FG, States Incur Over N450bn Pension Arrears Burden

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While the federal government ows more than 14 months pension
arrears, amounting to over N250 billion under the Contributory
Pension Scheme (CPS) and Defined Benefits Scheme (DBS), 20 states
of the federation owe a cumulative N200 billion to their retirees.
ZAKA KHALIQ presents industry experts’ perspectives on the way
out.

While the achievements so far recorded under the Contributory
Pension Scheme (CPS) known as the new pension system is
commendable, however, the inability of Federal Government and some
state governments to honour pension obligations of their respective
workers as and when due has created N450 billion pension arrears
for the two tiers of governments, both under the old and the new
pension schemes.

To this end, retirees are groaning in pains, for they could not
get what they have laboured for during their working career.

Federal government is already owing more than 14 months pension
arrears amounting to N250 billion to its workers, while there has
been a decline in the budgetary provision for funding of the
Retirement Benefit Bonds Redemption Fund (RBBRF) account and the
remittance of monthly contribution from 2014 till date, meaning
that retirees would not be able to get their monthly pensions.

Twenty states, especially, the financially strapped ones, are
owing as high as 20 months pension arrears amounting to N200
billion, while pensioners continue to live in penury, with some
dying in the process.

Information from the National Pension Commission (PenCom) shows
that as against the N91billion needed to offset pension arrears
through RBBRF, only N50billion was budgeted for in the 2016
national budget, leaving a shortfall of N41.71 billion.

FG had earlier said it has released N41.5 billion to PenCom as
pension arrears under CPS for the year 2014, 2015 and 2016.

Minister of Finance, Mrs. Kemi Adeosun who disclosed this also
announced that N12.5 billion being outstanding for January,
February and March 2017 has been settled based on 2016
appropriation, bringing the tally to over N54 billion.

States Not Remitting Pension Of Their
Workers.

At the state level, only 10 out of the 36 states of the
federation have commenced the remittance of contributions into the
Retirement Savings Accounts (RSAs) of their employees, while eight
have begun funding of their Retirement Benefit Bond Redemption Fund
Accounts.

The remaining 26 states, it disclosed, were yet to commence the
remittance of contributions into their workers’ RSAs or fund their
accrued rights, as retirees in those states were left to their own
faith.

A report from PenCom clearly disclosed that only 10 states out
of the 26 states that have enacted their Pension Reform Laws and
are remitting deducted funds into the RSAs of their employees.

Records also indicated that 673,116 contributors, who are
workers of the various state governments, are registered with
different Pension Fund Administrators( PFAs.). Lagos, Ogun, Kaduna,
Niger, Delta, Osun, Rivers and Anambra states have commenced the
remittance of contributions to six PFAs and are funding their
accrued rights.

On the other hand, while most of the states are owing between
one and three years pension arrears as a result of financial crunch
that affected their inability to pay salaries and pensions, only
few states are owing between two and 10 months pension
entitlements.

Investigation reveal that each of the states owes between N500
million and N1 billion pension on a monthly basis, amounting to
about N10 billion annually to some of the states that owed between
one to three years pension arrears.

This, our correspondent learnt, translates to about N200 billion
for the 20 States, while market observers believe the figure could
be more, with some states owing up to three years pension
arrears.

The aforementioned amount are arrears owed under the Defined
Benefits Scheme(DBS) and the Contributory Pension Scheme(CPS).

The concerned states are; Benue, Kogi, Abia, Oyo, Ondo, Osun and
Imo States.

Others are; Bayelsa, Delta Nasarawa, Niger, Taraba, Zamfara,
Ekiti, among other States.

To this end, ex-workers of the affected states who have now
retired are subjected to hardship after retirement as their
pensions were not forthcoming as expected.

Moreover, our correspondent’s investigation revealed that 28
states of the federation are still struggling to fully implement
the new pension scheme known as CPS, as only Lagos, Niger, Ogun,
Osun, Delta, Rivers and Zamfara States have fully implement the
scheme, with Jigawa, Kano, Adamawa,Akwa Ibom, Bayelsa and Edo
States partially implementing the new scheme.

