…HARROWING LIFE IN RETIREMENT: They pay us N1, 000 monthly pension, make themselves billionaires from our money
By Victor Ahiuma -Young
Pathetic aptly describes the situation of pensioners across the country who have been left destitute following their meagre monthly pension which does not even come as and when due. It is like they have been left to die miserably by those who should care.
Worst hit are pensioners who left the service of state governments. While many of the state governments have been making efforts to pay the accumulated pension benefits, some are busy blaming their inability to pay on the poor economic situation of the country.
The situation of the pensioners is made sadder by the stories making the rounds that the money that should have been used to pay their entitlements, in billions, was being misappropriated. The most recent of the stories of alleged misappropriation is the over N2billion pension money said to have been misappropriated by the former Chairman of the Presidential Pension Reform Task Team (PRTT), Mr Abdulrasheed Maina.
Maina has been declared wanted by the authorities and is currently on the run. But before he vanished into thin air, his case had generated controversy across the land after he was suspended following the alleged misappropriation of the huge pension money, recalled and, in fact, promoted from Deputy Director in the Federal Civil Service to Director. The House of Representatives is currently investigating the reinstatement.
Giving a historical perspective on pension and the problem of payment in Nigeria, Executive Director, Centre For Pension Rights Advocacy, Ivor Takor, noted that the plight of pensioners, especially in some states, goes beyond adverse economic situation.
Takor, who is also a former Board member of the National Pension Commission, PenCom, a former President of the Non-Academic Staff Union of Educational and Associated Institutions, NASU, and ex-Treasurer of the Nigeria Labour Congress, NLC, in a position paper obtained exclusively by Sunday Vanguard and titled, ‘The plight of Nigeria Pensioners: A Legal and Moral Burden on Federal and State Governments’, said: “In times past, Nigerians were protected from destitution and poverty, through traditional social security system, which was based on the concept of ‘our brothers’ keepers’ and was influenced by and derived from both culture and religious characteristics of society. It was largely kinship base.
Unfortunately, the traditional system of social security, where kinsmen built houses and farmed for each other and also provided for the upkeep of the elderly among them, has broken down. Urbanisation and industrial culture are contributing factors to the breakdown of the traditional social security system.
“The advent of paid employment introduced planning against old age destitution and poverty through pension schemes.
“Pension is the most visible programme of any social security scheme. It is meant to provide protection for citizens from old age poverty”.
According to him, the first public sector pension scheme in Nigeria was the Pension Ordinance of 1951, with retroactive effect from January 1, 1946. “The law provided public servants with both pension and gratuity. Pensions Decrees 102 and 103 of 1979 were enacted for civil servants and the military respectively, with retroactive effect from April 1974.
These decrees, which were later referred to as the Pension Act 1990 and the Armed Forces Pension Act, 1990 respectively, remained the operative laws on public service (federal, states and local governments) and military pension in Nigeria until they were repealed by the Pension Reform Act 2004, which was later replaced by the Pension Reform Act 2014”, he said.
“The National Provident Fund (NPF), which was established in 1961, was the first formal pension scheme in the private sector. It was largely a saving scheme providing a one-off lump sum benefits. The Nigerian Social Insurance Trust Fund (NSITF), established in 1993, took over from NPF and commenced business in July 1994. Nigerian pensioners have had a raw deal and continue to suffer in the hands of employers, who are expected to protect them against old age poverty and destitution. Employers, in the first place, based on contractual agreements, have a legal and moral obligation to protect workers against old age destitution and poverty.
Unfortunately, it is these same employers who have opened them up against old age destitution and poverty especially in the public service.”
Takor noted that the plight of Nigerian pensioners could be viewed from two eras: Pre-pension reform and post- pension reform eras.
He said: “In the pre-pension reform era, public service pensioners, including military pensioners, passed through very tough times. The pension scheme operational then was the Defined Benefit Scheme (Pay As You Go).Public service pension was unfunded, relying on annual budgetary allocation and thereby having outstanding liabilities, with workers who retired not knowing when their benefits will be paid thereby leaving then in the streets destitute, begging.
