The Director-General, National Pension Commission (PenCom), Aisha Dahir-Umar, has appealed to the Federal Government to improve on the retirement benefits of Nigeria Police Force personnel. Dahir-Umar, who made the appeal during a public hearing on two pension related bills by the House Committee on Pension, also said that the Contributory Pension Scheme (CPS) had provisions to address the challenges being faced by police personnel and other Federal Government agencies on the administration of their retirement benefits.
They are a Bill for an Act to exempt the Nigeria Police Force from the CPS and a Bill for an Act to further Amend the Pension Reform Act 2014 to, among other things, provide for a retiree to withdraw a lump sum of at least 75 per cent from the Retirement Savings Account (RSA) and to criminalise undue delay in the payment of pension and for related matters.
“The solution to the pension challenges of the personnel of the Nigeria Police does not reside in their exemption from Contributory Pension Scheme and reversion to the Defined Benefits Scheme, which is clearly unsustainable,” Dahir- Umar told the committee. She said the absence of other social security benefits in Nigeria was partly responsible for the clamour by the retirees for exemption or to access substantial amounts as lump sum from their RSA balance.
According to her, the exemption of NPF from CPS will result in the dismantling of the institutions, systems and processes that government had put in place in the last few years towards the implemen-tation of the pension reform programme. “Exemption of the personnel of the NPF would imply additional financial burden on the Federal Government by way of unsustainable pension obligations. For instance, as at September 2021, there were 304,963 Police personnel based on IPPIS data.
“An actuarial valuation revealed that the retirement benefits (pension and gratuity) liability of these personnel under the defunct Defined Benefits Scheme would amount to about N1.84 trillion,” she said. On the other hand, she said that the liability under CPS for the same NPF personnel is made up of N213.4 billion as accrued pension rights and monthly employer pension contributions of about N2.2 billion. The Director General said to address the concerns of Police personnel on pension, the employer could review upwards its current contribution rate of 10 per cent.
In addition, she said the PRA 2014 further provides that notwithstanding the pension contributions made by employer and employee into the employee’s RSA, the employer may agree on the payment of additional benefits to the employee upon retirement. “Accordingly, the Federal Government may wish to provide additional benefits in the form of gratuity to personnel of NPF upon their retirement,” she said. Meanwhile, regarding the 75 per cent lumpsum payment, she said the amendment, if approved, would be contrary to the provision of Section173 of the 1999 Constitution of the Federal Republic of Nigeria (as amended), which guarantees the right to pensions for all public officers as the payment of “at least 75 per cent of the balance of the RSA” as lumpsum at retirement. She added that this will significantly deplete the pension savings, such that the contributions will not be sufficient to provide meaningful pensions during retirement.
“That converts the pensions into a provident fund and leaves such a retiree with no periodic pensions, which is contrary to the requirement of Section 173 of the 1999 Constitution,” she said. The director general said the proposal is based on a misunderstanding of the concept of pension payment under CPS. Similarly, the Chief Executive Officer of the Pension Fund Operators Association of Nigeria (PENOP), Oguche Agudah, said the exemption of the Nigeria Police Force from CPS would take Nigeria back to the dark ages before the pension reforms. “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,” he said.