Status of Implementation of Contributory Pension Scheme By States

Introduction
ON Thursday, 10^th December 2020, we discussed the Nigerian Governors’ Forum (NGF’s) Plan to “borrow” from pension funds. The discussion was based on rumors, facts and law. In that discussion, we talked about the fact that some states have not keyed into the Contributory Pension Scheme (CPS) under which the funds were accumulated and as such, states that have not keyed into the CPS have no morale right to be eyeing pension funds for investment in any instrument such states are involved in.

Today, we present the status of implementation of the CPS in states as at September 2020. This information was sourced from the website of the National Pension Commission (PenCom), the regulator of pension in the country. However, the categorisation, headlines and the commentaries are mine.

States that are complying:

1. Lagos: The state is the flagship of the CPS: It enacted a law on CPS in 2007; amended some sections of the principal law in 2019; established Pension Bureau; registered employees with PFAs; regular remittance of 10% employer and 8% employee pension contributions; conducted actuarial valuation; funding accrued pension rights. It recently opened retirement benefits bond redemption fund account with two PFAs for state & local governments; and valid group life insurance policy. The state has arrears of accrued rights.
2. FCT: Covered by PRA 2014; established two Pension Bureaus (FCT & Area Councils); registered employees with PFAs; remitting pension contributions (up to date remittance of pension contributions for employees of FCT & LEAs, but irregular for some Area Councils); rate of contribution is 10% employer and 8% employee. Carried out actuarial valuation; opened retirement benefits bond redemption fund account and funding accrued rights; and valid group life insurance policy.
3. Osun: Enacted law on CPS in 2008; established 2 pension bureaus (state & local governments); registered employees with PFAs; remitting 7.5% of employer & employee contributions (remittances of pension contributions are inconsistent resulting in backlog); conducted actuarial valuation; opened retirement benefits bond redemption fund account with the CBN; inadequate funding of accrued rights; and valid group life insurance policy.
4. Kaduna: Amended law on CPS in 2016; established pension bureau; registered employees with PFAs; remitting pension contributions but reduced the employer’s rate of contribution from 13% to 8% in violation of the state’s pension law and PRA 2014. The employees’ pension contribution rate remains the same (7%); conducted actuarial valuation; opened retirement benefits bond redemption fund account with CBN; funding accrued rights inconsistently with 5% of total monthly wage bill; and replaced group life insurance with sinking fund to be domiciled with CBN.
5. Delta: Enacted law on CPS in 2008 (amended state’s pension law in 2011; established 2 pension bureaus (state & local government); registered employees with PFAs; remitting 10% employer & 7.5% employee pension contributions (up to date remittance for state employees, remitted up to April 2020 for local governments); carried our actuarial valuation; opened retirement benefits bond redemption fund account with CBN; funding accrued pension rights. However, the state has huge arrears of accrued rights; and no group life insurance policy.

6. Ondo: Enacted law on CPS in 2014; established pension bureau; registered employees with PFAs; remitting 10% employer & 8% employees’ pension contributions for workers employed from September 2014, in line with amended Law in 2019; no actuarial valuation as employees covered have no accrued rights; and valid group life insurance policy.
7. Edo: Enacted law on CPS in 2010 (amended pension law in 2017); established Pension Bureau; registered state employees with PFAs; remitting 10% employer & 8% employees contributions (up-to-date); actuarial valuation is still ongoing as at the reporting date; valid Group life insurance policy. Yet to commence funding of accrued rights.
8. Ekiti: Amended pension law in 2017; establish Pension Bureau; registered employees with PFAs; remitting 10% employer & 8% employees’ pension contributions; and carried out actuarial valuation. Yet to commence funding of accrued rights.

Hibernating States
These states have enacted laws but cannot be said to have keyed into the CPS because they are not complying with their own laws. Therefore, they are as good as not keying into the CPS. They include the following:

1. Kebbi: Enacted a law on CPS in 2009 (amended the law in 2014); established a Pension Bureau; registered employees with PFAs; and remitting only employees’ portion (7.5%) of pension contribution. Yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; no group life insurance policy; employees covered under CPS being placed under DBS retirement.
2. Anambra: Enacted a law on CPS in 2013 (amended some sections of the law in 2014); registered employees with PFAs; remitting employer 10% and employees 5% contributions albeit inconsistently; conducted actuarial valuation; opened retirement benefits bond redemption fund account with a PFA for the local government employees as provided in the law; and irregular funding of accrued rights for only local government employees. Yet to establish Pension Bureau (implementation being driven by Office of the Head of Service & Joint Account Allocation Committee; yet to open retirement benefits bond redemption fund account for state employees; yet to commence funding of accrued rights for state employees; and no group life insurance policy.
3. Rivers: Repealed pension reform law on CPS in 2009 and re-enacted pension law in 2019 and extended the transition period to commence July 2019; established Pension Bureau; registered employees with PFAs; stopped remitting 7.5% employer and 7.5% employees contribution in 2016 and 2019 respectively; conducted actuarial valuation; and opened a retirement benefits bond redemption fund account with a PFA in line with state law. Not remitting employer and employees’ pension contributions since July 2019; Yet to commence regular funding of the retirement benefits bond redemption fund account; and yet to institute group life insurance policy.
4. Benue: Enacted law on CPS in May 2019; established Pension Bureau; registration of employees with PFAs on going; remitting 10% employer & 8% employees’ pension contributions for three (3) Agencies. Yet to commence remittance for the remaining employees covered under the CPS; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; no group life insurance policy.
5. Nasarawa: Enacted law on CPS in 2009; and recently constituted Nasarawa State Assembly Ad-hoc Committee on Pension Review. Yet to establish Pension Bureau; yet to register employees with PFAs; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; and no group life insurance policy.
6. Sokoto: Enacted law on CPS in 2007; and registered some employees with PFAs. Yet to commence remittance of pension contributions; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; no group life insurance policy; and yet to establish pension bureau.
7. Ogun: Enacted law on CPS in 2008 (amended the law in 2013 to extend its transition period); established two pension bureaus (state & local governments); registered employees with PFAs; and deducting 7.5% pension contributions from employees but stopped remitting same since 2015. Not remitting pension contributions (the state has HUGE backlog of unremitted pension contributions); yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account, after closing the one earlier opened via commission’s assistance; yet to commence funding of accrued rights; and no group life insurance policy.
8. Oyo: Enacted law on CPS in 2010 (in the process of amending the law to commence CPS implementation). Yet to establish Pension Bureau; yet to register employees with PFAs; yet to commence remittance of pension contributions; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights.
9. Abia: Enacted law on CPS in 2017. Yet to establish pension bureau; yet to register employees with PFAs; Yet to commence pension contributions; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights and no group life insurance policy.
10. Ebonyi: Enacted law on CPS in 2017 (amended the law and forwarded to PenCom and which has communicated its observations on the law to the state).
11. Enugu: Enacted law on CPS in 2014. Yet to establish pension bureau; yet to register employees with PFAs; yet to commence pension contributions; yet to conduct actual valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights;  and  no group life insurance policy.
12. Imo: Enacted law on CPS in 2008. Yet to establish pension bureau; yet to register employees with PFAs; yet to commence remittance of pension contributions; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; and  no group life insurance policy.
13. Taraba: Enacted law on CPS in 2009. Yet to establish pension bureau; yet to register employees with PFAs; yet to commence remittance of pension contributions; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; and no group life insurance policy.
14. Bayelsa: Enacted law on CPS in 2009; established two Pension Bureaux (state and local governments). Yet to register state employees with PFAs; Yet to commence remittance of pension contributions; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; and non-group life insurance policy.
15. Adamawa: Enacted law on CPS in 2013; recently drafted a CPS Bill 2020, which seeks to establish a scheme similar to Contributory Defined Benefits Scheme (CDBS).
16. Kogi: Enacted law on CPS in 2018; and established Pension Bureau. Yet to register employees with PFAs; yet to commence remittance of pension contributions; yet to conduct actuarial valuation; yet to open retirement benefits bond redemption fund account; yet to commence funding of accrued rights; and no group life insurance policy.
17. Niger: Enacted law on CPS in 2006; suspended implementation of CPS in April 2015 but amended the law in 2017 to extend its transition period to exempt some employees from the CPS; established Pension Bureau; registered employees with PFAs; stopped remitting 7.5% employer & 7.5% employees’ pension contributions since 2015. Resumed deductions of 10.5% employer & 7.5% employee pension contributions from June 2020. However, contributions remittance to employees’ RSAs yet to  commence; yet to conduct actuarial valuation; yet to commence funding of retirement benefits bond redemption fund account; yet to commence funding of accrued rights;  and non-group life insurance policy.

Red States (states that are still at bill level)
These States don’t care whether or not their workers become destitute in their old age. Sixteen years down the line of pension reforms in the country, these states are not even pretending about it, like the states that have enacted laws without complying with their own laws.

1. Akwa-Ibom: Bill on CPS has been at the State House of Assembly.
2. Bauchi: Drafted a bill on Contributory Defined Benefits Scheme (CDBS) in 2015.
3. Borno: Drafted a bill on CPS in 2008
4. Cross River: Drafted a bill on CPS in 2012.
5. Katsina: Drafted a bill on Contributory Defined Benefits Scheme (CDBS) in 2017.
6. Kwara: Presented bill on CPS before the State House of Assembly in 2016.
7. Plateau: Drafted bill on CPS in 2016 (the draft bill has been in the State House of Assembly since then).
8. Yobe: Still operating the Defined Benefits Scheme (DBS). However, a committee was inaugurated on the adoption of CPS in February 2020.

States that Adopted Contributory Defined Benefits Scheme

1. Jigawa: This state is the flagship of the states that have adopted the Contributory Defined Benefits Scheme (CDBS). The state enacted law on CDBS in 2005 and further amended the law in 2015; established Pension Bureau; remitting 17% employer & 8% employees’ pension contributions under the CDBS to selected (11) PFAs (JP to date remittances under the CDBS; and conducted actuarial valuation in January 2019.
2. Kano: Enacted a law on CDBS in 2006 and implementing the Scheme; deducting pension contributions under the management of a Board of Trustees instead of PFAs. Yet to establish pension bureau; yet to transfer pension assets to a licensed Pension Fund Custodian; yet to conduct actuarial valuation; has HUGE pensions and gratuity liabilities.
3. Gombe: Enacted a law on CPS in 2008 but amended the law to introduce CDBS in January 2019. Yet to establish pension bureau; yet to commence remittance of pension contributions; and yet to conduct actuarial valuation.
4. Zamfara: Repealed the law on CPS and enacted law on CDBS in 2019. Remitting only employees portion (7.5%) of pension contributions prior to transiting to CDBS but stopped remitting with the enactment of CDBS law; employees are exiting from CPS and contributions are being refunded to employees, while employees’ RSAs opened under CPS are to be flagged off. Yet to establish pension bureau; Not commenced deductions and remittance under the CDBS; remittance under the CPS currently being refunded to employees; and yet to conduct actuarial valuation.

Conclusion
We hope that the presentation will assist workers and the general public to know past and present Governors of the thirty six (36) States well.