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Pension: Six states remit N26.17bn to RSAs

By BusinessNews Staff on December 30, 2013

Six out of 21 state governments that have enacted laws to adjust to the Contributory Pension Scheme have remitted N26.17bn into the Retirement Savings Accounts of their workers registered under the plan.

Investigations by our correspondent showed that more states are finding the CPS a preferred retirement settlement option for their workers and are drafting legislations to key into it.

According to statistics from the National Pension Commission, Lagos State has the highest figure and has paid N13bn, followed by Niger State that has paid N5.10bn; while Ogun State has paid N5.08bn, as of the first quarter of 2013.

Others are Kaduna State that has remitted N1.6bn; Osun State and Rivers State have paid N1.07bn and N0.32bn, respectively.

PenCom noted that the state governments were making progress in implementing the CPS, adding that in the first quarter of 2013, 21 state governments had enacted their pension laws; 14 states were at the bill stage; while one state had yet to commence the process of implementing the CPS.

Out of the 21 states making remittance into the RSAs of employees, the commission said six had commenced the funding of their Retirement Benefit Bond Redemption Fund Accounts.

The Director-General, Lagos State Pension commission, Mr. Adekunle Hussain, said the state governments were not bound by the federal law such as the Pension Reform Act 2004.

“The PRA 2004 actually introduced the Contributory Pension Scheme into the country and it is applicable to employees in federal employment and the private establishments where there are five and more employees,” he said.

According to him, as state governments have the enabling laws which are passed in the best interest of its people, the state legislative arm is expected to study and appraise the innovations or new ideas and pass a new law if deemed expedient.

While stating the reasons for adopting the new pension scheme, he said, “We were very much concerned about the plight of our people, including the retirees.”

The underlying policy thrust of the present administration in the state, he added, was poverty eradication and sustainable economic growth through infrastructure renewal and development.

According to him, one of the ways of eradicating poverty is to ensure that retirees are paid their dues on time.

The desire to make life comfortable for its retirees, he added, made the state arrive at what he considered to be in the best interest of its people.

For this reason, he said the CPS was signed into law in Lagos State in March, 19, 2007.

“Our commission came into being on account of the enabling law in July 2009 but effectively commenced operations in February, 2010 and by October, 2010, we had finalised structures to ensure the smooth running of the pension scheme so that we were able to pay the first batch of retirees their final entitlements,” the LASPEC boss said.

Hussain stated that while some states had subscribed to the CPS which had started running, other states had just signed the scheme into law.

Two years ago, PenCom introduced some guidelines to pension administrators for registration of state and local government employees to enable them adopt suitable structure for the implementation of the CPS.

Part of the objectives of the guideline was to ensure complete coverage in the states within the shortest time.

According to the guideline, the law gave concession to the state and local governments for implementing the structured approach to the registration of their employees.

This interim arrangement is not expected to last for more than 12 calendar months.

PenCom said in the guideline that employees could afterwards opt for PFAs of their choice, in accordance with Section 11 (1) and (2) of the PRA 2004.

Different levels of government are expected to select a number of PFAs and allocation of MDAs to each, while employees are to freely register with the PFAs.

The states are also required to inform the commission in writing the PFAs appointed by them, as well as the method of registration employed, such as free registration or allocation of MDAs to PFAs.

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