The Chief Executive Officer of the Pension Fund Operators Association of Nigeria (PenOp), Mr Oguche Agudah, said that the exemption of the Nigeria Police Force (NPF) from the Contributory Pension Scheme (CPS) would make the financial burden for budgetary allocations unbearable for the country.
He disclosed while reacting to the Bill “Exclude the NPFfrom the CPS” that at the time of the reform, it was estimated that the Federal Government had a pension liability of over N2 trillion.
“It will take another N1.8 to N2 trillion to return the NPF to the Defined Benefits Scheme (DBS).
“This was a time when retirees had to depend on a defined benefit system, where the federal government paid monthly pensions to retirees directly from its coffers.
“Past experiences have proven that this system puts a lot of burden on the federal government, making it unsustainable.
“The sustainability of moving the police back to the pay-as-you-go DBS, under their proposal is near impossible, given the federal government’s struggling finances at the moment,” he said.
Agudah recommended that from the rank of Assistant Inspector-General of Police (AIG) upwards, their pensions should be treated under the category of political appointees, who retire with full benefits as stated in the Pension Reform Act (PRA) 2014 as their appointments are political in nature.
Secondly, on the Bill to allow contributors to take at least 75 per cent of their Retirement Savings Account (RSA) balance at retirement.
The CEO said that people that have issues with the lump sum that they collect at the moment are those who have not been able to accumulate enough funds in their RSAs prior to retirement.
Agudah said what the 75 per cent essentially is looking to achieve is a gratuity type payment to retirees.
“The PRA in its current form does not preclude the payment of gratuities by employers as many Department and Agencies of the Government already pay gratuity to their staff on retirement.
“What we suggest is that employers should be encouraged to pay gratuities at retirement or increase their level of monthly contributions in order to boost the balances and subsequent pension payout of their staff,” he said.
Agudah said that the CPS has a safety management system from the Pension Fund Administrators (PFAs) as well as an articulated check and balance mechanism.
He harped on the need “to improve the transparency of the scheme because how much you contribute determines how much you will get.”
Agudah acknowledged that the CPS is not perfect but could be improved.
“The CPS has been running consistently for 16 years and the reason why people are even agitating for the increase is that they can see their balance.
“As such if we can have a transparent system like this, then there is no need to go back to the old DBS system,” he said.
