By ROSEMARY ONUOHA
States and Local Governments in the country have been alleged to be the biggest albatross of the contributory pension scheme powered by the Pension Reform Act 2004.

Of the 36 states in the country, only about 10 are partially complying with the pension scheme even when they regularly deduct monies from salaries of workers at source.

Mr. Dave Uduanu, Chairman, Pensions Operator’ Association of Nigeria, stated 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 several months ago.

According to Uduanu, the states are major beneficiaries of the pension scheme, revealing that 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.

“With the pension bill for some States serving as a platform to source for pension fund investments in proposed State Bonds, there is the need for these States to buy into the scheme fully by funding the accounts of their employees in order to sustain the scheme”

Uduanu lamented that it is alarming that the acceptance and participation level in the scheme by the respective States and Local Governments is not satisfactory, adding “Of the 36 States in the country, not more than 10 States (22%) can effectively be considered as near full-compliant. I believe that the time is now right to make the scheme compulsory at both states and Local Government levels.”

While noting that every worker in Nigeria should have a funded retirement savings account, Uduanu maintained that pensions and retirement benefit is arguably one of the most fundamental right of every worker irrespective of the type and nature of employer.

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. Therefore the scheme has been in existence since the past six years.  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.