THE NEWS making the rounds is that the federal government has released funds amounting to N44 billion to settle the accrued pension rights of federal retirees in Ministries, Departments, and Agencies (MDAs). According to the National Pension Commission (PenCom), the funds will cover retirees who left service between March 2023 and September 2023.
Despite these provisions, federal retirees continue to face delays and uncertainties in receiving their accrued pension rights. Meanwhile, private sector retirees, who also have accrued rights, are not experiencing the same challenges.
While this development might seem like good news for those retirees, it raises a critical question: What happens to those who retired between October 2023 and November 2024? They are left in uncertainty, waiting indefinitely until the federal government decides to act.
The Purpose of Pension Reform
The Pension Reform Act of 2004 was designed to ensure that pensioners do not retire into poverty. Its primary objective, as stated in Section 2(a) of the Act, is to guarantee that “every person who worked in the Public Service of the Federation, Federal Capital Territory, or Private Sector receives their retirement benefits as and when due.” This provision was reiterated in Section 1(c) of the Pension Reform Act of 2014, which replaced the 2004 Act.
At the onset of the Contributory Pension Scheme (CPS) in 2004, it was clear that both public and private sector employees with accrued pension rights under the old schemes could not be paid in one lump sum. To address this, the Pension Reform Act made provisions for transitional arrangements.
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Transitional Provisions for Accrued Pension Rights
Section 29 of the Pension Reform Act 2004 (now Section 39 of the 2014 Act) mandated the Central Bank of Nigeria (CBN) to manage a Retirement Benefits Bond Redemption Fund account. This fund was to be funded by the federal government, which was required to contribute an amount equal to 5% of the monthly wage bill of federal public servants. The funds were to be used by the CBN to redeem retirement benefits bonds issued under the Act.
Despite these provisions, federal retirees continue to face delays and uncertainties in receiving their accrued pension rights. Meanwhile, private sector retirees, who also have accrued rights, are not experiencing the same challenges.
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Protests, rallies by retirees under CPS and FG’s Assurances
Federal Pensioners under the CPS have been compelled to resort to protests and rallies to demand the release of funds for the payment of their accrued pension rights. Demonstrations held in front of the Office of the Accountant General of the Federation (OAGF) and the Federal Ministry of Finance drew attention to a two-year backlog of unpaid accrued pensions rights. It was only after these protests that the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, assured the pensioners that the funds budgeted for this purpose in the 2024 annual budget would be released.
However, the same cannot be said for the federal government as an employer. The government has failed to comply with its own laws on pension administration. PenCom, being an agency of the federal government, is left pleading with the government to fulfill its legal obligations. This ironic situation, where PenCom “begs” the government to honor its responsibilities, highlights a systemic flaw: “He who pays the piper dictates the tune.”
Despite the Minister’s assurances, correspondence from Musa A. Raheem, Director of Administration for the Accountant General of the Federation, in a letter dated November 26, 2024, revealed lingering uncertainties. Raheem informed the leadership of the Nigeria Union of Pensioners, Contributory Pension Scheme Sector, that allocations for January to March and April to June 2024 had been released to the National Pension Commission (PenCom). However, he added that further releases to reduce the outstanding pension liabilities would depend on the availability of funds before the year ends.
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This response raises serious concerns about the transparency and consistency of pension payments. If the N44 billion reportedly released in September 2024 is part of the allocations for accrued pension rights budgeted for January to June 2024, and if it only benefits those who retired between March and September 2023, what is the plan for retirees from October 2023 to November 2024? When will their accrued pension rights be paid?
These retirees have dedicated their productive years to serving the Federal Republic of Nigeria, ensuring the smooth operation of governance, administration, and the economy. Many are now unable to fend for themselves or their dependents and are battling health challenges aggravated by old age. Yet, they are left in uncertainty and despair.
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The federal government must answer why allocations for the salaries and allowances of political officeholders in both the executive and legislative arms of government are always promptly paid. Are contractors not being paid for both completed and future projects under the guise of mobilization? Why then is it difficult to ensure that pensioners, who gave their best years to the country, receive their dues in a timely and dignified manner?
The current situation underscores the urgent need for systemic reforms to ensure federal retirees receive their entitlements promptly and in full. The federal government must lead by example and comply with the laws it enacted.
This neglect undermines the trust and dignity of public service and reflects poorly on the government’s priorities. Pensioners deserve more than promises, they deserve action and respect for their sacrifices.
Regulatory Oversight: Private Sector vs. FG
The Pension Reform Act 2004 established the National Pension Commission (PenCom) to regulate and supervise pension matters in Nigeria. PenCom has effectively regulated private sector pensions, ensuring compliance with laws and penalizing defaulters.
However, the same cannot be said for the federal government as an employer. The government has failed to comply with its own laws on pension administration. PenCom, being an agency of the federal government, is left pleading with the government to fulfill its legal obligations. This ironic situation, where PenCom “begs” the government to honor its responsibilities, highlights a systemic flaw: “He who pays the piper dictates the tune.”
Benevolence vs. Obligation
Instead of adhering to the provisions of the law and redeeming the bonds issued for accrued rights, the federal government has adopted a discretionary approach, releasing funds sporadically. For instance, the recent funds only cover retirees from March 2023 to September 2023, leaving others from October 2023 onwards in limbo.
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This piecemeal approach paints a distressing picture of federal retirees, many of whom are left in poverty after decades of service. These retirees, waiting for their turn to be included in future batches, are forced to endure hardship and indignity.
The Way Forward
The current situation underscores the urgent need for systemic reforms to ensure federal retirees receive their entitlements promptly and in full. The federal government must lead by example and comply with the laws it enacted.
Until then, federal retirees will remain at the mercy of an employer that acts as a benevolent giver rather than fulfilling its legal obligations. This situation not only undermines the integrity of the pension system but also calls into question the government’s commitment to the welfare of its retirees.
Comrade Takor was a two-term President of NASU, a two-term National Treasurer of NLC and an inaugural member of the Board of PenCom. Comrade Takor retired as a Director in federal service and is now a Lagos-based legal practitioner. He is an alumnus of the National Institute of Policy and Strategic Studies (NIPSS), Kuru-Jos, Plateau State.
