
By this Act, “the employee may, on request, withdraw a lump sum of money not more than 25 per cent of the amount standing to the credit of the retirement savings account: provided that such withdrawals shall only be made after six months of such retirement and the retired employee does not secure another employment. Where an employee dies, his entitlements under the life insurance policy maintained under Subsection (3) of Section 9 of this Act shall be paid to his retirement savings account. The pension fund administrator shall apply the amount paid under Subsection (1) of this section in accordance with Section 4 of this Act in favour of the beneficiary under a will or the spouse and children of the deceased or in the absence of a wife and child, to the recorded next-of-kin or any person designated by him during his life time or in the absence of such designation, to any person appointed by the Probate Registry as the administrator of the estate of the deceased.
But barely 16 years down the line, the same controversy that dogged the old pension arrangement has continued to characterize the implementation of the policy. A cross section of workers both in public and private employment who spoke with Sunday Sun, narrated their concern and anxiety over the issue of remittance to the pension administrators and disbursement of their retirement saving accounts as and when due.
Mr Obinna Louis Dominic Ozuzu, who retired as a deputy director in the Federal Inland Revenue Service (FIRS) in August last year, said he had not been able to access to his Retirement Saving Account till now. Having gone through the screening process, he was told to wait for the Federal Government to pay the accrued contribution to his RSA.
According to him, the Federal Government has only funded his RSA up to February 2019. He, therefore, wondered when the authorities would pay the balance.
He lamented: “I retired in August last year, up to now I have not been able to access my pension. The Federal Government is not contributing its own counterpart funding or accrued rights. When the government introduced the contributory pensions, some monies were already in their hands. According to their obnoxious and bogus laws, before you are entitled to the pension fund, the government has to bring your accrued rights into what you have contributed. The two contributions would be summed up by the pension managers and you now negotiate with them on what you would be paid and how you are going to be paid. The problem now is that even as I speak with you, the government has only funded up to February 2019.
“I retired in August 2019, only God knows when they will fund up to the month of August. As if the insult is not enough, the pension managers are insisting on giving you whatever they arrived at. They now insist on paying 25 per cent lump sum and keep 75 per cent. For somebody that is already 60 years, you are keeping 75 per cent where you are paying the person monthly stipend that is not even up to the interest accruable to the money not to talk of the principal sum. So, that is where the wickedness is. The money is there yielding interest in their bank and they are collecting interest on your money. You see the alert in your phone, but you cannot access the money.”
Another concerned retirees, Mr Hezekiah Onwuelezi, who disengaged from the Federal Housing Authority (FHA) as an Administrative Officer on Grade Level 14, also shared a similar experience, saying “after my data capturing, my pension fund administrator (PFA) told me to wait until the government pays the accrued rights. It is only when that is done that they would calculate my pension.”
Mr Onyema Njoku, a retired Federal Government College principal in Rivers State, could also not hide his disappointment. Speaking with Sunday Sun, he said he retired two years ago, but he had not been able to access his pension fund.
He said since he did not have access to filthy money while in service, he depended sorely on his pension contribution, which was not forthcoming.
“Since I retired from service about two years ago, I have not been able to access my RSA and it is affecting me seriously. I cannot buy my drugs and even feed well because some of my children are still in school. It is so frustrating. That is why some workers are fraudulent in the office, knowing that there is no assured future,” he fumed.
In Lagos and indeed other states of the federation, most retirees are complaining of their inability to access their RSA until after three years.
Mr Badmus Akande, who retired in 2018 as a deputy director, state Ministry of Education, told Sunday Sun that his entitlements had not been paid because the government did not remit its own part of the contribution to the pension funds.
“I retired in 2018 as a deputy director in the Ministry of Education, up till now, my gratuity and pension entitlements have not been paid. Those who retired before us have also not been paid. After spending all your life to serve the state, you still have to wait for a minimum of three years before you have access to your entitlement, which the pension administrator would pay in piece meal. Everything about our system is always riddled with fraud.”
Miss Bolanle Ajao, who lost her mother while in active service as a teacher, expressed sadness over the way and manner she was being tossed around until she gave up the effort to access her mum’s claims and entitlements. “Following my mother’s death about seven years ago, we did everything necessary to access her benefits, but nothing came out of it. At last, I had to back out and move on with my life. It’s quite disheartening that some people live on other people’s sweat,” she said.
The President of the Trade Union Congress (TUC), Mr Qadir Olaleye, speaking with Sunday Sun on the matter, blamed the poor implementation of the contributory pension scheme on the insincerity of the government both at the state and federal levels.
He said that the organized labour would review its strategy to ensure that government fulfills its own side of the obligation.
He argued: “There is no problem with the New Pension Act, but the implementation. You will agree with me that we always have implementation problem in Nigeria. There is lack of commitment on the part of the states and Federal Government to release deductions from workers’ salaries and their own part of contributions to the Pension administrators.
