• Tuesday, March 05, 2024
businessday logo


Labour’s resistance to adoption of Contributory Pension Scheme in states is mere ignorance – PenCom

pension contributions

National Pension Commission (PenCom) in its commitment towards ensuring an effective implementation of the Contributory Pension Scheme (CPS) across the states has continued to engage stakeholders to enable it appreciate the scheme and also address some of the challenges confronting implementation. Dan Ndackson, head, States Operations Department of the Commission in this interview with Modestus Anaesoronye shares his thoughts on implementation challenges, efforts of the commission and compliance level across the states. Excerpts:

PenCom recently held the 2019 Second Quarter Consultative Forum for States. Please, tell us the purpose of this programme?

The main purpose of this programme is to see how we can encourage states to adopt the contributory pension scheme. Second is to see how we can enhance the implementation of the scheme in states that have adopted the scheme as their model of pension administration. So, we are hoping that at the end of this meeting, like the one we hold every quarter, people will get more informed about what it takes because I am quite happy that Head of Service and Permanent Secretaries of states that have not adopted the scheme and those that have passed the law but were yet to implement it are present here. So, we are hoping that at the end of the programme, we will have people who have acquired a lot of information from their colleagues on how to proceed with implementation of the scheme in their various states.

In your interaction with these states over time, what have you found as their major challenge? Could it be political or what?

In adopting the CPS, challenges come from two angles. One is from the executives of the states and the second is from the labour unions. To add to that, the challenges that come from labour are as result of ignorance because it is co-employee scheme, which guarantees the employee the likelihood of him getting something at retirement much more than the old scheme the cling on to.

So, even though the scheme has some challenges in some states, I link it is due to the ignorance; they do not understanding the benefits of the scheme. The greatest challenges that this scheme has are those that come from the chief executives of the States. The truth is that any state government that adopts the scheme makes a sacrifice. What sacrifice does that government make? The money that ordinarily some could have used for some other things including wrong uses, have to be paid religiously on a monthly basis. Not so many chief executives are comfortable with that. For many chief executives, their longest life span is eight years, and we have seen the government survive its two terms without paying pensions under the defined benefit scheme and nothing happens. Many governors are comfortable with that and are doing so.

So, I have always called governors that adopt the contributory pension’s scheme as pro-people government, as people who have welfare of their citizens at heart because what they are doing is making sacrifices, while some others who have this money abuse it rather than invest in their people. So, because of the reluctance in people coughing out this money in order to meet the CPS, they would opt out.

And looking at it, it is cheaper to adopt because once you are not in the CPS no one compels you. All of us have been in this country all this while when the Paris Fund was released, when the Federal Government directed that the money should be used to first settle salary arrears and then pensions. But I can tell you that in many states, if part of the money was used to settle pensions it was insignificant sum and nothing has happened. But with the Contributory Pension Scheme, you have layers of authorities that ensure compliance. Most of the states are required to set up State Bureau or Commission that serves as their local PenCom to ensure that the law is implemented as intended. And in most of the laws, there is a provision for escalation that says, if a state government fails to comply with his own laws, that institution that has been established by the state is given powers to escalate the matter to the National Pension Commission. Most of the states’ laws empower the National Pension Commission to approach the Accountant General of the Federation to deduct these contributions that they have failed to remit at source.

You don’t have such in the defined benefit scheme. If the governor pays, you say thank you; if he does not pay, there is nothing you can do. In this case, who feels the impact? The retirees continue to protest.

What is the effectiveness of the National Pension Commission in enforcing compliance with this scheme?

Unfortunately, the constitution gives states the powers to design their pension laws. However, it is the beauty of that constitutional provision that we can let the states know the beauty of the scheme and it is those that are willing. If a state government decides to opt out, there is nothing we can do. So it is constitutional provision that allows states the independence to enact a pension law that suits their interest, and what the Commission can do is to say look, we have seen the good things that are in the Contributory Pension Scheme, tell the gospel on the beauty of the scheme, so that other chief executive who see it can implement it in their own states for the benefit of their employees.

How many states have complied with the CPS to date?

Well, we may not use that phrase, fully complied, but we can tell you the milestones and extent that each state has reached in doing that. If passing the law is to you full compliance, we have about 26 states as at today that have passed the law. At the moment, there is no state that is 100 percent compliant, none. Week on week bases, we give update on the milestones that each state has reached. There are about eight ranges of activities to go through in trying to comply. Some have done excellently well in eight out of nine, some have done well in three out of nine. In each parameter, it depends on what you are interested in. And we can tell you that on this parameter these are the states that have met the requirement. But it is difficult to tell you that this state has fully complied.


Modestus Anaesoronye