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Pension: The bad, the ugly and the worst

IN the face of various pension reforms, likethe  Nigeria Social Insurance Trust Fund (NSITF),  National Provident Fund, and more recently, Pension Reform Act 2004, pensioner s have had to live in misery because pension funds have consistently been diverted to private pockets. With the matter constituting an embarrassment to the country, not a few want an end to the hardship retirees go through in order to get their pension. CHARLES KUMOLU writes.

WHEN he secured appointment to lecture Internal medicine at the University of Lagos in 1962,  he looked forward to a happy retirement.

It is with this enthusiasm that he performed his job as Vice Chancellor, Minister of External Affairs, Physician, among other duties in the nation’s civil service as a public servant.

Following his detention by the military government of Gen. Mohammadu Buhari, he retired into private medical practice.

For someone, who had served his country at various capacities, this first indigenous Vice Chancellor of a foremost northern university, was entitled to his pension.

But until he died in the United States of America while on medical checkup, in August 2005, his pension was not paid by the Federal government.

The task of pursuing his pension, fell on the wife, Victoria Audu, who after all the hurdles, discovered that her husband’s pension wasa paltry N47.

My husband’s pension is N47

I was shocked to be told my husband’s pension was N47. I requested that the file be brought out. Some of the documents  I saw before were no longer there. I think it was the accountant in charge who said he was going to work out everything. This was last December.

You can imagine my state of mind and expectations and how it hit me when I was told it was only N47. I was told their calculation was based on figures sent in by Ahmadu  Bello University ABU. Going back to ABU I was told that it was N47,” she stated.

That is the story of Nigeria’s first indigenous  Vice Chancellor of Ahmadu Bello University Zaria, Prof. Isaya A Audu, who died without receiving his pension.

*Pensioners queuing for verification

This case however, is just one out of the countless instances when, those, who laboured for Nigeria are not rewarded with their retirement benefits.

Lately, news about  public sector pension has been negative. It is either discoveries of  huge pension arrears, ghost pensioners and discrepancies between pension appropriations and the actual amounts released.

Under this situation, which has made payment of pension appear like a probability, many retirees have died while waiting for their pension, while those alive live every day with regrets and pains.

The implication of this, VanguardFeatures,VF, findings revealed, is the dream of pensioners  retiring to relative comfort, which have been dashed, as funds meant for these senior citizens have been diverted by those responsible for managing it.

Diversion of N12 billion to private use

A handy examples is the Senate probe of the administration of pension funds in the country  and the ongoing  trial of  Dr. Sani Teidi Shuaibi, Mrs. Phina Ukamaka Chidi, Aliyu Bello and 21 others, for allegedly defrauding the pension department, office of the Head of Service of over N12billion pension fund.

Investigation  indicated that they used ghost pensioners to pay N2million and N3million into their accounts monthly, and later diverted the money through  fictitious award of contracts to the  companies where they had interest.

In the suit filed by the EFCC, dated March 21, 2011, the accused were alleged to have used various fictitious companies to divert N12 billion into private use.

Investigation also revealed that the commission froze the latest N12billion in three accounts allegedly operated by the two directors, following a fresh discovery by its team of investigators.

The team that uncovered the fraud had since 2010 been probing alleged massive pension fraud in the Pension Unit of  Office of the Head of the Civil Service of the Federation.

2004 Pension Act

It is against the backdrop of this mismanagement and the attendant  misery that senior citizens have had to live with, that the 2004 Pension Act, was enacted by the National Assembly.

Also,  failure of the National Social Insurance Trust Fund (NSITF) and the public sector pension schemes to effectively administer a social insurance and pension system in Nigeria metamorphosed into a crisis from which the Pension Act is founded.

However, further findings by VF indicated that before the act, which introduced contributory pension scheme for employees in public and private sectors, there had been other retirement schemes.

Accordingly, it was gathered that the first attempt at having a pension administration in Nigeria, was in 1946, when the Colonial Government in Nigeria, through the Chief Secretary to the Government (in a circular No 19/1945 of 24th  march, 1945) announced a superannuating pension scheme for African staff employed by Government. The appropriate legal enactment that brought the scheme into being was the Pensions Ordinance of 1951.

This scheme, reportedly had a minimum coverage, as only few Nigerians who were opportuned to work with the colonial Masters benefitted from the schemes.

And this finding was also corroborated by the Chairman of Frontline Assurance Company, Dr. Eidonogie Efandion, who told VF that pension crisis in the country, was inherited from the colonial masters.

Pension Decree 102 of 1979

“What you are seeing is not new, and people should not be surprised because retires were progrommed to suffer right from the days of the British. A discriminatory pension system was imposed on us and as gullible as our leaders have been over time, they have not been able to evolve a better way of rewarding, those who laboured for this nation. I don’t like talking about it because it is sad, you can imagine the revelations  from the ongoing probe,” he stated.

