We Cannot Continue To Borrow To Pay Pension

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As pressure is beginning to mount from Nigerians to stop the many bills seeking to amend the Pension Reform Act 2014, interest groups such as the Nigerian Police Force (NPF); Nigeria Labour Congress (NLC); Central Bank of Nigeria (CBN) and many other organizations have registered their opposition to bills before the National Assembly seeking to amend the Pension Reform Act (PRA) 2014.

Representatives from these organizations stood firmly against the bill at the public hearing on the bills for Act to amend the PRA 2014. They took time to explain why they think the amendment bills should be dropped as it negates current realities and if passed into law would increase financial burden of the Federal Government.

Amongst the various bills seeking changes in the pension Act include: a bill to further reform the pension  Act that provide for definite percentage a retiree can withdraw from his retirement savings account as well as, compel  each licensed PFA to have an operational office in at least one state in each of the geopolitical zones of the federation.

Other bills seeking amendment to the current pension administration in the country, also include the bill to exclude members of the Nigerian Police, the Nigeria Security and Civil Defence Corps, Nigeria Customs Service, Nigerian Prison Service, the Nigerian Immigration Service, etc. from the CPS.

Even as all of these bills look good on the surface, inwardly the bills, according to experts  are not workable and if implemented, would collapse the pension system and destroy the future of pensioners as we know it today, hence we join other Nigerians to lend our voice to the demand that these bills be dropped.

It is common knowledge that the CPS was introduced in Nigeria because of the crisis that bedevilled its underfunded, uncoordinated and fragmented defined benefits at the time.

Pension at the time was characterized by the chaos of poor records of eligible beneficiaries, deficit in pension liabilities to the tune of N1.6million, alarming incidents of fraud and non-uniformity in pension arrangement in both the public and private sectors.

But with the enactment of the Pension Reform Act 2004, repealed and replaced by the PRA 2014 and Its implementation thereafter, pension administration, management and regulation has greatly Improved in the country since then.

It is noteworthy that the checks and balances entrenched in the framework of the Contributory Pension Fund (CPS) by virtue of the establishment of Pension Funds Administrations (PFA), the Pension Funds Custodians and the regulator-(National Pension Commission) has elevated the system of pensions in the country to a level that has significantly addressed the ills prevalent in the old Defined Benefits system of pensions.

A closer look at the contributory nature of the new system, as well as, its unitized nature makes the current system highly personalized by embedding ownership for its contributors, as well as adequately organized, transparent and appropriately funded.

It is no surprise therefore, that from a deficit of N1.6trillion at the advent of PRA 2004, the new CPS has grown to N6.42trillion in assets as at the end of March 2017. This happening is further testimony to the workability of the current pension scheme.

This paper therefore calls on the law makers at the National Assembly to attend to issues already raised by all stakeholders in the pension industry which, as we know is already being attended to by the National Pension Commission (PenCom). We also support the agitation that the para-military pensions remain with the CPS.

We also believe that exempting the paramilitary from the scheme, for instance, would be retrogressive to the economy, instead PenCom should be empowered to regulate properly and be encouraged to do more research and listen to people.

Our views stems from the fact that there is need to sustain policies, and that the number of people seeking exemption could increase by 50 per cent of government workers, which it cannot cater for. The budget cannot sustain the exemption, and besides, the CPS remains a safe vehicle for creating national savings.

As the critical thing with the CPS is funding, we call on policy makers to always think of ways to improve lives instead of creating more burden for the government. Since the issues raised are challenges which are presently being worked on, it is our belief that such challenges are temporal which would be resolved very soon.

It is wrong to ask one to give what he does not have. The government has been borrowing to pay salaries and cannot continue to borrow to pay pension. There is no point to legislate what you cannot enforce. It is too early to amend the PRA. 2014. If we allow various amendments to pass we cannot recover. We should come together to sustain the gains of the CPS.

 

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