Despite the recapitalisation of PFAs, EHIME ALEX writes that Nigeria seems to be far from getting it right in pension administration
In every state in Nigeria, stories of pension fund administration are much the same: unpalatable, disgusting and scary. Workers and retirees have consistently accused the government of being adamant in paying pensioners their gratuities and other entitlements.
Pensioners’ agony
There are reports that the delay or non-payment of gratuities to pensioners have caused irreparable loss to many homes and families. They cause marriages to break up when male pensioners could no longer meet their domestic obligations, untimely deaths of retirees who could not afford medical bills, inability to withstand the harsh economic realities, depression and hopelessness, among others.
A recent report by the National Pension Commission on the status of implementation of the Contributory Pension Scheme by states in the six geopolitical zones as at December 31, 2021, puts the matter straight. It shows that all the states have huge pension and gratuity liabilities, a huge backlog of Accrued Pension Rights, and are not doing well in other parameters.
Pension fund
Just recently, about 20 Pension Fund Administrators succeeded in raising their shareholders’ fund from N1bn to N5bn, complying with the Minimum Regulatory Capital requirement.
PenCom had approved the recapitalisation exercise for PFAs with a 12-month transition period from April 27, 2021.
According to PenCom, the exercise became expedient as the value of pension fund assets under management and custody grew exponentially by 244 per cent, from N3tn in 2012 (the last time recapitalisation was done) to N12.29tn as at December 31, 2020.
With the recapitalisation of PFAs, one could only hope that the intended benefits would trickle down to pensioners. This is as PenCom had said, with the conclusion of the recapitalisation, Retirement Savings Account holders should expect particularly increased effectiveness and efficiency as well as improved service delivery from PFAs.
Withdrawals
Meanwhile, between June and December last year, 1,775 workers withdrew N3.09bn from their RSAs with PFAs.
PenCom reportedly granted approval of withdrawal from voluntary contributions amounting to N1.42bn to 787 contributors in the third quarter of 2021 and from voluntary contribution accounts N1.67bn to 988 contributors in the fourth quarter.
Died waiting and protests
Recent demonstrations by aggrieved workers and the reports that came out of this year’s Workers’ Day celebration were, as usual, awful across the states. Workers in Rivers State were reportedly in black attires to mourn pensioners, who retired from the state civil service but passed on while waiting for their gratuities, pension arrears and other benefits.
“Retirees have continued to die in dozens, without the government showing any concern or empathy. It is shameful, to say the least, that a government that prides itself as responsible will allow people, who devoted the better part of their lives to working for the state, to turn to fasting and prayers in public before realising that these people need the little benefit to stay alive longer,” Nigeria Labour Congress Chairperson, Mrs. Beatrice Itubo, lamented.
In Akwa Ibom State, no fewer than 5,300 retired primary school teachers and the next-of-kin of deceased teachers, protested non-payment of their pensions estimated at N28bn on January 8, 2022.
Hundreds of retired local council workers and primary school teachers blocked the Delta State Government House entrance in Asaba protesting against “wickedness on the part of the government” over the non-payment of their gratuities and pensions on March 11, 2022, since 2014.
Also, pensioners in Abia State reportedly protested against the non-payment of pensions and gratuities to them by the state government.
Concerned Abia Pensioners embarked on a two-day state-wide protest to demand the payment of their 38 months of pension arrears, 20 years gratuities and non-harmonisation of pensions from 1998 to 2010.
Resort to prayers
In Ekiti State, pensioners recently resorted to seeking divine intervention as a solution to the neglect, suffering and abandonment over outstanding pensions and gratuities, which had made life unbearable for them.
At a prayer conference in Ado Ekiti, the pensioners lamented that their unpaid pensions and gratuities had subjected them to untold pains, sufferings, and denials; hence, they resorted to prayer for divine intervention.
The Chairman, Nigeria Union of Pensioners, Ekiti State Council, Joel Akinola, was quoted to have said that gratuities were last paid to the state’s pensioners in July 2013 and to local government pensioners in September 2012.
“Pensioners in Ekiti State have been subjected to pains by the failure of the state government to discharge its obligation to us as and when due,” he said. “As of December 2021, state pensioners are owed three months. Those of the local government are owed seven months of pension. State pensioners are owed gratuities to the tune of N18bn while local government pensioners are owed gratuities to the tune of N19.8bn, totalling N37.8bn.”
Challenges of pension scheme
A few of the challenges of the scheme, Financial Street gathered, include low coverage and compliance, inadequacy of benefits and poor awareness, poor outreach of operators to workers, deepening of investment to create impact, non-compliance by various state governments (most of which are still operating the Pay As You Go system) as well as failure of private employers to remit staff contributions to employee pension accounts.
Recent figures from PenCom shows that total assets under the Contributory Pension Scheme rose by N460bn in three months to N13.88tn in March. The funds, which ended December 31, 2021, at N13.42tn, rose to N13.61tn and N13.76tn as of the end of January and February 2022 respectively.
PenCom said N8.5tn of the fund was invested in Federal Government securities, comprising bonds and treasury bills in March. Other portfolios where the funds are invested include domestic and foreign ordinary shares; corporate debt securities comprising corporate bonds, corporate infrastructure bonds, corporate green bonds and supranational bonds.
The commission also disclosed that the total number of workers with RSAs rose slightly to 9.589 million as at February ending, from 9.529 million in December 2021. It also stated that 131,376 workers, who retired from active service, could not be placed on monthly pensions as of the end of 2021.
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