Findings have shown that only five states are ready to fund their retirees’ RSA under the Contributory Pension Scheme (CPS). This is as more workers are expected to retire by the end of the first quarter of 2022.
Most of the states that have joined the CPS have not begun planning or setting aside funds for pension payments, and this situation has raised worries for the National Pension Commission (PenCom).
PenCom listed Lagos, FCT, Osun, Kaduna, and Delta as the states paying pensions under the CPS and covering the accrued rights of pensioners.
According to data collected from PenCom on the “Status of implementation of the CPS by states,” 25 states had passed legislation relating to the CPS, and 15 of those had pension bureaux and boards that were compliant with the CPS.
The 25 states include Lagos, Federal Capital Territory, Osun, Kaduna, Delta, Ekiti, Ondo, Edo, Benue, Kebbi, Niger, Rivers, Ogun, Bayelsa, Kogi, Anambra, Abia, Taraba, Imo, Sokoto, Adamawa, Ebonyi, Nasarawa, Enugu, and Oyo, according to the statistics.
The statistics showed that the states of Kwara, Plateau, Cross Rivers, Borno, Akwa Ibom, Bauchi, Katsina, and Yobe were in the process of drafting bills to join the CPS.
Jigawa, Kano, Gombe, and Zanfara were states having additional pension plans, according to PenCom statistics.
According to the pension regulator, “The Commission approached the Rivers State government, expressing concern about the state’s failure to fully implement the CPS in the state, in light of the looming start of retirement for state employees under the CPS as of 1 June 2022.
The Commission “addressed the government of Ogun State on the repeated non-remittance by the state of pension contributions into the RSAs of the state employees, in view of the fact that employees of the state would start retiring under the CPS as of 1 July 2025.”
The Pay-As-You-Go defined benefit scheme (the previous unfunded pension regime) and the CPS under the Pension Reform Act 2014 as amended have been operating concurrently in Nigeria’s pension industry since 2004, according to Dr. Pius Apere, Chairman/Chief Executive Officer of Achor Actuarial Services Limited.
Apere pointed out that because the regulator insisted that the retirement benefits would not be paid from RSA without the accrued pension rights being added to it, the delay or inability of the Federal Government and state governments to remit the accrued pension rights to the individual retirees’ Retirement Savings Accounts on a timely basis had worsened the situation of pensioners.