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24 states adopt contributory pension scheme

By BusinessNews Staff on December 29, 2014

At least 24 states have dumped the Pay As You Go pension scheme to adopt the Contributory Pension Scheme for their workers.

A record of the CPS implementation update by the state governments which was obtained from the National Pension Commission on Friday confirmed this.

“The number of state governments that enacted their laws on the Contributory Pension Scheme was 24 as of the second quarter of 2014,” it stated.

According to the commission, 12 other states are at the various stages of implementing the scheme, while one state has yet to commence the process.

Lagos State, which was the first to drop the old pension scheme for the CPS, is already in the process of amending its Pension Reform Law 2007 following the amendment of the National Pension Reform Act 2004.

The Director-General, Lagos State Pension Commission, Mr. Rotimi Hussain, said the state was looking at a complete review of the amended Pension Reform Act 2014, and comparing its items with the State Pension Reform Law 2007.

He said as much as possible, it would make the law the same with what was happening at federal level.

“We want to see if there will be improved benefits for our people. Secondly, we are ensuring that while we are trying to attempt some of those amendments, we still place ourselves very much in a position to continue to meet up with our obligations because, the key issue here is not just pension administration, but sustainable pension administration,” he said.

The Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu, said the CPS ushered in a uniformed pension scheme for workers in both private and public sectors in Nigeria.

“The law, whose implementation started June, 2004 reformed the crisis-ridden unfunded and under-funded defined benefit pension schemes in the country,” she said.

Before then, she observed that the huge and increasing pension liabilities in the public sector needed to be addressed while most workers in the private sector were not covered by any form of retirement benefit scheme.

The PenCom boss said the inefficient administration of pension schemes and demographic shift made the benefits of the scheme unsustainable.

Under the CPS, she explained that both employers and employees were required to contribute certain percentage of an employee’s total emoluments into a Retirement Savings Account opened by the worker with a Pension Fund Administrator.

She said the accumulated pension assets with the Pension Fund Custodians were being privately managed by the PFAs while PenCom regulates and supervises pension operators.

“Putting the challenges, gains, implementation drive and sustainability of the Contributory Pension Scheme into perspective, it is evident that breakthroughs have been recorded in the last 10 years,” she said.

According to her, the number of contributors has increased, more workers in the private and informal sectors are covered and the scheme has continued to impact positively on the Nigerian economy.

[Punch]

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