It was common sight around Agura Hotel in Abuja to see military pensioners, who came from their homes or who were unable to return to their home states, waiting indefinitely for the day their retirement benefits will be paid. It was a disgraceful and pitiable sight to behold senior citizens of this country, who had given their whole active life for the development of the nation and therefore no longer able to actively support themselves and families, sleeping in the open under sun and rain.
“Civilian public service pensioners were not better off. They also became destitute, dying in droves as a result of hunger and lack of health care. The real shame for the nation was during the annual dehumanizing ritual called pensioners verification exercise.
This was the time when these senior citizens were made to line up, supported by their children or relations, to be counted among the living. It was meant to be a punishment for those of them who were still alive, for having not died like their colleagues who had died without tasting the fruits of their labour (gratuity and pension)”.
The activist stated that the administration of public service pension during this era was weak, lacking supervision and regulatory control. His words: “It was during this period that Nigeria found itself among the league of nations that are classified as ‘blood money nations’. While others got there as a result of dealing in illicit drugs or criminal activities, Nigeria was elevated to that status as a result of illegal dealings with pension money: People’s sweat, blood and lives.
It was the era when top civil servants, with seared conscience, were put in charge of pension administration in the Office of the Head of the Civil Service of the Federation, Police, Customs, Immigration, Prisons and other Pension Departments in the Federal Public Service. Their counterparts were found in States and Local Governments Pension Boards. These public officials derived pleasure in not paying or under paying pensioners and bringing them annually to die on verification lines, with the sole aim of attracting public attention to the plight of these senior citizens.
“What was their interest in these verification exercises? Their interest lay in the fact that they succeeded in blackmailing government to release huge sums of money for conducting pensioners’ verifications and payment of pensioners without accounting for the money released, to stave off public outcry as a result of the suffering of these senior citizens.
Lack of effective supervision, regulatory control and accountability opened the door for these public officials to corruptly enrich themselves, building castles and business empires for themselves, children and grandchildren yet unborn. It was an era of criminal and primitive acquisition of blood wealth.
“The whole talk on pension corruption got to a crescendo in 2012, leading to the then Federal Government setting up a Pension Task Team headed by a Deputy Director in the Federal Public Service, Abdulrasheed Maina, to reorganize the Federal Public Service Pension Departments earlier mentioned. Monumental fraudulent activities were uncovered by Maina’s team in these departments, especially the Police Pension Department.
“In the course of the work of the Task Team, a pandora box on pension embezzlement was opened as the Task Team, the expected hunter of pension criminals, became the hunted, as it was alleged that the Team members were swimming in the ocean of embezzlement of pension fund themselves.
The Senate therefore set up a committee to investigate the Abdulrasheed Maina’s Task Team. According to the report of the Senate Committee, Maina, his colleagues in the Team and their accomplices were actually drowning in the ocean of pension embezzlement and, therefore, recommended to the government that they should be rescued through the EFCC with a view to being taken to protective custody in either Kuje, Kirikiri or Gasua prisons, from the reach of the sharks in the pension corruption ocean. This has given birth to what is now referred to as Mainagate”.
According to him, anti-corruption agencies have prosecuted some of those involved in the scandal, including seizing of some properties acquired by them. The former Board member of PENCOM said the prosecution and seizing of properties notwithstanding, there has been no visible change in the living conditions of pensioners. “Federal pensioners under the old Defined Benefits Scheme are still being owed arrears of token percentage increases granted them in line with Section 173(3) of the Constitution. Military pensioners may not be better off”, he said.
“States and local governments’ pensioners are worse off. With the exception of Lagos State, the shining mirror of pension administration in Nigeria and some others, such as Kaduna and Jigawa, most states’ retirees are not sure they will ever collect their gratuities and pensions before they die.
