By ROSEMARY ONUOHA

The Contributory Pension Scheme, CPS, became operational in 2004 with the enactment of the Pension Reform Act 2004. Unfortunately, of the 36 States in the country, not more than 10 states (22 per cent) can effectively be considered as near full-compliant to the scheme. This is because many state governments have refused to enact their own Pension Act as stipulated by the Act. Consequently, these state  have continuously deprived their workers of the benefits of the CPS.

However, for workers in these states, it is time to make the scheme compulsory at both states and local government levels.

That the pension fund is growing on daily basis is not new, however, the fact that it is taking many state governments such a long time to enact their own pension law and cue into the scheme is cause for worry. More worrisome is the fact that it is these same states governors that have been falling over themselves to access the pension fund through bonds in the guise to improve infrastructure in their various states.

According to statistics, states are major beneficiaries of the pension fund. Pension fund investments in state bonds grew significantly by 106 per cent from N34 billion in 2009 to N70 billion in 2010 and currently stands at over N100 billion.

As regards this, it is only rational that state governments take up implementation of the Contributory Pension Scheme in their respective states.

Recall that as part of measures to safeguard the pension fund from falling into wrong hands, as well as ensure that state government’s key into the scheme, the National Pension Commission, PenCom, obtained the support of the Debt Management Office, DMO, by making it a condition that state governments desirous of obtaining bonds must key into the contributory pension scheme. Unfortunately, some states that hitherto were seeking to raise bonds, subtly abandoned the move.

What the law stipulates
The Pension Reform Act 2004 stipulates that state governments should enact their own pension Act; however, findings show that a greater percentage of the states that have passed the enabling Pension Bill are not funding their employees’ accounts while some that commenced funding stopped midway.

The way forward
The pension Act for states serves as a platform to source for pension fund investments in proposed state bonds. Accordingly, there is the need for states to buy into the scheme fully by enacting their own laws as well as funding the accounts of their employees in order to sustain the scheme.

Since the old pension scheme is now defunct, it is only rational that every worker in Nigeria have a funded retirement savings account because pensions and retirement benefit is arguably one of the most fundamental right of every worker irrespective of the type and nature of employer.

The CPS
It will be recalled that the Pension Reform Act (2004) was enacted on 25th June, 2004 by the Federal Government of Nigeria and came into effect on 1st July, 2004.

This pension reform led to the establishment of a Defined Contributory (DC) scheme due to the prevailing pension crisis during that period which were evident in pension deficit estimated at about N2.3 trillion in 2004; irregular payment of entitlements to pensioners; existence of ghost pensioners in the public service; death of pensioners on verification queues; mismanagement of pension assets by fund managers and unstructured and unfunded private sector schemes among other reasons.

Therefore the key objectives of the PRA 2004 are to ensure the prompt payment of benefits; to develop an efficient savings culture among Nigerians towards old age; to empower workers both in the public and private sector; to develop a uniform regulatory and supervisory framework; to develop a simple, transparent and sustainable pension system; to encourage wide coverage and ensure that every person who has worked receives retirement benefit;  as well as to establish a uniform set of rule, regulation and standards for administration and payments of pension.

The reform is meant to ensure that every person who has worked in either the public or private sector gets retirement benefits as and when due and to help improvident individuals to save toward catering for their livelihood during old age.