Introduction
ON TUESDAY, November 19, 2024, the Senate Committee on Establishment and Public Service conducted a public hearing on a bill sponsored by Senator Binos Dauda Yaroe, representing Adamawa South.
After thoroughly reviewing the Pension Reform Act of 2014 and the provisions of the proposed bill, the CPRA firmly believes that the Contributory Pension Scheme (CPS) remains the most secure and sustainable system for ensuring police officers’ pensions and safeguarding them from old age poverty.
The proposed legislation seeks to establish the Police Pension Board, which would be responsible for managing the pension scheme for police personnel.
The bill aims to exempt the police force from the Contributory Pension Scheme (CPS) established under the Pension Reform Act of 2014.
On November 13, 2024, the Centre for Pension Rights Advocacy (CPRA) submitted a memorandum to the Clerk of the Senate Committee on Establishment and Public Service, outlining its position and recommendations on the proposed bill.
During the public hearing held on November 19, 2024, Ivo Takor, mni, the Director of the Centre, was present to formally present the memorandum and articulate CPRA’s stance on the matter.
CPRA expresses its gratitude for the opportunity to participate in this public hearing and applauded the Senate Committee on Establishment and Public Service for organizing the session.
The proposed bill aims to create a Police Pension Board to oversee the pension administration for Nigeria Police Force personnel, marking a potential departure from the Contributory Pension Scheme (CPS) established under the Pension Reform Act of 2014.
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The Centre acknowledged the immense sacrifices and risks police officers face daily to protect the peace, security, and well-being of Nigerians. Ensuring their welfare, especially in retirement, is crucial. However, after thoroughly reviewing the Pension Reform Act of 2014 and the provisions of the proposed bill, the CPRA firmly believes that the Contributory Pension Scheme (CPS) remains the most secure and sustainable system for ensuring police officers’ pensions and safeguarding them from old age poverty.
CPRA position and key arguments
The position of CPRA, as outlined in her memorandum, is as follows:
- Protection against budgetary uncertainty
The Contributory Pension Scheme (CPS), as outlined in Section 4 of the Pension Reform Act 2014, establishes a dedicated pool of funds that guarantees pension payments for life. Unlike the Defined Benefits Scheme (DBS), CPS pensions are not reliant on annual budgetary appropriations, ensuring retirees receive timely and consistent payments.
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- Flexibility for enhanced benefits
Section 4(4) of the Pension Reform Act permits employers to enhance pension benefits by either, providing additional benefits at retirement, or solely funding contributions, in which case the contributions of the employer shall not be less than 20% of employees’ monthly emoluments.
CPRA views this flexibility as a practical means to improve police pensions without dismantling the CPS framework.
- Group life insurance coverage
Under Section 4(5), the CPS mandates employers to maintain a Group Life Insurance Policy worth three times an employee’s annual emoluments. This ensures financial security for the families of deceased officers, offering vital support during challenging times.
- Ownership and security of Retirement Savings Accounts (RSAs)
Section 11 of the Pension Reform Act safeguards an officer’s RSA as a personal account protected from interference. Even in cases of dismissal, the officer retains full access to their contributions, ensuring that earned benefits remain intact.
- Oversight and regulation by PenCom
The National Pension Commission (PenCom), established under Section 17, oversees and regulates pension administration in the country. This guarantees transparency, accountability, and professionalism in managing pension funds, protecting the contributions of police personnel.
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- Specialized pension fund administration for the police
In response to calls for tailored solutions, NPF Pensions Ltd. was established in 2014 as a specialized Pension Fund Administrator for the Nigeria Police Force. This entity operates independently of the public service bureaucracy, employing experts to efficiently manage pensions while addressing the specific needs of police officers.
The Contributory Pension Scheme should remain the foundation of police pensions, with necessary enhancements implemented within its existing structure as provided under the Pension Reform Act of 2014. This ensures stability, transparency, and long-term financial security for police personnel.
Recommendations
Based on the foregoing analysis, the CPRA submits the following recommendations:
- Enhanced gratuity payments
The Federal Government should provide police retirees with a gratuity amounting to 300% of their final annual gross pay upon retirement, while their Retirement Savings Accounts (RSAs) continue to fund their monthly pensions.
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- Government-exclusive contributions
The Federal Government should assume full responsibility for funding police pensions under the CPS. This approach would enhance the adequacy and sustainability of police retirement benefits without disrupting the current pension system.
- Retention of full salaries for senior officers
Senior police officers at the rank of Assistant Inspector-General (AIG) and above, who currently retire with their full salaries as pensions, should retain this benefit within the CPS framework to ensure continuity and fairness.
- Unified support for the CPS
The Contributory Pension Scheme should remain the foundation of police pensions, with necessary enhancements implemented within its existing structure as provided under the Pension Reform Act of 2014. This ensures stability, transparency, and long-term financial security for police personnel.
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.
