Still on the plight of pensioners

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DESPITE the hues and cries, our senior citizens continue to suffer and wallow in abject poverty, daily.

The plight of Nigerian pensioners has been a thing of concern for many years now. The picture of haggard-looking pensioners collapsing on queues for their meager pensions during verification exercises is no longer news.

What have been the lot of these special people are non-payment of entitlements, omission of pensioners’ names from payroll, under-payment of pensioners, delayed pension payment and non-payment of arrears and gratuities.

Retirement, which ordinarily should be embraced with joy, has become a source of sorrow, frustration, panic and agony, replete with stories of fraud, embezzlement, illegal lodgments of funds and illegal deductions for ghost pensioners.

Ironically, the public servant, having put all his life into active service would naturally expect to be rewarded.

His/her immediate returns are by ways of salaries and wages, while his long time rewards are by ways of pensions and gratuities. But that is not the case in Nigeria.

The truth is that these yearnings are constantly dashed by exposing the retirees to a life of untold hardship and penury that could be better imagined as they are constantly subjected to a lot of hardship under the old pension scheme, as neither the Pension Act of 1979 nor the NSITF put in place has guaranteed regular payment of pension stipends.

No doubt, the old pension scheme was not adequately funded, leading to mounting pension liabilities that made the scheme unsustainable. Also, it was largely unregulated.

Therefore, the setbacks and flaws of the scheme led to the repeal of the 1979 Act and subsequent amendment of the Nigerian Social Trust Fund Act of 1993.

Under the old pension scheme, the National Provident Fund was a creation of an Act of Parliament in 1961 to regulate private sector pension scheme in the country.

It pooled monthly contributions from the basic salaries of workers and the employers. The NPF was later converted to a limited social insurance scheme in 1993 and administered by the NSITF.

The National Pension Commission then facilitated the transfer of N54.08bn outstanding from the old pension scheme from the defunct NSITF to Trustfund Pension Plc.

By the transfer, workers who had contributed to the NSITF under the old pension scheme will now be able to integrate their contributions under the old scheme with the present Contributory Pension Scheme.

Governments all over the world get involved in pension matters in the form of laying down the legal framework, pension funds management and regulation of pension schemes.

Due to the flaws experienced in pension administration in the past, the Pension Reform Act, 2004 was promulgated and it established a contributory pension scheme for the payment of retirement benefits of employees in both the public and private sectors of the economy.

The Act is a major component of the general economic reform of the Federal Government, aimed at eliminating the trauma, pains, and death associated with past policies on pension schemes.

THE objectives of the Act, as stated in its Section 2, are to: Ensure that every person who worked either in the public service of the Federation, Federal Capital Territory or the private sector receives his/her entitlements as and when due; assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age; and establish a uniform set of rules, regulations and standards for administration and payment of retirement benefits for the public service of the Federation, Federal Capital Territory and the private sector.

The benefits of the new pension scheme are obvious in terms of: Firstly, the enormous deposit growth of banks through the placement of pension funds in fixed deposits and from more regular payment of pension entitlements of existing pensioners.

Secondly, the new pension scheme is expected to generate about N60 billion in contributions every year.

Thirdly, under the new pension system, the use of accumulated funds in individual Retired Savings Accounts to purchase annuities from insurance companies would also provide another major tonic for insurance business in Nigeria.

Fourthly, stock broking firms stand to profit from the higher business volumes which the increased transactions on retirement bonds, corporate bonds and equities consequent upon the higher capital market operations that increased pension funds offers.

Again, mortgage and property development firms are expected to experience greater profitable long-term opportunities for their real estates and commercial property development schemes as an increased build-up of pension funds forces pension fund managers to seek more and safer inflation-proof outlets for their investable funds.

Ordinarily, a civil servant, either at the state, federal or local government level, is qualified to draw pension if he/she has put in, a minimum of 10 years in the service and the maximum of 35 years.

A person is however not qualified to draw pension if he/she has not attained the age of 45 even if he/she has served for required qualified period of pension. However, the amount computed for such beneficiary would wait until when the age of 45 is attained.

Gratuity, on the other hand is the lump-sum amount of money paid to an employee of any of the three tiers of government on leaving the service, having served for a minimal period of five years.

For gratuity, the lowest percentage of total emolument payable is 100 per cent, for a person that has put in a minimum period of five years.

Despite the existing legal framework, the administration of pension and gratuity in Nigeria remains problematic for a number of factors that could be best described as man-made.

To start with, some employees who work in government establishments that handle pension and gratuity matters have continued to be very fraudulent in their dealings.

This, they do by inflating the pension payroll through the inclusion of fictitious, non-existent and/or ghost pensioners on the payroll. Through these means, monies meant for persons rightfully retired go into personal coffers.

Stations’ swapping or pay points of retirees are also manipulated. For instance, a pensioner, whose pay point is in Kaduna, is intentionally indicated to be paid in either Lagos or Owerri and vice-versa.

Invariably, when the said pensioner is unable to trace his/her name at the supposed pay point, he/she gets frustrated, but unknown to him/her these pension payments are claimed by other persons.

Other mischievous acts include non-payment of dead pensioners’ entitlements, falsification of the documents of retirees and wrongful computation of the total amount payable. It is extortion galore by faceless officials during the biometrics capture exercises.

Due to the complete maladministration of pensions, the government’s latest intervention through the Pension Reform Task Team (PRTT) – set up to bring sanity into the system and ensure that pensioners received their pensions as and when due appear to have been dashed – for allegedly engaging in fraudulent practices.

Apart from the reported problem of power tussle between the Office of the Head of the Civil Service of the Federation, the Task Team and the Police Pensions for control over these accounts, there have been allegations of the mismanagement of N45 billion at the Police Pensions Office and another N21 billion of police pensions by the chairman of the Task Team on Pensions, Alhaji Abdulrasheed Maina.

The consulting firm, KPMG, which was invited to audit the police pensions, had alleged that remittances were fraught with irregularities.

For instance, N1.5 billion was said to have been remitted to the Police Pensions Office monthly, as against the N500 million that was actually required while another N24 billion was kept in an account meant for the payment of harmonisation arrears.

KPMG also observed that accounts were being opened and monies belonging to the police pensions were being moved around, as every new management opened new accounts in banks and moved funds around.

Another major issue with the pension administration is its poor execution at the state level.
Mr. ADEWALE KUPOLUYI wrote from Federal Varsity of Agric., Abeokuta, Ogun State.

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