Besides, this act which is generally believed to have laid the foundation for  today’s pension crisis, past governments had initiated schemes like, Pension Decree 102 of 1979, social insurance trust fund, national provident fund.

Government created pension crisis

Even though   these efforts were expected to address the perceived and obvious inadequacies of the former pension regime that depended on the budgetary allocation, it is believed that until the Pension Reforms Act.2004, government had reacted, rather, uncaringly to the problem.

Commenting on this, a former Managing Director of Skye Bank Mr. Johnson Chukwu told VF that, ”The fraud in Police Pension management is a manifestation of the level of rot in the public service, which partly informed the decision of the Federal Government under former President Olusegun Obasanjo’s administration to privatise Pension Administration.

The Pension Fund Act of 2004 was designed to eliminate such abuses in the management of pension fund. This can explain why the fraud was only perpetuated on the “old  pension scheme” and not on the current “contributory pension scheme”, which is regulated by the Pension Commission (PENCOM).”

“There are several checks and balances built into the Pension Act that makes its almost impossible for anybody to carry out the type of monumental fraud witnessed on the Police Pension fund. For instance, under the Act, the pension funds and assets are domiciled with the Pension Custodians while the administration of the asset/fund is the responsibility of the Pension Fund Administrators (PFAs).

The Administrators therefore do not have unfettered access to the assets under management. Beyond that, the PFAs are guided by strict rules on the investment of the funds.” Continuing, he said, “ it is obvious that the fraud in the Police Pension fund was committed because of lack of rules/regulation, poor or weak supervision, excessive greed and conflict of interest between the Pension Fund’s purpose and the objectives of the Administrator.

Consequently, I believe that the level of malfeasance witnessed in the management of the Police Pension fund under the “old scheme” is not possible under the contributory pension fund, which came into effect as a result of the Pension Funds Act of 2004.”

Chukwu’s position on the role of government in pension crisis, also finds support in a report by Global Journal on Humanities.

The report titled An overview of the Nigerian pension scheme from 1951-2004, observed that, “The Nigerian pension sector is characterised by frequent review by the Federal Government without a complementing strategy to enforce compliance and evasion. This is at times done without proper consultation with state Governments and other stakeholders. This tends to impact negatively on the implementation  process.

“Examples of such reviews include, Upward review of pension benefits effective from 1st October, 1994- Circular No 6321/S.1/X/710 of 20thDecember 1994, Review of pension Benefits- Circular No B.6321/S.1/XT/8 of 22nd July, 1992, Review of pension scheme increases in, retirement age for public officials, Circular No B.63207/VI/001 of 21st April 1978.”

Consequently, the report stated that , “To minimize corruption, our Law enforcement Agencies and other corruption fighting Commission like EFCC, ICPC etc should beam their search light on those saddled with pension responsibilities in the country, and those found culpable brought to book.”

Financial autonomy for the aged

However, considering that most respondents, who spoke to VF on the matter had blamed relevant authorities for the failure of pension administration, the pertinent question on many lips is; how can an enduring pension administration regime be achieved in order to ensure improved living standards of the elderly and  financial independence of retirees?

While responding to this poser, the Executive Director African Coalition for Leadership, Dr. Otene Ibeabuzia, said, “the buck stops at the government’s table. They should take a cue from countries that have come up with a responsive pension management. There are better global examples to be copied. Since the government has appeared incapable of managing pension matters, it should be left for administrators, who are experts in that field to be handled.”

Continuing, the social critic stated thus: “I am glad that the Senate found it worthy to prosecute this people who feed fat on pensioners’ money. They should be brought to book, I hope that the full weight of the law should fall on them if found guilty, because they have not been fair to the nation.”

The Ghana model: Before its  pension reforms, Ghana had its own share of pension crisis. And there was need to ensure a universal pension scheme for all employees in the country, and to further address concerns of Ghanaian workers.

Against this backdrop, the Government in July 2004 initiated a major reform of the Pension System in Ghana. The process started with the establishment of a Presidential Commission on Pensions under the chairmanship of Mr. T. A. Bediako.

Bediako commission

The Bediako Commission was charged with the responsibility to examine existing pension arrangements and to make appropriate recommendations for a sustainable pension scheme(s) that would ensure retirement income security for Ghanaian workers, with special reference to the public sector.

The Commission submitted its Final Report in March 2006. The Government accepted almost all the recommendations of the Commission and issued a White Paper in July, 2006.

The main recommendation of the Commission was the creation of a new contributory Three-Tier Pension System for Ghana, funded by direct contributions of employers and employees to, replace existing parallel pension schemes.

In addition, the Social Security and National Insurance Trust (SSNIT) is a statutory public Trust charged with the administration of Ghana’s national pension scheme. The Trust is currently the biggest non-bank financial institution in the country.

The Pension Scheme administered by SSNIT has a registered membership of over 700,000 and there are over 30,000 pensioners who collect their monthly pension from SSNIT


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.