In a significant legislative move on Tuesday, the Senate successfully passed the Bill for the Establishment of a Police Pension Board. This development follows the recent departure of National Assembly workers from the Contribution Pension Scheme. While the passing of the bill marks a pivotal moment, pension operators have expressed apprehensions about the sustainability of the expected funding, should it receive approval.
Under the provisions of the bill, the Nigeria Police Force would be exempted from the Contributory Pension Scheme, reverting instead to the old Defined Benefit Scheme. Industry stakeholders estimate that addressing the pension liabilities for approximately 300,000 police personnel through actuarial evaluations could amount to a substantial N2tn burden on the Federal Government.
If the bill is enacted, it would require the Federal Government to assume full responsibility for funding police pensions, diverging from the current Contributory Pension Scheme, which entails contributions from both workers and employers. Despite the opposition raised by industry stakeholders during the public hearing organized by the Senate Committee on Police Affairs on January 20, 2023, the upper chamber announced the bill’s successful passage via its Twitter handle.
The National Pension Commission, which serves as the regulatory body for the pension industry, along with the Pension Fund Operators Association of Nigeria and the Nigeria Labour Congress, have all expressed their opposition to the bill. In light of these concerns, Oguche Agudah, the Chief Executive Officer of the Pension Fund Operators Association of Nigeria, emphasized the need to consider the larger financial implications, stressing the importance of sustainability and affordability in the decision-making process.
As the bill progresses, further scrutiny will undoubtedly be directed towards the potential ramifications of the proposed legislative changes, particularly regarding the long-term financial feasibility of the envisaged funding model.