From Uche Usim, Abuja
Following the ninth Senate’s passage of the Police Pension Bill, the Pension Fund Operators Association of Nigeria (PenOp) has appealed to President Bola Ahmed Tinubu, to discard the document currently awaiting his assent in the overall interest of the country.
There are already concerns in various quarters that the cash-strapped federal government may incur over N1.9 trillion additional pension liabilities if the police force, with over 300,000 personnel, exits the Contributory Pension Scheme and becomes the full responsibility of the federal government under a Defined Benefits Scheme (DBS).
From industry records, the federal government’s liability under the CPS for police personnel is estimated at over N200 billion. The money is from accrued pension rights and monthly employer pension contributions as obtained in the CPS.
PenOp’s Chief Executive Officer, Oguche Agudah, in a statement described the Bill, seeking to create a Police Pension Board as retrogressive and unsustainable.
The operators insisted that the CPS, currently in operation, was very transparent and sustainable.
“There is clear visibility into the amount of retirement benefits disbursed by all the PFAs. In contrast, other pension schemes operated in the past, outside of this framework, lack such transparency”, the statement noted.
According to PenOp, if the Police Pension Bill secures presidential assent, it automatically withdraws the police from the CPS and takes it back to the outdated and opaque Defined Benefits Scheme (DBS), which is burdened by allegations of fraud and consistent operational inconsistencies. This, the operators noted, would lead to a terrible system upset as procedures and processes designed by the government to manage pension matters of various institutions would be fractured.
PenOp said it was completely counterproductive to go back to the old order when the current CPS holds better offerings.
“This would only add more financial burden on the government through unsustainable pension obligations that it has already made provision for through a private sector managed pension scheme.
“Unwinding investments destabilizes the financial system, diminishes assets, and jeopardizes the retirees themselves. Moreover, it disrupts fiscal policies and creates an unstable financial system.
“The beauty of the CPS is that the benefit that accrues to one member within the scheme can be enjoyed by all the members. A standalone pension management system as the police is advocating will not benefit from this pooling effect”, the statement added.
The DBS is administered by the Pension Transitional Arrangement Directorate (PTAD), a Federal Government Agency, while the pension fund assets under the Contributory Pension Scheme (CPS) are privately managed by Pension Fund Administrators (PFAs) and kept in custody by Pension Fund Custodians (PFCs).