This Day (Lagos)

16 January 2013

Nigeria: Contributory Pension - Only Five States Have Complied Fully

Eight years after the introduction of contributory pension scheme in the country, only five out of the thirty six states of the federation have fully embraced the social security scheme, which is meant to take care of workers when they finally retire from active service.

They are Lagos, Ogun, Osun, Niger and Jigawa States. 16 other states are at various stages of compliance with contributory pension, 14 others are still making laws to enable them transit while Adamawa State is yet to take any positive action in this direction.

The National Pension Commission (PenCom) confirmed this while responding to recent enquiries from THISDAY.

Worried about the plight of retirees across the federation, the Federal Government in 2004 enacted the Pension Reform Act with which it changed the face of pension in the country.

The law, which covered federal government employees and workers in the organised private sector, allowed states the freedom to make their own contributory pension laws to take care workers for the second and third tiers of the government in the country.

The commission revealed that while 21 states have enacted laws to enable them kick-start contributory pension scheme, only five of them have fully complied with relevant provisions in the law, particularly in the area of deducting and remitting workers contributions and their own contributions to relevant Pension Fund Administrators (PFAs).

The five states, according to the commission, have commenced full implementation of the contributory pension scheme and by this it meant that "the states have commenced remittances of employees' contributions into their Retirement Savings Accounts (RSAs)."

The commission also revealed that 10 other states have partially complied with contributory pension law in the country, saying they have "appointed PFAs, but are yet to commence remittance of employees' contributions into their RSAs."

The ten states are Delta, Ekiti, Kaduna, Kebbi, Kogi, Imo, Oyo, Rivers, Sokoto and Zamfara. In line with the commission's categorisation, six other states, Akwa Ibom, Bayelsa, Edo, Kano, Nasarawa and Taraba were "yet to commence contributory pension, explain that these states "have not appointed PFAs and hence have not commenced remittance of employees' contributions into their RSAs."

The pension regulatory at the Federal level also confirmed that 14 other states were at the stage of making laws to help them transit to contributory pension, as provided by the Pension Reform Act, 2004.

They are Abia, Anambra, Bauchi, Benue, Borno, Cross River, Ebonyi, Enugu, Gombe, Katsina, Kwara, Ondo, Plateau and Yobe states.

Adamawa State according to the commission was the only state in the federation that is yet to take any positive action towards transiting to contributory pension.

The Pension Reform Act, 2004 provided that every worker in an organisation employing five people or more must contribute 7.5 per cent of his or her salary to a Pension Fund Administrator (PFA). The employer under the law is expected to contribute 7.5 per cent of the individual salary of workers to their respective Retirement Savings Accounts (RSA) resident with their chosen PFAs.

In furtherance with the law, the government established PenCom which in turn licensed the 18 PFAs, 4 Pension Fund Custodians (PFCs) and 7 Closed Pension Fund Administrators (CPFAs) that are now in operation.

As at December 2012, about 5.3 million workers and retirees registered under the contributory pension scheme with accumulated pension assets rising from N265 billion.

Under the scheme, the number of retirees drawing monthly pension have risen to 54,558 retirees from both public and private sectors under the scheme as at September 2012. These have collectively received over N151.52 billion of their accumulated pension savings as lump sum and were receiving about N1.77 billion monthly as pension as at the same date.

TABLE

Status of Compliance by State Governments as at Jan 10, 2013

State

LEVEL OF COMPLIANCE

Enacted Laws

Full Implementation

Partial Implementation

Yet to Commence

Bill Stage

No Action

Lagos

P

P

Osun

P

P

Ogun

P

P

Niger

P

P

Jigawa

P

P

Delta

P

P

Rivers

P

P

Kaduna

P

P

Zamfara

P

P

Kebbi

P

P

Kogi

P

P

Sokoto

P

P

Oyo

P

P

Ekiti

P

P

Imo

P

P

Taraba

P

P

Bayelsa

P

P

Edo

P

P

Kano

P

P

Akwa Ibom

P

P

Nasarawa

P

P

Abia

P

Anambra

P

Bauchi

P

Benue

P

Borno

P

Cross River

P

Ebonyi

P

Enugu

P

Gombe

P

Katsina

P

Kwara

P

Ondo

P

Plateau

P

Yobe

P

Adamawa

P

Note:(i) Full implementation refers to the states that have commenced remittances of employees' contributions into their Retirement Savings Accounts (RSAs).

(ii) Partial implementation refers to those states that have appointed Pension Fund Administrators, but are yet to commence remittance of employees' contributions into their RSAs.

(iii) Yet to commence refers to states that have not appointed PFAs and hence have not commenced remittance of employees' contributions into their RSAs.

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