26 December 2012

Nigeria: Old Pension Scheme More Attractive - Maina

The huge retirement benefit payable to pensioners under the old pension scheme has continued to make the scheme more attractive to the Contributory Pension Scheme.

Chairman of the Pension Reform Task Team (PRTT), Abdulrasheed Maina told LEADERSHIP that while a director receives N150,000 monthly, guaranteed for life under the old scheme, a director receives only N70,000 or N80,000 monthly, guaranteed for only 10 to 15 years under the contributory pension.

"We have used all our Actuaries. Look at what we have in our Pension Funds under PENCOM. How many years can this money pay existing pensioners the same number and the same amount? The Actuaries gave us 10 years and some 15 years."

He said this huge disparity in benefits to retirees is the reason why the Military, the State Security Service (SSS) and the NIA all opted out of the Contributory Pension scheme, and added that now the Police are also trying to opt out.

"People are pulling out because they think it is better to go back to the old scheme. How can I retire as a director and you are giving me N70, 000 or N80, 000 guaranteed for maybe 15 or 18 years? And then, here you are paying me N150, 000 guaranteed for life, and that is subject to increase every five years, or anytime there is salary increase in the civil service. Now we are even talking about the 53 per cent increase that government says they are going to pay pensioners.

"So with the 53 per cent somebody is collecting N200, 000 plus while his colleagues are collecting N70,00 to N80,000."

Maina said the issue of disparity can be fixed if the funds were put to more viable use to generate greater returns for contributors.

"We wanted to fix this thing. I even sat down some time ago with the Director General of Pension Commission (PenCom) to offer suggestions on how to improve the scheme and he said he would look into it. But he was not able to do that and so we are where we are," Maina said.

He queried why all the state governments were going abroad to ask for loan when PenCom has over N3 trillion pension assets.

"States can get their loans from there and we take the money from source. We agree on the payment and we take it from source. Federal government wants to borrow money, they also borrow from there and we will be making profit. We are Nigerians and this money is for everybody.

"These are some of the things we are trying to do. We have the blueprint and we want to ensure that we do it based on these funds that we have," he said.

He said that the Task Team has come under severe attacks simply because it was trying to restructure the pension sector.

He, however, stressed that his team was not out to witch-hunt anybody but was simply trying to lay a sound foundation for the administration of pensions in the country.

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