The Pension Reform Act (PRA) was introduced to solve a critical problem, but has done more than that. The PRA Act of 2004, was enacted to introduce the Contributory Pension System (CPS) which was designed to correct the shortcomings of the Define Benefits Scheme (DBS).
The DBS, mostly operated in the public sector was fraught with many problems: inadequate budgetary provisions for pension, inadequate and untimely release of funds resulted in delays and accumulation of arrears of payment of pension rights and corruption. Even in the private sector, the pension schemes put in place by most employees had problem of inadequate funding and most did not cover all staff, and they were also thoroughly abused. These resulted to situations where workers who have spent their hay days serving the nation end up in frustration, some giving up the ghost in the process of endlessly waiting to get what rightly belong to them at retirement.
To correct these anomaly, it was obvious that the a new system was needed to replace the BDS, and that is what has happened under the Contributory Pension Scheme (CPS) powered by the Pension Reform Act 2004 Today, a worker either in the public or private sector who is happy being part of the process that will determine how well he/she will live after retirement from active service, readily monitors the growth of its pension contributions through its chosen Pension Fund Administrators (PFAs). But beyond this, is the pool of savings, long term investible funds that the CPS has helped the nation to accumulate. In just nine years or thereabout, the scheme garnered over three trillion naira (N3trillion) as contributions from few workers in the public and private sectors whose organizations have embraced the scheme.
These achievement notwithstanding, the body whose duty is to regulate activities of the various players in the pension industry known as the National Pension Commission (PENCOM) says it is not yet uhuru and therefore has committed itself to seeking better ways to take the industry to a greater height.
To achieve its goal, the PENCOM has sent its prayers to the representatives of the people of Nigeria at the National Assembly to help repeal the Pension Reform Act 2004 and enact the Pension Reform Act 2013 to make provision for the Contributory Pension Scheme and for connected matters.
The passage of the Bill which is right before the National Assembly according to the Commission will help it address the challenges that it is being confronted with in the process of implementing the PRA 2004.
The principal thrusts of the Pension Reform Act (PRA) 2013 Bill, according to the Commission are to enhance the powers of the Commission in its regulatory and enforcement activities, enhance the protection of pension fund assets, unlock the opportunities for the deployment of pension assets for national development, review the sanctions regime to reflect current realities, provide for the participation of the Informal Sector and also provide the framework for the adoption of the Contributory Pension Scheme (CPS) by States and Local Governments.
Furthermore, the PRA 2013 Bill seeks to enhance the regulatory authority and efficiency of the Commission to provide greater oversight on, and reposition the Pension Transition Arrangement Departments (PTADs) for greater efficiency and accountability in the administration and payment of pensions under the Defined Benefits Scheme. This move by the PENCOM is consistent with the desire of the National Assembly to tackle gross impunity and widespread corruption in the various Pension Departments in the country.
For instance, the PRA 2013 Bill if made into law will allow for a wider decree of transparency in the pension industry as the regulatory commission will be able to exercise more powers to discharge its regulatory functions.
Part of the things PENCOM seeks to achieve with the Bill is to be able to reposition the Pension Transition Arrangement Directorates (PTADs) to ensure greater efficiency and accountability in the administration of the Defined Benefits Scheme (DBS).
Perhaps the aspect which will most delight workers under the Defined Benefits Scheme is the proposal by the PENCOM that payment of pensions would be made by the Accountant General of the Federation (AGF) directly into beneficiaries (pensioners') bank accounts rather than go through the usual long processes during which the monies disappears in transit.
Besides pushing to expunge corruption and introduce transparency in the administration of the pension industry in Nigeria, PENCOM is of the view that not only workers in both the public and private sectors should be catered for by government. The Commission is equally pushing through the PRA 2013 Bill that people in the informal sector of the economy be accorded equal right to save for their old age.
To capture a wider number of employees in the informal sector which unarguably constitute the greater chunk of the country's economy, PENCOM is asking through the PRA 2013 Bill that the minimum requirement of five employees for organizations to participate in the scheme be reduced to three to allow small businesses, especially the Small and Medium Scale Enterprises (SMEs) to partake in the scheme.
According to the Commission, compiled data supplied by the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) show that over 12million organizations which include Partnerships and Micro Enterprises that normally have less than five employees are registered in Nigeria.