Experts have cautioned that exempting the Nigeria Police Force (NPF) from the Contributory Pension Scheme (CPS) would worsen their economic conditions at retirement.
Their position comes as a bill for an Act to remove the police from the CPS is being pushed in the National Assembly. The bill sponsored by Francis Ejiroghene Waive, member, House of Representatives, seeks to return the NPF to the Defined Benefit Scheme, giving their concerns that their colleagues who retired under the Defined Benefit Scheme (DBS) earn more than them in retirement.
But regulators and managers of the CPS warned that allowing the police to exit the scheme would not only deplete the accumulated pension assets now in excess of N13.6 trillion as of January 2022 but also destroy a system that is already working and enhancing economic and infrastructure development of the country.
The experts noted that “except one is new in this country, the history of police pensions is not what should be remembered when you consider how many billions of naira that was embezzled in a system marred with high-level corruption.”
According to Aisha Dahir-Umar, director-general, National Pension Commission (Pension) during a public hearing on the bill by the House of Representative committee on pensions in Abuja, “the solution to the pension challenges of the personnel of the Nigeria Police does not reside in their exemption from CPS and reversion to the Defined Benefits Scheme, which is clearly unsustainable,”
“Exemption of the personnel of the NPF would imply additional financial burden on the Federal Government by way of unsustainable pension obligations.”
“For instance, as of September 2021, there was 304,963 police personnel based on IPPIS data, and actuarial valuation revealed that the retirement benefits (pension and gratuity) liability of this personnel under the defunct Defined Benefits Scheme would amount to about N1.84 trillion,” she said.
On the other hand, she said that the liability under the CPS for the same NPF personnel was made up of N213.4 billion as accrued pension rights and monthly employer pension contributions of about N2.2 billion.
Dahir-Umar said that CPS has provisions that can address the challenges being faced by personnel of the Nigeria Police and other Federal Government Agencies on the administration of their retirement benefits.
To address the concerns of police personnel on pension, the employer can review upwards its current contribution rate of 10 percent, she said.
Oguche Agudah, chief executive officer of the Pension Fund Operators Association of Nigeria (PENOP), said the exemption of the police from the scheme would take Nigeria back to the dark ages before the pension reforms.
“This was a time when retirees had to depend on a defined benefit system; where the federal government paid monthly pensions to retirees directly from its coffers,” he said.
Agudah said at the time of the reform, it was estimated that the Federal Government had a pension liability of over N 2trillion.
“Past experiences have proven that this system puts a lot of burden on the federal government, making it unsustainable. The sustainability of moving the police back to the pay–as–you–go Defined Benefit Scheme under their proposal is near impossible, given the Federal government’s struggling finances at the moment.,” he said.
He recommended that from the rank of Assistant Inspector-General of Police (AIG) upwards, their pensions should be treated under the category of political appointees who retire with full benefits as stated in the PRA 2014 as their appointments are political in nature.
Ivor Takor, executive director, Centre for Pension Rights Advocacy in his submission at the public hearing said the Pension Reform Act 2014 was the most guaranteed law in the country that protects these officers from old-age poverty and destitution.
According to him, Section 4 of the Act, makes provision for the creation of a ready pool of funds, that will be used in the payment of pension for life to an officer.