…divide, dismember and discredit
…groundwork for Mainarisation
Older persons are a particularly vulnerable group of people, due to a decline in their physical, mental and consequently economic powers. In Nigeria, westernization and urbanization is also eroding away the traditional extended family kinship system which hitherto took care of the elderly. Social security systems that have been in evolution right from the colonial era have not been very effective owing in the main, to administrative negligence, poor planning and poor policy implementation.
Theories, such as those of Hobbes, Locke or Rousseau, suggest that organized society is brought into being and invested with the right to secure mutual protection and welfare or to regulate the relations among its members. Rousseau differentiated between armour de soi which is the need for self-preservation; and amour proper, a self-centered vanity that puts one’s own needs and demands above those of others. He posited that all mankind is by nature equal and free, and that the only way authority can be justified is when the authority is generated out of covenants or contracts to submit individual free-will to the collective will.
The contributory pension system achieved equity, unity and growth. Otherwise, we may descend into division, dismembering and credibility erosion when payment cannot be guaranteed.
At a time the nation is battling with paucity of funds to meet enormous existing needs of her citizenry, some members of the legislature, National Assembly who should have aligned with the government to suggest ways of raising revenue, are pushing bills to increase its financial burden by calling for exemption of security personnel from Contributory Pension Scheme (CPS) which has helped to give succour to retirees in the past 13 years. ‘It’s a journey to live or die situation’, according to Dr. Abdullazeez.
Owing to this same paucity of funds, the Federal Government, it was learnt is yet to implement the Pension Reform Act (PRA) 2014 which repealed the 2004 Act. In the 2014 Act, the government is mandated by law to contribute 10 per cent for its employees, while the employees contribute eight per cent, amounting to 18 per cent.
Upon government’s precarious financial position, A sizeable portion of member institutions are headed for the guillotine; a member of the National Assembly, Honourable Oluwole Oke, from Obokun/Oriade, constituency, Osun State, on May 16, 2017, sponsored a bill seeking to “Amend —Lie Pension Reform Act 2014 , to Exclude Members of The Nigeria Police, The Nigerian Security and Civil Defence Corps, Nigeria Customs Service, Nigeria Prison Service, Nigeria immigration Service and Economic and Financial Crimes Commission From The Application Of The Contributory Pension Scheme and Other Related Matters”.
The Bill passed its second reading and was referred to the relevant Committee of the House of Representatives for further action.
The above mentioned Bill which is similar in context to that of the Armed Forces and Intelligence agencies, also sponsored by Honourable Oke, seeks to fully exempt the stated organisations from the CPS and return them to be 100 per cent underwritten in relation to pension arrangements by the Federal Government. In other words, return them to the erstwhile Defined Benefit Arrangement.
The arguments advanced by the promoters of the Bill include: National Security, the identity, data, addresses and family ties of security personnel are best handled internally by the relevant service and not kept in civilian custody which may be easily compromised.
Also cited as an excuse includes occupational hazard; that the nature of the service provided by the paramilitary is unique and hazardous and the burden of paying their pensions should therefore be borne by the government.
Low Monthly Pensions being paid to the retired personnel. A preference for the Direct Benefit system where workers who had worked up to 35 years were entitled to 70 per cent of their last monthly salary and Directors received l00 per cent.
It is important to note, however, that the reasons that informed the decisions of both the federal Government and the 6th National Assembly to respectively decline the request and the Bill for exemption of the Police and other Paramilitary Agencies from the CPS in 2011, despite the above arguments are still valid.
Indeed, the argument against exemption is today further reinforced by many other economic, fiscal, social and public policy reasons, such as: The exemption of the personnel of the Police and other Paramilitary Agencies means additional financial burden on the Federal Government by way of unsustainable pension obligations.
For instance, in the last 10 years, the number of FGN employees that retired under the CPS from the six Agencies sought to be exempted are 50,730. The total Accrued Benefits of these personnel amounted to N208.22 billion, which had been redeemed by the Federal Government, paid into their respective Retirement Savings Accounts (RSAs) and consolidated with their monthly pension contributions to fund their retirement benefits.
These retirees are currently receiving their retirement benefits promptly as and when due. Exempting them from the CPS would imply that Government would shoulder the huge financial obligation of payment of their pensions as well as that of future retirees through budgetary provisions, with no guarantee of availability of funding and; or timeliness of payment.
The Federal Government is already overburdened with the payment of pensions as illustrated by the 2016 Appropriation Act, which made a provision under the Service Wide Vote for the sum of N200,170, 000,000.00 as total Pension and Gratuities Allocation
This allocation is still insufficient to fund the pension liabilities of the Federal Government. For instance, the 2016 Pension Transitional Arrangement Directorate (PTAD)’s Budget proposal indicated a total Annual Pension Liability of the sum of N388, 320,580,231.64.
Out of that amount, the sum of N255, 896,954,017.38 constituted unfunded liability, which was inherited by PTAD mostly due to outstanding payments for 33 per cent pension arrears to pensioners under the Defined Benefits Scheme.
Indeed, the Federal Government pension liability burden under the Defined Benefits Scheme is much higher than the PTAD proposals in view of the provisioning of about N74.53 billion for the Military Pension Board, N7.64 Billion for the State Security Service and 1443.71 Billion for the National Intelligence Agency.
Consequently, it would be fiscally imprudent to increase the number of this category of retirees under that Scheme. It would also render the retirees financially vulnerable and insecure.
In addition, it is evident that the Defined Benefit pension system is not sustainable as exempting the Military, Department of State Security and the Nigeria Intelligence Agency has resulted in very high allocation of resources to fund their retirement benefits.
As is evident in the various Appropriation Acts since their exemptions, their combined allocations were 49.4 per cent; 49.1 per cent; 45.1 per cent; 41.99 per cent and 43.1 per cent of total allocations for pensions in the 2013, 2014, 2015 and 2016 Appropriation Acts, as well as in the 2017 Appropriation Bill respectively.
The figures will therefore be staggering and clearly unsustainable if the personnel of the Police and other Paramilitary Agencies were to be exempted in view of the fact that the number of Police personnel is significantly higher than the number of the personnel of the three exempted Agencies combined
Thus far, two organizations have condemned the bills seeking amendments to the pension reform Act, describing the bills as spurious and against the interest of the country’s financial system.
PENOP Chairman, Longe Eguarekhide while speaking at the forum said the Bill passed its second reading and has been referred to the relevant Committee of the House of Representatives for further action.
He stated that an additional cause for concern regarding the legislature arose on May 10, 2017, when yet other private member’s Bill sponsored by Senator Aliyu Wamako (Constituency – Sokoto North) sought to pass a Law for “An Act to Further Amend the PRA 2004 to Provide for Definite Percentage a Retiree Can Withdraw from his RSA and for Other Matters Related Thereto.
He noted that this permits retirees to withdraw a definite rate of 75 per cent of the value of their RSA upon retirement, leaving only 25 per cent.