CONTRIBUTORY PENSION SCHEME OR SCAM?

Click for Full Image Size
Alex Osondu Atawa Akpodiete

After working for years, it would make sense for you to look forward to retirement. Usually, you would have planned both for activities and financial security. In some countries like American, they have what is called Social Security that is supposed to be available to all citizens at the designated retirement age. Some of these countries have either a straight government handled retirement plan or one in which both the employee and employer (public or private) contribute a percentage. The programs in which the employee contributes a percentage of his income while the employer contributes a percentage also is called “contributory pension scheme.” The word scheme could be a turn-off for some people, especially today where it seems that some civil servants have “schemed” away money meant for retirees. So maybe we should call it contributory pension scam?

Nonetheless, a look at the enabling law is in order. The National Assembly, on June 25, 2004, passed the Pension Reform Act 2004 into law, after President Obasanjo's assent. What this did was also to repeal the Pension Act 1990. Additionally, the law also established the National Pension Commission (PenCom). Apparently, this was after an extensive & exhaustive research and study. In the preceding investigations, it was realized that the Nations' Senior Citizens were being marginalized and uncared for, after years of service to the country. On April 7, 2011, President Goodluck Ebele Jonathan (GCFR), signed the Pension Reforms Amendment Act into law, with the only change being exclusion of members of the military, Intelligence service and Secret Services. In other words, the bulk of the 2004 Act is still in force and unchanged.

Many States Houses of Assembly has passed their own counterpart Pension Law. This includes both Delta and Imo State with the intention of various administrations to do everything to implement the pension law for the benefit of the elder citizenry. The law States or private employers are required to contribute 7.5 % as suggested by Section 9 of the Pension Reform Act. However, some States like Delta have done more by contributing as much as 10% to further assist their workers. Nonetheless, this does not solve the whole pension scam.

A major problem is that most employees do not even know that the National Pension Reform Act 2004 requires even Private Sector employers with staff of 5 or more, to abide by the Pension Law and contribute to their retirement that is supposed to be managed by a Pension Fund Administrator (PFA). So, conceivably, a lot of our citizens are being short-changed. In fact, this exemplifies one of the biggest problems in Pension, which is funding of the Scheme. What States need to do is to insist that only private companies that are complying with the Pension laws will be allowed to bid for contracts. In other words, States and Local Government Areas should start issuing compliance certificates like the Federal Government (FGN) does to force these companies to comply. People should be educated and know that there is a process for registering private sector (State and Local Government) employees in compliance with the circular issued last year by PenCom.

I am sure most people have read in the print and electronic media about the scandals rocking the Federal pension scheme. We need to put in place checks and balances that will make sure these “Contributory Pension Scams” are stopped.

Those states that are not on board yet should get an actuary and plan for harmonization of benefits. To further reduce the scam, they should use biometrics data capture to make sure there are no ghost pensioners, which will save the States tremendous amount of money that can be channeled to other beneficial projects. Furthermore, the verification exercise should be streamlined and made comfortable for the pensioners, instead of having them stand in line for endless hours. The National Union of Pensioners (NUP) is an invaluable partner in making sure genuine pensioners receive their correct payments and receive it when due.

On Thursday, July 6, 2012, the National Assembly stated that it would amend the Pension Reform Act 2004 to give PenCom more power so that it can fight the abuse of the Contributory Pension Scheme by both the corporate and public organizations. This was stressed by the Chairman, House Committee on Pensions, Honourable Ibrahim Bawa Kamba. Hopefully, we will not hear any “stories” about this committee being involved in a scam itself.

In the interim, or in addition to it, let us value our retired workers and remove the temptation from the civil servants to collect their pensions “ahead of time.”

Let's think & talk about it.
Prof. Alex Osondu Atawa Akpodiete is an author, Computer Scientist, Educator, Consultant, retired lawyer, Political Analyst & Social commentator. He has lectured Law, Ethics and Security & Intelligence Studies at the University level here in Nigeria and US. He was also certified to teach Computer Science and Mathematics by the State of Florida USA. He currently divides his time between Nigeria and USA where he runs an international consulting firm. Contact him on 08138391661 or [email protected], & [email protected]. He is also on Facebook and you can follow him on Twitter.

Disclaimer: "The views expressed on this site are those of the contributors or columnists, and do not necessarily reflect TheNigerianVoice’s position. TheNigerianVoice will not be responsible or liable for any inaccurate or incorrect statements in the contributions or columns here."

Articles by Prof. Alex O. Atawa Akpodiete, Esq.