Ekiti, Imo, Ondo, Kogi, Oyo, Taraba and Kaduna States, it was
learnt, have domesticated the CPS in their respective state law,
but are yet to commence implementation even as Borno, Ebonyi, Cross
River, Katsina, Kebbi, Gombe, Kwara, Nasarawa, Plateau, Sokoto and
Yobe States are in the law making process. Further investigation
shows that Anambra, Abia, Enugu, Bauchi and Benue states are yet to
enact any law to subscribe to the new pension scheme, thus, leaving
their teeming civil servants to their fate after retirement.

Retirees’ Lamentation

Some months ago, several pensioners in Abia State protested 20
months arrears of pensions and 18 years of unpaid gratuity.

According to the chairman of Abia State Civil/Public Pensioners
Association, Dr Emmanuel Okparanta, his members are owed several
months of pension arrears. He said: “Pensioners are dying on daily
basis as a result of delayed payment of pension and gratuity. Since
the beginning of the year, only one month pension has been paid,
even that of February, only few received the alert.” Okparanta said
they had exhausted all avenues of trying to draw government’s and
House of Assembly’s attention to the plight of members without
success.

Giving the breakdown, Okparanta said: “Unpaid pension arrears
from January to October, 2017 (10 months), unpaid accumulated
gratuity for 18 years, unpaid backlog of pension arrears for 2013
(12 months) 2014 (8 months) 2015 (10 months) 2016 (9 months)”.
According to him, the government has also failed to key into the
pension harmonization from 1999 to 2010, saying it is the reason
some of the pensioners in the state still receive as little as N500
monthly.

On the other hand, Ekiti and Oyo states pensioners have pleaded
with Governor Ayo Fayose of Ekiti State and his Oyo State
counterpart, Abiola Ajimobi, to pay their benefits to save them
from untimely death. While some of the pensioners in Oyo State
especially the primary schools retirees claimed they have not been
paid for over 56 months in addition to gratuities since 2008, those
in Ekiti lamented that beside the issue of unpaid pensions, their
gratuities have not been paid since 2012.

These pathetic stories cut across virtually all the states of
the federation and majority of the retirees affected are those
under the old pension scheme, known as Defined Benefits
Scheme(DBS).

Experts Reactions

Responding to this development, president, Pension Fund
Operators of Nigeria(PenOp), who is also the managing director of
AIICO Pension Managers, Mr. Eguarekhide Longe, urged state
governments to prioritise the payment of pension of their workers
as this will provide a secured future for their employees when they
retire. He urged states that are yet to fully key into the new
pension scheme to do so, saying, the transparency and
accountability enshrined in the CPS makes it the best pension
system to adopt.

Director, Centre for Pension Right Advocacy, Mr. Ivor Takor,
while charging states governments to perform their civic
responsibilities by honouring pension obligations of their
employees, said, most illiquid states have suspended pension budget
for now, instead, paying salaries without remitting the employer’s
monthly pension contributions into their workers Retirement Saving
Accounts (RSAs).

Takor, who is a former board member of the National Pension
Commission (PenCom), noted that the pension liabilities of some
states are so huge, that even if situation improves, it’s going to
be difficult to offset them, wondering why some states could owe
two to three years pension arrears.

He noted that the federal government was unable to remit pension
contributions as and when due since October 2015, even as state
governments are defaulting in the payment of their workers pension
contributions.

He observed that it was unfortunate that some state governors
left office and made some segmented pension laws that only cover
them and their office holders, some of them drawing massively from
the purse of the state in the name of pension to build houses and
cars and did not make laws for the state workers.

“This is very bad, it’s immoral and it should be addressed by
current governors,” he advised.

Director-general, Lagos Pension Commission(LASPEC), Mrs.
Folashade Onanuga, said in spite of the challenges the states are
passing through, their inability to priortise pension was
responsible for the pension backlog they owe.

“Even though there are a lot of things contending with state
funds, I believe if there is a commitment towards pension, we will
always find a way to pay it,” she noted.

“The inability to fund the Retirement Savings Accounts (RSAs) of
civil servants at the federal and state levels on a regular basis
is a concern for the growth of the pension assets,” according to
director-general, Ondo State Pension Commission, Mr. Jaiyeola
Olowosuko.

