By John Mayaki

THE introduction of Contributory Pension Scheme, CPS, to Edo State by Governor Godwin Obaseki is exciting workers and other stakeholders.

Followers of CPS are not surprised by the excitement of this development because of its benefites and well being  of both workers and the state.

There is no doubt that  the Edo State workers especially, stand to reap immense benefits from  CPS.

Under the CPS, one has the liberty to choose a Pension Fund Administrator, PFA. This freedom leaves the employee with the ability to choose which PFA he or she wants to manage his or her money for future benefit.  No more will the employee stick with a fund manager that he or she does not trust.  In the same vein, the employee has the option to remain with a particular fund manager even when he or she changes job.

The scheme is also designed in such a way that employee can transfer her or his  Retirement Savings Account, RSA, to another PFA if he or she is dissatisfied with any PFA’s services. This creates more flexibility for the contributor to back out of any corner he or she feels trapped in.

Additionally, it is more modern and user-friendly. The new system allows contributors access to their account balances through the Internet and other technology-driven platforms.

Governor of Edo State, Mr Godwin Obaseki

Efficient customer service and good investment returns are at the heart of the scheme, and the PFAs must  put systems in place, as well as personnel and services that will ensure that contributors can easily access their accounts, maximize returns to be earned on their retirement benefits over time, and receive their retirement benefits with ease. What this signifies for the worker is the absence of queues. It also means that workers  do not have to travel long distances to get their pension payments neither do they have to present themselves for periodic pay parades since pension payments are completed directly to retirees’ accounts through banks of their choice on a monthly basis.  Also,  PFAs are required to have offices across the nation to enable clients to have easy access to their PFAs.

The CPS does not only benefit the individuals independently,  there are other social and economic benefits as the new scheme enhances labour mobility. Workers can move freely from one employer to another without their retirement benefits suffering any negative impact.

Furthermore, the system instills a savings culture among workers, which  create a pool of long-term investible funds for the development of our financial markets and the economy as a whole. The life insurance cover for employees also improves staff welfare, and promotes workers’ commitment and loyalty, while providing adequate cover for a worker’s family should he or she die in service. Fund withdrawals also enjoy some constitutional protection. The Pension Reform Act, PRA, 2004 protects fund withdrawals before the prescribed retirement age of 50 years. There are various instances where this can occur – a programmed withdrawal for life, the purchase of an annuity for life, and a lump sum withdrawal. These requirements ensure that retirement benefits are only available to workers during their old age, except for situations of disability or ill health. It also ensures that adequate funds are available on a continuous basis to meet recurrent expenditure of retirees throughout their lives.

The Act also enables employees who have been out of employment and have not secured alternative employment after six months, to access a portion of their retirement savings.

The PRA 2004 stipulates investment guidelines for the management of pension fund assets and requires that PFAs adhere strictly to these guidelines because they seek to ensure the security and quality of pension fund assets.

So far, this new scheme provides a solution to the pension system that has elusively dogged the Nigerian economic clime. Edo workers will do well to key into this scheme in order to bring an end to the dark and trying times that often degenerated into elderly people hoisting placards wearily and begging successive governments to release their pensions and retirement benefits.

John Mayaki is the Chief Press Secretary (Interim) Governor’s Office