THE CONTRIBUTORY Pension Scheme (CPS) introduced by the Pension Reform Act (PRA) of 2004 was heralded as a revolutionary step in ensuring financial security for retirees in Nigeria.
One of its cornerstone promises was the introduction of a Guaranteed Minimum Pension (GMP) for Retirement Savings Account (RSA) holders, as stipulated in Section 71(1) of the repealed (PRA) 2004 and Section 84(1) of the (PRA) 2014. This provision stipulates that all RSA holders who have contributed for a specific number of years as determined by the National Pension Commission (PenCom) are entitled to a guaranteed minimum pension.
PenCom, as the regulatory body overseeing the CPS, has the responsibility to set and review the GMP. Its prolonged silence and inaction on this matter are disconcerting. The federal government, being the largest employer of labour in the country, also has a significant role to play. There appears to be a disturbing complacency or perhaps a deliberate conspiracy to ignore the plight of pensioners under the CPS, leaving them to fend for themselves with inadequate pensions.
Despite this, a glaring gap remains in the implementation of this crucial aspect of the law. Since 2007, when the first cohort of CPS members began retiring, PenCom has not specified what constitutes the GMP. As a result, many retirees today are living on pensions as low as N20,000 per month, a figure that pales in comparison to the current national minimum wage and is grossly inadequate in the face of rising inflation and living costs.
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The GMP is not just a promise; it is embedded in the legal framework governing the CPS. Section 39(3) of the PRA 2014 mandates a periodic review of pensions in alignment with Section 173(3) of the Nigerian Constitution, which states that pensions should be reviewed every five years or whenever there is an increase in salaries of civil servants. This is meant to protect pensioners from the erosion of their purchasing power due to inflation.
Similarly, Section 84(1) of the PRA 2014 specifically addresses the need for a guaranteed minimum pension to safeguard retirees who have diligently contributed to their pension funds but whose retirement benefits might be insufficient.
The failure to implement a GMP has left many pensioners struggling to make ends meet. With the cost of living rising steadily, a pension below N20,000 is woefully inadequate. It is an unfortunate irony that those who have served the nation diligently for years, contributing to their pension funds as required by law, find themselves languishing in poverty.
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The situation is particularly troubling given the mandate of the PRA 2014 to protect pensioners from such economic hardship. The failure to establish a GMP not only contravenes the spirit of the law but also raises serious questions about the commitment of both PenCom and the federal government to the welfare of retirees.
PenCom, as the regulatory body overseeing the CPS, has the responsibility to set and review the GMP. Its prolonged silence and inaction on this matter are disconcerting. The federal government, being the largest employer of labour in the country, also has a significant role to play. There appears to be a disturbing complacency or perhaps a deliberate conspiracy to ignore the plight of pensioners under the CPS, leaving them to fend for themselves with inadequate pensions.
The promise of a Guaranteed Minimum Pension under the Contributory Pension Scheme was a beacon of hope for Nigerian workers. It was meant to ensure that after years of service, retirees would not be left destitute. The delay in implementing this promise is a betrayal of the trust placed in the system by contributors to the CPS. It is time for PenCom, the federal government, and labour unions to act decisively and ensure that the rights and dignity of Nigerian pensioners are upheld.
A significant development that may explain this lack of concern for the plight of pensioners under the CPS is the exemption of top officials in the federal public service from the scheme. Officers in the top echelon, such as the Head of Service, the Accountant General of the Federation, and Permanent Secretaries, who are responsible for formulating and implementing policies on civil servants’ welfare, have been exempted from the CPS. This exemption means they are no longer personally invested in the success or failure of the scheme, as their own retirement benefits are secured outside of it.
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This detachment could be a contributing factor to their apparent indifference towards the struggles of CPS pensioners. With their interests no longer aligned with those of the vast majority of federal employees under the CPS, the urgency and empathy required to address the issues faced by these retirees may be lacking. The exemption of these top officials is fostering an environment where policy decisions are made without adequately considering the impact on those still bound by the constraints of the CPS.
Another dimension to this issue is the seeming indifference of labour unions and the two labour centres, the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC). These unions and their labour centres, that once represented these retirees when they were active workers, have remained largely silent on the issue of GMP and the review if pensions under the CPS, in line with Constitutional provisions. The voices that should be advocating for the rights of pensioners appear muted, leaving retirees feeling abandoned. The question on the lips of many is whether the inability of pensioners to go on strike has rendered their plight invisible to those who once championed their cause.
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The current state of affairs is untenable. PenCom must fulfil its mandate by setting a realistic GMP that reflects current economic realities. This will require a thorough review of the financial needs of retirees, considering inflation and cost of living. The federal government, as the largest employer and key stakeholders, must ensure that this process is expedited and that the necessary funds are made available.
Labour unions must also rise to the occasion and advocate for the rights of pensioners. These retirees were once members of the workforce, and their welfare in retirement should be a priority.
The promise of a Guaranteed Minimum Pension under the Contributory Pension Scheme was a beacon of hope for Nigerian workers. It was meant to ensure that after years of service, retirees would not be left destitute. The delay in implementing this promise is a betrayal of the trust placed in the system by contributors to the CPS. It is time for PenCom, the federal government, and labour unions to act decisively and ensure that the rights and dignity of Nigerian pensioners are upheld.
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.