Former director-general, PenCom, Mrs. Chinelo Anohu-Amazu, while
speaking on this development said the lack of, or low funding of
RSAs of civil servants is a serious concern, especially at the
state level, stating that PenCom has embarked on a serious
awareness and sensitisation campaign in some states of federation
in a bid to ensure prompt compliance and full implementation of the
CPS.

Some states that opt out of the new scheme initially, she
pointed out, are now putting mercenaries in place to subscribe to
the scheme, while states which had earlier complied but are not
funding the RSAs of their workers, have been persuaded to remit as
at when due, although some of them she noted, cited the current
financial crisis as a challenge that is limiting their ability to
fulfill their pension obligation of workers.

Any Hope?

Whether this issue will be meaningfully addressed or not is a
matter of time, but with the country just out of recession, experts
say, it is going to be difficult for the two tiers of government to
clear this backlog of pension in a short time.

However, it was learnt that the federal government is seriously
considering the bond option to offset the over N90 billion
accumulated pension liabilities owed workers under the Contributory
Pension Scheme (CPS).

Meanwhile, the federal government has pleaded with pensioners to
be patient following the delay in the payment of pension and death
benefits to beneficiaries.

The Head of the Civil Service of the Federation, Mrs Winifred
Ekanem Oyo-Ita, said: “As a critical stakeholder in the pension
administration in Nigeria, the Head of Civil Service is well
informed of some of the challenges faced by pensioners. This is
either as beneficiaries under the Defined Benefits Scheme (DBS) or
the Contributory Pension Scheme (CPS). Worthy to mention is the
legion of complaints and challenges faced by pensioners under the
DBS.

“Similarly, under the CPS, what has recently been on the front
burner is the non- payment of pension to officers who retired from
2015 arising from the delayed funding of their accrued rights. It
is imperative to state that President Buhari, through the
instrumentality of relevant government agencies saddled with
responsibility of pension administration is working hard to evolve
more ingenious solution to address the challenges, ‘’ she said.

While the federal government ows more than 14 months pension
arrears, amounting to over N250 billion under the Contributory
Pension Scheme (CPS) and Defined Benefits Scheme (DBS), 20 states
of the federation owe a cumulative N200 billion to their retirees.
ZAKA KHALIQ presents industry experts’ perspectives on the way
out.

While the achievements so far recorded under the Contributory
Pension Scheme (CPS) known as the new pension system is
commendable, however, the inability of Federal Government and some
state governments to honour pension obligations of their respective
workers as and when due has created N450 billion pension arrears
for the two tiers of governments, both under the old and the new
pension schemes.

To this end, retirees are groaning in pains, for they could not
get what they have laboured for during their working career.

Federal government is already owing more than 14 months pension
arrears amounting to N250 billion to its workers, while there has
been a decline in the budgetary provision for funding of the
Retirement Benefit Bonds Redemption Fund (RBBRF) account and the
remittance of monthly contribution from 2014 till date, meaning
that retirees would not be able to get their monthly pensions.

Twenty states, especially, the financially strapped ones, are
owing as high as 20 months pension arrears amounting to N200
billion, while pensioners continue to live in penury, with some
dying in the process.

Information from the National Pension Commission (PenCom) shows
that as against the N91billion needed to offset pension arrears
through RBBRF, only N50billion was budgeted for in the 2016
national budget, leaving a shortfall of N41.71 billion.

FG had earlier said it has released N41.5 billion to PenCom as
pension arrears under CPS for the year 2014, 2015 and 2016.

Minister of Finance, Mrs. Kemi Adeosun who disclosed this also
announced that N12.5 billion being outstanding for January,
February and March 2017 has been settled based on 2016
appropriation, bringing the tally to over N54 billion.

States Not Remitting Pension Of Their
Workers.

At the state level, only 10 out of the 36 states of the
federation have commenced the remittance of contributions into the
Retirement Savings Accounts (RSAs) of their employees, while eight
have begun funding of their Retirement Benefit Bond Redemption Fund
Accounts.

