FG to clear pension arrears
By Patience Ikpeme
The National Pension Commission (PenCom) has assured Nigerians that the federal government’s outstanding pension liabilities under the Contributory Pension Scheme (CPS) will soon be cleared.
This update was provided by the Director-General of PenCom, Mrs. Omolola Bridget Oloworaran, during the second annual conference of the Pension Correspondents Association of Nigeria (PENCAM) in Abuja on Thursday.
Represented by the Head of Corporate Communications, Mr. Ibrahim Buwai, Mrs. Oloworaran confirmed that the commission had successfully computed the backlog of pension liabilities owed by the federal government, and efforts are underway to address them promptly. “Very soon, this issue will be put behind us,” Buwai stated, highlighting the government’s commitment to resolving these long-standing arrears.
In addition to clearing the current liabilities, PenCom is working on a mechanism to prevent delays in the accrued pension rights of retirees in the future. Mrs. Oloworaran emphasized the importance of this initiative, noting that it would ensure smoother and more timely payment of pensions going forward. However, she pointed out that “enlightenment gaps” persist, contributing to the challenges within the pension system.
Mrs. Oloworaran underscored the benefits of the CPS, describing it as a robust framework designed to address issues inherent in Nigeria’s previous pension system. “The CPS is an inbuilt mechanism for resolving the challenges that were associated with the defined benefit scheme,” she said, affirming that, despite certain challenges, the CPS remains the best option for pension administration in the country.
The CPS, introduced in 2004 under the Pension Reform Act, marked a significant departure from the old system by requiring contributions from both employers and employees. “The contributions are privately managed by licensed Pension Fund Administrators (PFAs), and this private management structure ensures better accountability and efficiency,” Mrs. Oloworaran added.
She also highlighted the stringent licensing process that PFAs must undergo, which ensures that only qualified companies handle pension funds. Furthermore, the establishment of PenCom as the regulator has brought much-needed oversight to the pension industry, which was previously lacking a clear regulatory direction.
Providing additional insights into the achievements of the CPS over the years, Mr. Ogwuche Aguda, the Chief Executive Officer of the Pension Funds Operators Association of Nigeria (PenOp), revealed that N1.12 trillion has been paid out in lump sums to 357,310 retirees over the past 15 years through programmed withdrawals and annuities. This figure reflects the scale of the CPS and its impact on pensioners across the country.
Moreover, a total of N247.47 billion has been paid to 483,464 Nigerians who withdrew 25% from their Retirement Savings Accounts (RSAs) after losing their jobs. In terms of death benefits, N451.2 billion has been disbursed to 104,259 beneficiaries. These figures, according to Mr. Aguda, demonstrate the efficiency and reach of the CPS in addressing various pension-related needs.
Reflecting on the 20-year journey since the introduction of the Pension Reform Act in 2004, Mr. Aguda highlighted the significant gains made by the CPS. “The CPS has introduced a total paradigm shift in pension management, transforming a broken system into one that is both transparent and reliable,” he stated. He also noted that the scheme had been amended in 2016 to address challenges faced by the sector, further strengthening its regulatory framework.
Mr. Aguda expressed optimism about the future, noting that the sector is expected to see higher returns from investment guideline reversals and increased investment in infrastructure. He also emphasized the importance of expanding the CPS to the informal sector, particularly through the micro-pension scheme, which aims to provide retirement benefits to workers in non-formal employment.
As the conference drew to a close, PenCom reaffirmed its commitment to ensuring that the outstanding pension liabilities of the federal government are settled. The commission’s efforts to compute these liabilities and establish mechanisms to prevent future delays are expected to restore confidence among pensioners and other stakeholders.
For Nigerians, particularly retirees, the assurance from PenCom represents a significant step toward resolving the pension payment challenges that have plagued the country for years. As the government prepares to clear these outstanding liabilities, many look forward to a more stable and efficient pension system under the CPS, which continues to evolve and address the needs of retirees across the nation.
