Posted by News Express | 21 June 2022 | 184 times
PenCom should apply stricter measures to enforce compliance with the act
A major attraction of working in both the private and public sectors in any country is the benefit of receiving pension after retirement. But over the years, such prospect has become not only problematic but also uncertain in Nigeria. In the public sector, for instance, the failure of government to meet the pension expectation of retirees has shattered the plans of many as well as inducing economic trauma, which in some cases have led to fatalities. Stories abound of senior citizens who had collapsed and died while on queues while waiting for their pensions.
It was in a bid to address this problem that the Pension Reforms Act of 2004 was enacted. The Act covers both public and private sector employees. The Contributory Pension Scheme (CPS) was introduced to replace the Defined Benefit Scheme (DBS). Under the new regime, both the government/companies and the workers themselves are to save up a given amount of their earnings towards building up an accumulated funds reserve which the worker could fall back on after retirement. Sadly, 18 years after the CPS was launched, only four states (Lagos, Osun, Kaduna, and Delta) and the Federal Capital Territory (FCT) are paying pensions under the scheme. Meanwhile, only six states (Lagos, Osun, Ondo, Edo, Ekiti and Kaduna) also had valid group life and sinking funds for their workers as of March this year, in clear breach of the Act. Figures from the private sector are even more depressing.
In its latest quarterly report on Issuance of Pension Clearance Certificates (PCCs), the National Pension Commission (PenCom) reported that as at the end of March this year, only 10,541 firms complied with the enabling laws and had been cleared to do business with government. Yet, section 4(5) of the Pension Reform Act 2014 provides that, “Every employer must maintain a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee and premium must be paid not later than the date of commencement of the cover.”
Section 2(2) of the Act provides that in the case of the private sector, the pension scheme applies to organisations in which there are 15 or more employees. That only 10,541 firms had complied with the country’s statutory laws on pension and insurance covers and have been cleared to do business with government speaks volumes. While the 2004 Pension Act and the 2014 Pension Reform Act which heralded the CPS were designed to address the pitfalls of the old order under Defined Benefits, it is regrettable that pensioners are still passing through harrowing times after retirement.
As regulator, PenCom appears not to be on top of its game thus leaving retirees at the mercy of employers who fail to adhere to the provisions of the Pension Reform Act 2014. While many obstacles have stood in the way of pensioners to access their retirement benefits, the Pension Fund Administrators (PFAs) have been the ultimate beneficiaries of the growing pension assets which currently stand at about N13.6 trillion. It is time for PenCom to rise to the occasion to make the pension scheme truly beneficial to the greatest number of pensioners by whipping errant employers into line.
We urge the federal and state governments to keep faith with their obligations to pensioners. We also call on PenCom to apply stricter measures in enforcing compliance with the provisions of the Pension Reforms Act by the PFAs. Indeed, we believe and demand that it is only fair and just to allow pension to sooth the nerves of retired persons, especially after the workers have been faithful in making appropriate contributions to the scheme while in active service.
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