The Pension Fund Operators Association of Nigeria (PenOp) has expressed concerns over proposals from the Nigeria Police Force to exit the Contributory Pension Scheme (CPS) in favor of a Defined Benefits Scheme (DBS).
According to Oguche Agudah, chief executive officer of PenOp, transitioning to the DBS would not solve the police’s concerns but instead create deeper financial and operational challenges for the country.
Speaking at a hearing on a bill for an act to establish a police pension board, on Tuesday in Abuja, Agudah highlighted that the CPS has proven to be a transparent, sustainable, and resilient system for managing pensions, benefiting both retirees and the broader economy.
He warned that reverting to the DBS model, which relies on government budgetary allocations, would lead to fiscal unsustainability and delayed payments for pensioners.
“Moving the police out of the CPS would require a staggering 3.5 trillion Naira annually to fund pensions for approximately 400,000 personnel, in a budget already burdened by deficits, this is simply unsustainable. It would also divert resources from other critical needs, including minimum wage adjustments and public services,” he stated
Agudah noted that pension funds under the CPS are currently invested in bonds, infrastructure, and other critical sectors that contribute to Nigeria’s economic growth. He cautioned that unwinding these investments to accommodate a DBS for the police would erode the value of assets and destabilize the financial system.
He explained that the Contributory Pension Scheme, which currently holds over 21 trillion naira in assets, remains a critical component of Nigeria’s economic infrastructure. He insists that maintaining the police within the CPS will ensure long-term sustainability, equity, and economic stability.
The CEO also raised concerns about setting a dangerous precedent. “If the police exit the CPS, other public sector groups may demand similar transitions, fragmenting the pension system and undermining reform efforts.
“And our key aim and our key goal is to ensure that all pensioners are paid on time, all pensioners have a living pension, and everybody gets their pension on time. And what we heard at the hearing is actually a joy to us because what we are seeing is that even the sponsor of the bill is on the path that it is not really the CPS that is the problem of the police, it is welfare. So what we have said is if your salary is small, your pensions will be small,” he explained.
Sylva Nwaiwu, chairman of the Nigerian Union of Pensioners, Contributory Pension Scheme Sector (NUPCPS), echoed these sentiments, emphasizing that the CPS’s challenges stem from poor implementation and not the structure itself.
He urged the government to address inefficiencies within the CPS and ensure fair treatment for police personnel rather than dismantling the system.
“The CPS was agreed upon by all Nigerian workers, including the police, to address the failures of the DBS. The issue now is the government’s failure to pay pension increments and implement the system effectively, not the scheme itself,” Nwaiwu said.
Nwaiwu stressed the need for collaborative efforts between the National Pension Commission (PenCom), the police, and relevant government agencies to resolve grievances and improve the CPS.
“We have seen the benefits of the CPS, which is the Contributory Pension Scheme. So the police are reacting because the government has taken a discriminatory step, which is totally wrong. And it’s an abrasion to that very agreement it has earlier reached with Nigerian workers,”
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