The remaining 26 states, it disclosed, were yet to commence the
remittance of contributions into their workers’ RSAs or fund their
accrued rights, as retirees in those states were left to their own
faith.

A report from PenCom clearly disclosed that only 10 states out
of the 26 states that have enacted their Pension Reform Laws and
are remitting deducted funds into the RSAs of their employees.

Records also indicated that 673,116 contributors, who are
workers of the various state governments, are registered with
different Pension Fund Administrators( PFAs.). Lagos, Ogun, Kaduna,
Niger, Delta, Osun, Rivers and Anambra states have commenced the
remittance of contributions to six PFAs and are funding their
accrued rights.

On the other hand, while most of the states are owing between
one and three years pension arrears as a result of financial crunch
that affected their inability to pay salaries and pensions, only
few states are owing between two and 10 months pension
entitlements.

Investigation reveal that each of the states owes between N500
million and N1 billion pension on a monthly basis, amounting to
about N10 billion annually to some of the states that owed between
one to three years pension arrears.

This, our correspondent learnt, translates to about N200 billion
for the 20 States, while market observers believe the figure could
be more, with some states owing up to three years pension
arrears.

The aforementioned amount are arrears owed under the Defined
Benefits Scheme(DBS) and the Contributory Pension Scheme(CPS).

The concerned states are; Benue, Kogi, Abia, Oyo, Ondo, Osun and
Imo States.

Others are; Bayelsa, Delta Nasarawa, Niger, Taraba, Zamfara,
Ekiti, among other States.

To this end, ex-workers of the affected states who have now
retired are subjected to hardship after retirement as their
pensions were not forthcoming as expected.

Moreover, our correspondent’s investigation revealed that 28
states of the federation are still struggling to fully implement
the new pension scheme known as CPS, as only Lagos, Niger, Ogun,
Osun, Delta, Rivers and Zamfara States have fully implement the
scheme, with Jigawa, Kano, Adamawa,Akwa Ibom, Bayelsa and Edo
States partially implementing the new scheme.

Ekiti, Imo, Ondo, Kogi, Oyo, Taraba and Kaduna States, it was
learnt, have domesticated the CPS in their respective state law,
but are yet to commence implementation even as Borno, Ebonyi, Cross
River, Katsina, Kebbi, Gombe, Kwara, Nasarawa, Plateau, Sokoto and
Yobe States are in the law making process. Further investigation
shows that Anambra, Abia, Enugu, Bauchi and Benue states are yet to
enact any law to subscribe to the new pension scheme, thus, leaving
their teeming civil servants to their fate after retirement.

Retirees’ Lamentation

Some months ago, several pensioners in Abia State protested 20
months arrears of pensions and 18 years of unpaid gratuity.

According to the chairman of Abia State Civil/Public Pensioners
Association, Dr Emmanuel Okparanta, his members are owed several
months of pension arrears. He said: “Pensioners are dying on daily
basis as a result of delayed payment of pension and gratuity. Since
the beginning of the year, only one month pension has been paid,
even that of February, only few received the alert.” Okparanta said
they had exhausted all avenues of trying to draw government’s and
House of Assembly’s attention to the plight of members without
success.

Giving the breakdown, Okparanta said: “Unpaid pension arrears
from January to October, 2017 (10 months), unpaid accumulated
gratuity for 18 years, unpaid backlog of pension arrears for 2013
(12 months) 2014 (8 months) 2015 (10 months) 2016 (9 months)”.
According to him, the government has also failed to key into the
pension harmonization from 1999 to 2010, saying it is the reason
some of the pensioners in the state still receive as little as N500
monthly.

On the other hand, Ekiti and Oyo states pensioners have pleaded
with Governor Ayo Fayose of Ekiti State and his Oyo State
counterpart, Abiola Ajimobi, to pay their benefits to save them
from untimely death. While some of the pensioners in Oyo State
especially the primary schools retirees claimed they have not been
paid for over 56 months in addition to gratuities since 2008, those
in Ekiti lamented that beside the issue of unpaid pensions, their
gratuities have not been paid since 2012.