“The plight of pensioners, especially in some of the states, goes beyond the (adverse) economic situation of these states. It is in the public domain that even when the Federal Government gave bailout funds to state governments to pay arrears of salaries and pensions, most of the states’ diverted the funds and did not pay pensioners.
Nigeria, in 2004, carried out a comprehensive reform of its pension schemes, with the promulgation of the Pension Reform Act 2004, which was later replaced with the Pension Reform Act 2014.The main objective of the pension reform, which introduced the Contributory Pension Scheme (CPS), is to ensure that every person that worked in either the public or private sector in Nigeria receives his or her retirement benefits as and when due.
“Under the post-reform era, federal public servants are almost back to the pre-pension reform era, where, under the Defined Benefit Scheme (Pay As You Go), retired federal public servants were not sure when their retirement benefits will be paid.
Federal public servants, who retired as far back as October 2015, were not paid their retirement benefits under the Contributory Pension Scheme until early 2017, the same for the next of kin of deceased federal public servants within the period.
To date, federal public servants, who retired in January 2017, are yet to be paid their benefits. However, this is not an indication that the reform of the pension industry, which jettisoned the Defined Benefit Scheme for the Contributory Pension Scheme, was ill-conceived or that the new scheme is not working.
The scheme is working because private sector employees, who are under the same scheme, regulated and supervised by the National Pension Commission (PenCom), using the same Pension Fund Administrators and Custodians, are not facing the same challenge being faced by federal public servants.
“Moreover, Lagos State Government, which adopted the Contributory Pension Scheme and enacted its own law similar to that of the Federal Government, with slight modifications, is a glowing testimony to the effective working of the Contributory Pension Scheme.
While federal public service retirees and retirees from other states with few exceptions are languishing in abject poverty and blaming the Contributory Pension Scheme, Lagos State Government retirees are smiling to the bank and feeling happy with the Introduction of the Contributory Pension Scheme. The difference between the Federal and Lagos State schemes is the political will of the Lagos government to fund its scheme”.
Takor lamented that the problem is that the Federal Government has not been funding the Retirement Benefits Bond Redemption Fund Account in the Central Bank the way it ought to. “Therefore, the bonds cannot be redeemed and the bulk of retirees’ retirement benefits are in the bonds. The irony of the whole issue is that more than 50 per cent of pension fund generated under the Contributory Pension Scheme is invested in Federal Government Securities and the money is mostly used by government for recurrent expenditure.
It is used for the payment of salaries of active staff and other overhead costs. The question then is why is part of that money not being used to fund the Retirement Redemption Bond Account from where the accrued rights of those who contributed to it are redeemed?”, he said.
“The answer may not be far from the fact that retirees don’t have the capacity to hold the government to meet her obligation to them, through strike actions as current staff can do if their salaries are not paid. Accrued pension rights are liabilities of the Federal Government to her employees and, therefore, the government has a legal and moral obligation to her employees on the accrued rights protected through the issuance of Federal Government Retirement Bond. Part of the money invested in government Securities should have been used to pay accrued rights of retirees, who contributed the money in the first place.
“Talking about the political will to fund the scheme, it was in the public domain and discussed in several forums that for the 2016 Annual Budget, the National Pension Commission requested for the sum of N91, 914,899,000.00, being the actual amount required for the payment of accrued rights of retirees in the year 2016. Out of this, the National Assembly approved only the sum of N50, 195,808,918.00, leaving a balance of N41, 829,840,756.00. How much of this has so far been released is not known by us.
With the government not being able to, 100 per cent, fund the 2016 budget, it will be a miracle if the whole amount approved in the budget has been released. The amount required will surely be more than N100, 000,000,000.00 if death benefits and other figures we may not know are taken into consideration.
“The other issue militating against Federal Government retirees is that under the Contributory Pension Scheme, the take home benefits comprise of accrued rights; contributions made by employees and employers, which are in Retirement Savings Accounts and the return on investments. In order to increase the take home benefits of retirees, when the 2004Act was reviewed, the contributions were raised.
