A bill is being moved to heavily penalise state governments that fail to pay workers’ pension benefits. The operators of the Contributory Pension Scheme disclosed this during an interactive session with the Senate Committee on Establishment and Public Service. The pioneer Director-General, National Pension Commission, Mr Muhammad Ahmad, said there was a need for state governments to comply with the provisions of the Pension Reform Act 2014.
Ahmad said, “I’m aware that a bill is being sponsored to compel state governments to comply and to criminalise non-payment of pension liabilities. This is a step in the right direction, and I urge you as representatives of the good people of Nigeria to get behind this piece of legislation.” Latest figures obtained from PenCom showed that Kaduna State is the only compliant state in terms of pension and insurance obligations to workers.
Kaduna is said to be up to date in remittance of pension contributions and funding accrued pension rights consistently with five per cent of the total monthly wage bill. However, PenCom’s latest report on the ‘level of compliance with the Compulsory Pension Scheme by state governments showed that none of the states had valid insurance covers as of the end of June 2019.
Anambra, Delta, Edo, Ekiti, Jigawa, Kebbi, Lagos, Ondo and Osun had different levels of compliance with the pension scheme. Other states are not remitting funds into workers’ Retirement Savings Accounts, according to PenCom. PenCom had also barred Pension Fund Administrators from investing in the bonds of states that have yet to amend their state pension laws and join the Contributory Pension Scheme.
The CPS was established under the Pension Reform Act to replace the DBS. This was because the DBS had huge liabilities, which were not being funded, leading to situations where retirees experience long waits to get their entitlements, while many of them died without being paid. Unfortunately, analysts say the same scenario, which was prevalent in states operating the DBS, is now happening in the states operating the CPS due to poor funding of the scheme.