These pathetic stories cut across virtually all the states of
the federation and majority of the retirees affected are those
under the old pension scheme, known as Defined Benefits
Scheme(DBS).

Experts Reactions

Responding to this development, president, Pension Fund
Operators of Nigeria(PenOp), who is also the managing director of
AIICO Pension Managers, Mr. Eguarekhide Longe, urged state
governments to prioritise the payment of pension of their workers
as this will provide a secured future for their employees when they
retire. He urged states that are yet to fully key into the new
pension scheme to do so, saying, the transparency and
accountability enshrined in the CPS makes it the best pension
system to adopt.

Director, Centre for Pension Right Advocacy, Mr. Ivor Takor,
while charging states governments to perform their civic
responsibilities by honouring pension obligations of their
employees, said, most illiquid states have suspended pension budget
for now, instead, paying salaries without remitting the employer’s
monthly pension contributions into their workers Retirement Saving
Accounts (RSAs).

Takor, who is a former board member of the National Pension
Commission (PenCom), noted that the pension liabilities of some
states are so huge, that even if situation improves, it’s going to
be difficult to offset them, wondering why some states could owe
two to three years pension arrears.

He noted that the federal government was unable to remit pension
contributions as and when due since October 2015, even as state
governments are defaulting in the payment of their workers pension
contributions.

He observed that it was unfortunate that some state governors
left office and made some segmented pension laws that only cover
them and their office holders, some of them drawing massively from
the purse of the state in the name of pension to build houses and
cars and did not make laws for the state workers.

“This is very bad, it’s immoral and it should be addressed by
current governors,” he advised.

Director-general, Lagos Pension Commission(LASPEC), Mrs.
Folashade Onanuga, said in spite of the challenges the states are
passing through, their inability to priortise pension was
responsible for the pension backlog they owe.

“Even though there are a lot of things contending with state
funds, I believe if there is a commitment towards pension, we will
always find a way to pay it,” she noted.

“The inability to fund the Retirement Savings Accounts (RSAs) of
civil servants at the federal and state levels on a regular basis
is a concern for the growth of the pension assets,” according to
director-general, Ondo State Pension Commission, Mr. Jaiyeola
Olowosuko.

Former director-general, PenCom, Mrs. Chinelo Anohu-Amazu, while
speaking on this development said the lack of, or low funding of
RSAs of civil servants is a serious concern, especially at the
state level, stating that PenCom has embarked on a serious
awareness and sensitisation campaign in some states of federation
in a bid to ensure prompt compliance and full implementation of the
CPS.

Some states that opt out of the new scheme initially, she
pointed out, are now putting mercenaries in place to subscribe to
the scheme, while states which had earlier complied but are not
funding the RSAs of their workers, have been persuaded to remit as
at when due, although some of them she noted, cited the current
financial crisis as a challenge that is limiting their ability to
fulfill their pension obligation of workers.

Any Hope?

Whether this issue will be meaningfully addressed or not is a
matter of time, but with the country just out of recession, experts
say, it is going to be difficult for the two tiers of government to
clear this backlog of pension in a short time.

However, it was learnt that the federal government is seriously
considering the bond option to offset the over N90 billion
accumulated pension liabilities owed workers under the Contributory
Pension Scheme (CPS).

Meanwhile, the federal government has pleaded with pensioners to
be patient following the delay in the payment of pension and death
benefits to beneficiaries.

The Head of the Civil Service of the Federation, Mrs Winifred
Ekanem Oyo-Ita, said: “As a critical stakeholder in the pension
administration in Nigeria, the Head of Civil Service is well
informed of some of the challenges faced by pensioners. This is
either as beneficiaries under the Defined Benefits Scheme (DBS) or
the Contributory Pension Scheme (CPS). Worthy to mention is the
legion of complaints and challenges faced by pensioners under the
DBS.

“Similarly, under the CPS, what has recently been on the front
burner is the non- payment of pension to officers who retired from
2015 arising from the delayed funding of their accrued rights. It
is imperative to state that President Buhari, through the
instrumentality of relevant government agencies saddled with
responsibility of pension administration is working hard to evolve
more ingenious solution to address the challenges, ‘’ she said.

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