Therefore the PRA 2014 provides for 12 per cent and 8 per cent as the new rates of contributions for the employer and employee respectively. Unfortunately, the new rates have not been effected since June 2014 when they became effective.
“States and local governments’ pensioners are worse off than federal workers. Years into the implementation of the Pension Reform Act 2004, which repealed the Pension Act 1990 that was of universal application in the whole of Public Sectors in the country and the introduction of the Contributory Pension Scheme, most states governments have failed to enact laws to protect the pension rights of their workers.
As at the last count, only about ten states governments have either enacted pension laws or are at various stages of enacting pension laws for their employees. More disturbing is the fact that even those that have enacted their own pension laws, thereby keying into the Contributory Pension Scheme, operate the scheme in default of their own laws. Is anyone therefore surprised that most states government owe their workers’ pensions for upward of two to three years?”
The former NASU leader believed that matters are made worse because we are in a nation that is administered without a sense of values. “What embolden these people is the fact that they strongly believe, for good reason, that they can manipulate the justice system to favour them and their ill-gotten wealth will open doors for them into private and public castles, to enable them wine and dine with apex spiritual and temporal political leaders and give them access to front rows in churches and mosques, where they think they can use some of the wealth to atone for their sins”, Tarok said.
“It is precisely for this reason that the Abulrasheed Mainas’ of this nation could still be moving about and associating with the ‘high and mighty’, while they have been declared ‘wanted’. There were speculations that his governorship ambition posters even appeared on the streets in Borno State”.
Saying the plight of pensioners cannot be wished away, the labour leader said, “What is required are proactive actions by federal and state governments to address the plight of pensioners. The first step towards addressing it has already been taken by the federal and some state governments through the introduction of the Contributory Pension Scheme, which is already creating a pool of pension fund.
The next step is for the federal and state governments that have pension laws in place, to develop the political will to implement the laws to the letter. Thirdly is to, through the Council of State, ensure that states that have not yet keyed into the Contributory Pension Scheme do so without delay. Finally, no governor or political office holder in any state without a working pension scheme should be allowed to collect pension on leaving office although we know that, through criminal diversions of public fund, they would have collected their pensions upfront.
“Meanwhile, the Federal Government has an obligation to meet her legal responsibility towards ensuring that her pensioners and retiring public servants are paid; appropriately fund the Retirement Redemption Bond Account opened with the Central Bank, from where accrued rights (outstanding pension liabilities) are paid and the implementation of the rates of contributions in the Pension Reform Act 2014. Anything outside this will only be begging the issue and shedding crocodile tears on the plight of pensioners.”
Also speaking to Sunday Vanguard, the President of Nigeria Union of Pensioners, NUP, Abel Afolayan, on the plight of public sector pensioners in the country, said: “Pensioners in the public sector have been stagnated over the years due to lack of increase in their pension. Some pensioners go home monthly with pension as low as N5, 000 or N6, 000.
Many states are owing pensioners but the worst states are Imo, Kogi, Abia, Nasarawa and Edo. Federal Government has been up to date in the payment of monthly pensions but they owe accumulated arrears of pension increase since July 2010.”
On what the NUP is doing to address the issues, he added, “The NUP is engaging the Federal Government in regular dialogue over the issues and it is yielding dividend gradually. In March this year, the NUP addressed the members of the National Assembly over the issues which led the Federal Government to inaugurate a committee to look into the plight of pensioners in the country. Recently, the FEC approved the release of N740 billion in bonds to pay pensioners’ arrears.
Equally, we are trying to reach out to recalcitrant state governors among other steps”. Meanwhile, in virtually all the states across the country, retirees groan either because pension is too small or it has not been paid for years.
For instance, an activist in Benue said some pensioners in the state still earn as low as N1, 000 per month while another in Kwara claimed some of his colleagues in the state do not take home more than N2, 850 per month. On the regularity of payment, while Lagos, Kaduna and Anambra, among other states, do not owe pension or gratuities, Oyo and Osun, among others, have liabilities running into several years.