…It’ll hurt retired police officers, experts warn
By Henry Uche, [email protected]
The Nigerian Police Force’s potential departure from the Contributory Pension Scheme (CPS) after two decades of participation has sparked controversy. A proposed law aiming to establish a Police Pension Board and reinstate a Defined Benefits Scheme for police pensions has ignited debate among stakeholders.
Critics argue that this move is short-sighted and could lead to severe financial hardship for retired police officers. They contend that the CPS offers greater security and transparency compared to a Defined Benefits Scheme, which can be susceptible to mismanagement and political interference.
By remaining within the CPS, many believe that police officers would continue to enjoy the benefits of a professionally managed pension fund, ensuring a more secure financial future. A shift to a Defined Benefits Scheme, on the other hand, could expose retirees to uncertainties and potential shortfalls, particularly in an era of economic volatility.
Nonetheless, the national assembly is in top gear to enact new law to establish a Police Pension Board, to administer police pensions under a Defined Benefits Scheme.
Just last week, the Inspector General of Police, Kayode Egbetokun kicked against the bill seeking to exempt the police from the Contributory Pension Scheme (CPS), saying that it will not favour the police force. Egbetokun, who stated this while addressing some police officers, noted that if the police exit the CPS, they will go back to square one.
He said: “Yes it is true that a bill has been passed by the National Assembly for the police to exit the CPS and that bill is awaiting presidential assent, but has anyone of you seen the details of the content of that bill? You need to go and look at the bill and see where you are exiting to.
“Everybody is shouting ‘let us go, let us go’. You must know where you are going before you start shouting, ‘I want to go.
“When I became IG, I set up a committee to look into the pension issue and we discovered that the bill awaiting the assent of the President does not favour us. If we exit the present Contributory Pension Scheme, we are going back to square one, where we were before the introduction of the scheme. Our pension will be in the hands of politicians and they will be the one to address our pension. Our pension will be subject to budgetary allocation every year and when the government does not have money, you will not be paid.
“You remember those days when retirees will go and line up and wait for months and they will not get anything, that is the place you want us to go back to. So we have to be careful, not to go from the frying pan to the fire. I am the Inspector General of police, you must trust me that I care about your welfare and I will fight this pension issue to make sure that police officers who retire get the best of pension in retirement”
The Police Chief continued, “Let me disclose to you what I am working on, I am working on a pension scheme where every police officer will retire with his salary. That is the best and that is what I want for the police. Not the exit you are all shouting about. Where are you going, where are you exciting to, you don’t know where you people are going and you are saying let us go. Can you tell me where you are going before you say let us go. So let us be very careful with this emotion we are attaching to the exiting the scheme”
Also speaking during the public hearing conducted by the Senate Committee on Establishment and Public Service on Tuesday, November 19, 2024, on the bill sponsored by Senator Binos Dauda Yaroe, representing Adamawa South; Mr. Ivor Takor, Director, Centre for Pension Rights Advocacy (CPRA) stated that the CPS remains the most secure and sustainable system for ensuring police officers’ pensions and safeguarding them from old age poverty.
Takor recommended an enhanced gratuity payment for police retirees by the federal government, amounting to 300% of their final annual gross pay upon retirement, while their Retirement Savings Accounts (RSAs) continue to fund their monthly pensions.
He also beckoned on the federal government to assume full responsibility for funding police pensions under the CPS. This approach, he said, would enhance the adequacy and sustainability of police retirement benefits without disrupting the current pension system.
“Senior police officers at the rank of Assistant Inspector-General (AIG) and above, who currently retire with their full salaries as pensions, should retain this benefit within the CPS framework to ensure continuity and fairness. Meanwhile, the Contributory Pension Scheme should remain the foundation of police pensions, with necessary enhancements implemented within its existing structure as provided under the Pension Reform Act of 2014. This ensures stability, transparency, and long-term financial security for police personnel,” he added.
