By Paddy Ezeala
One governor in one of the states in the southeast, more than a decade ago, said that it was better for him to take care of current workers in his state than to devote state resources to pay gratuities to those who were already retired from service. This governor never had any paid employment in his life; neither did his parents nor siblings. Retirement benefits to him was more or less an unwarranted distraction. In this state no retiree till date has received any gratuity since the year 2000. Many retirees have since died without collecting their entitlements. Current workers are also not that hopeful that they would be receiving their entitlements as and when due on retirement. The horizon is gloomy.
This sentiment represents the disposition of various tiers of government in Nigeria with regard to the need to prioritize pension. Frankly, the old Defined Benefit Scheme put much burden on the Government. The Federal Government has been battling to offset the backlog of accrued rights of retired workers.
The lateness in the payment of Accrued Rights to retiring or retired workers is bringing untold hardship to retirees who have to wait for several months before accessing their entitlements. While Accrued Rights are largely entitlement of workers before the advent of the private sector – driven Contributory Pension Scheme (CPS), its late payment by especially, the various tiers of government, makes it difficult for Pension Fund Administrators to do the needful with regard to paying retirees. This is because Accrued Rights have to be lumped into Retirement Savings Accounts (RSAs) before lump sum and Programmed Withdrawals can be paid to retirees. All the workers now retiring from government establishments must have worked under both the old Defined Benefit Scheme and the new Contributory Pension Scheme. There is no doubt that the complications arising from harmonising the entitlements of this category of workers is affecting the smooth running of the new pension scheme. Those who do not understand these intricacies would conclude that the new pension is saddled with so much challenges. But it is not so.
For a proper understanding of the difficulty in which Pension Fund Administrators (PFAs) somehow find themselves, more light should be shed on Accrued Rights or Benefits. Accrued Rights is a total amount of a pension plan as on a specified date. They are usually in agreement with the terms of the pension plan and are based on the participant’s salary package and length of service. In Nigeria, it is not different. It is a term used to describe what the Government owes its workers who have been in service before the advent of the Pension Reform Act, 2004 (Reviewed in 2014). It is recognised as an amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds. When the Government employee retires, the bonds are liquidated and added to the retiree’s balance in his/her Retirement Savings Account (RSA) managed by a PFA. It is the addition of these two that makes up the retiree’s entitlement. Sometimes, the Government finds it difficult to cash back Retirement Benefits Bonds domiciled in the Central Bank.
The truth of the matter is that the retirees bear the brunt of the technical hitches emanating from these delays. With the current economic challenges, it becomes inhumane to obstruct workers income in the guise of retirement.
It should be pointed out that it is only the Federal Government and a few states that are making efforts to offset these Accrued Rights. Many states still do not see any reason to do so. Some states have not even seen any reason to key into the CPS. In some of these states the thought of the new Contributory Pension Scheme comes to mind only when it becomes mandatory for the state to do so in order to access some financial benefits. It is only then that some state governments set up committees to assess PFAs in exercises defined by some weird criteria and extortionist propensities. Some of these interactions have not yielded any fruits till date. The welfare of the retired workers continue to be relegated to the background.
Another bunch of retirees that have not fared any better is the workers abruptly disengaged from establishments privatized by the President Obasanjo administration. It seems that the new investors acquired the assets and not the liabilities. While the Pension Transitional Arrangement Directorate (PTAD) has done a great job of sorting out discrepancies and resolving them and also facilitating payment of deserving retirees, many are getting too old and some others have since died leaving behind their entitlements. A typical example is the Delta Steel Company (DSC) Aladja in Delta State. The place called DSC Township in Ovwian, Aladja has become an abode of poverty and its extended consequences. “Wives have begun to run away from their husbands, children have become miscreants, poverty and sickness have eaten deep and life has come generally unbearable” said one of the former workers of DSC who craved anonymity. “PTAD has been doing a great job, but more is expected so that things don’t get out of hand.”
While accepting that the Contributory Pension Scheme is to a great extent taking care of current workers, we should not lose sight of the liabilities accumulated under the old scheme which is increasingly making life unbearable for a weak segment of our population. The situation qualifies for a national emergency. It should also be noted that paying these entitlements is altruistic and also a way of injecting liquidity into a sagging economy and stimulating productive activities.
Paddy Ezeala is a communication and development specialist based in Abuja (firstname.lastname@example.org, +2348050559960)