“I can tell you that we have a lot of accumulated pension funds they have failed to release to the pension administrators. If they don’t release the funds to the administrators, how would the workers get their entitlements as and when due? So, it is not implementation problem, but lack of commitment on the part of the government both at the federal and state levels to release those funds to the pension administrators.”
He accused the administration of President Muhammadu Buhari of muzzling the regularity authorities by deliberately refusing to constitute the board of PENCOM for the past five years.
He added: “The regulatory authority is being supervised by the Federal Government of Nigeria or its agency. For the past four or five years, the Federal Government has refused to constitute governing board of PENCOM. As we speak, there is no board in place. It is only board that can enforce penalty for non-compliance either to sue the government or to continue to liaise with the government to ensure that they release those funds. But for the past five years, the government of President Muhammadu Buhari has refused to constitute PENCOM board.
“We will continue our strength on shouting on government to release those funds to the pension fund administrators so that retirees can have access to their money. At the state level, 90 per cent of pension funds both deductions from workers and their own part of it has not been released to the administrators. Labour will come up with another strategy to ensure regular release of funds to the administrators. But it is very important to establish PENCOM board to take decision.
“If there is going to be any reform at all, there must be a proviso that pension deductions must be paid along with salaries both at the state or federal level. Salaries should not be paid without the pension going along with it. In the organized private sector, I don’t think we have up to one per cent defaulters. PENCOM always applies penalty to the organized private sector, but they find it difficult to apply it to the government. Government has refused to live by leadership example. Oragnised private sector deducts and pays immediately because of the fear of penalty and the interest that will be charged for defaulting. It is a shame that the government has refused to be a good example.”
The real fears
Following the Federal Government’s disclosure of its plan to borrow N2.0 trillion from the over N10 trillion pension funds to construct roads and houses, there is now heightened fears among workers and retirees as to what would be their fate, if the government refuses to pay back.
This has also triggered suspicion over the ability of the Federal Government to meet up its obligations to the pension administrators.
In difference to the workers’ fear, however, a renowned Economist, Prof Segun Ajibola, says nothing is wrong in government borrowing from pension money, if the purpose is to make use of idle funds for the economy to recover, especially at a time like this.
He then warned that stringent measures must be put in place to ensure good utilization and repayment.
He explained: “If the fund is there idle, the government can borrow from it for the purpose of developmental project that can make the economy recover, but with a strict condition of how that money would be repaid back to the fund. For that to happen there must be clearly defined projects for which the money is tied and those projects must be capable of paying back if not fully, at least, reasonably so that the government can make up for the shortfall.
“The projects themselves must be able to generate revenue to pay back. It should not be taken for running the administration or payment of salaries and so on and so forth. That will be money going down the drain.”
According to him, the fear of the workers may not be misplaced considering the problem of accountability, mismanagement and corruption in high places.
He said: “These are fears that are raising concern in the minds of many Nigerians.
“As a country, we have our fears about how funds are utilized. If the money is taken for genuine concern for development, there is the likelihood that another succeeding government may come and then turn it into a different story entirely.
“We have institutions that have oversight functions on the executive. We have the National Assembly; we have the ministries and agencies. The roadmap should be very clear to everybody that we have a good reason for taking this money. It should also be clear to everybody that there will be effective monitoring. It should be clear to everybody that accountability will not be a problem. All the loopholes should be plugged. There should be no leakages or wastages. It is even better for this kind of money to go by the way of Public Private Partnership (PPP) so that there will be some external forces that will be able to monitor utilization of the money and will also monitor accountability to ensured repayment.
“As an Economist, I won’t support idle funds staying somewhere while the country is bleeding. It doesn’t make economic sense. But at the same time, we must strike a balance with a sense of accountability. So long we can do that, so long as the National Assembly can perform its oversight, so long external parties are involved by way of PPP and we can be assured that it is not going to be money going down the drain, it makes more economic sense to use money already accumulated somewhere than going overseas to borrow.”
Also, the National Pension Commission (PenCom), in a quick response to the fear being expressed by the workers, said the commission had developed very expensive and comprehensive investment guidelines that will guide the kind of investment the PFAs will make. It also added that the regulator had specified the limits on investments, which the PFAs must abide by.
In a chat with Sunday Sun in Abuja, the PenCom spokesman, Peter Aghahowa, said: “If those funds are to be invested, they are going to be invested within the assets classes. For example, treasury bills, infrastructure bonds and all those kind of things. So, if an instrument is coming out in line with that investment guideline, PFAs have the liberty to invest in it because what they want for the contributor is very good return and security because nobody wants to retire and at the end of the day he would not see his money. So, these are the funds that are invested. When people say that government wants to borrow, it is like saying that you are going to take money from somebody’s account.
“If the government provides instruments that meet investment guideline, the PFAs will call their investors who are the professionals and they will look at it. If it meets their requirements in terms of providing fair returns and safety, they will invest. They also have the liberty to say well, we have looked at it, we have analyzed it and we are not going to invest. So, these are purely professional decisions.”