Similarly, the Pension Fund Operators Association of Nigeria (PenOp) vehemently faulted the plan by the Nigeria Police to exit the Contributory Pension Scheme for the Defined Benefits Scheme. The group said the “unsustainable” move would require N3.5 trillion yearly to fund pensions for approximately 400,000 personnel, in a budget already burdened by deficits.
This position was made by Chief Executive Officer of PenOp, Mr. Oguche Agudah, in Abuja, at the public hearing on a bill for an Act to establish a police pension board, cautioning that it would erode the value of assets and destabilize the financial system.
Agudah argued that transitioning to the DBS would not solve the police’s challenges, but “will, rather, create deeper financial and operational challenges for the country’s financial system.” According to him, reverting to the DBS model, which relies on government budgetary allocations, would lead to fiscal unsustainability and delayed payments for pensioners.
“It will also divert resources from other critical needs, including minimum wage adjustments and public services,” he said. Agudah explained that pension funds under the CPS were currently invested in bonds, infrastructure, and other critical sectors that contribute to the country’s economic growth. He said the CPS currently holds over N21 trillion in assets and remains a critical component of the country’s economic infrastructure. He noted that maintaining the police within the CPS would ensure long-term sustainability, equity, and economic stability. This is against the position of the Chairman of the Senate Committee on Establishment and Public Service, Cyril Fasuyi, who believes the bill was to create an enabling environment for retired police officers.
The bill is titled “Bill for an Act to Establish Police Pension Board, Bill, 2024 SB.294.” It seeks to create a separate pension board for the Nigerian Police Force, allowing them to exit the Contributory Pension Scheme (CPS) and transition to a Defined Benefits Scheme (DBS). The bill aims to address concerns regarding inadequate pensions for retired police officers, according to its sponsors.
In the same vein, the Director General of the National Pension Commission (PenCom), Omolola Oloworaran, advised the Police Force to remain in the CPS, as the Commission is working to ensure that pension administration is sustainable and adequate.
Represented by Dr. Farouk Aminu, the Commissioner Administration at PenCom, she added that “the Federal government has set up a committee consisting of the minister of finance, Accountant General and Auditor General of the Federation, head of service among other heads of agencies to identify the issues of pension liabilities and accrued rights.”
PenCom DG, who spoke at the same session (the public hearing), maintained that the Police pension board bill is a step in the wrong direction but reiterated PenCom’s commitment to police welfare and the quest to make pension affordable, sustainable, and adequate.
“PenCom has consistently proposed practical solutions, including increasing pension contribution rates, offering additional retirement benefits, and implementing periodic pension reviews under the existing CPS framework.
“These measures are designed to enhance the financial well-being of retired police personnel without compromising fiscal discipline or administrative efficiency.
“Notably, the establishment of an Augmentation Fund and the enhancement of the Retiree Resettlement Scheme demonstrate PenCom’s commitment to addressing the unique needs of the police,” Oloworaran affirmed.
She added that the welfare of Nigeria Police personnel is paramount, saying; “The CPS offers a balanced approach to achieving pension adequacy, affordability, and sustainability.”
PenCom Chief also assured that implementing the Commission’s recommendations was a more viable path to meeting the needs of the police personnel while safeguarding the broader national interest. PenCom DG admonished the senate to prioritize those solutions and uphold the principles of Nigeria’s pension reform for the benefit of everyone involved.
Other stakeholders at the hearing, including the Central Bank of Nigeria (CBN), the Secretary to the Government of the Federation (SGF), and the Nigeria Union of Pensioners, also strongly opposed the bill seeking to establish the police pension board.
Recall that in 2022, Aisha Dahir-Umar, former DG of PenCom, strongly opposed the idea of the NPF seeking exit from the CPS. According to her, rather than exiting, the NPF should seek a salary increment and better welfare.
Speaking with an insurance educator, Dr. Abass Olufemi, who is the immediate past Head of Department, Insurance, Lagos State University (LASU), he expressed worry over the intended exodus, as such would snowball to other military and paramilitary seeking to leave any time soon. Olufemi advised vested interest to painstakingly analyze the pros and cons of the decision, saying, “this may set the template and model for other forces to leave.”