The Chief Executive Officer of the Pension Fund Operators Association of Nigeria (PENOP), Oguche Agudah, said the exemption of the Nigeria Police Force from the CPS would make the financial burden for budgetary allocations unbearable for the country.
This was part of his submissions at the Public Hearing recently at the House of Representatives on A Bill to Exclude the Nigerian Police Force from the Contributory Pension Scheme.
Agudah said at the time of the reform, it was estimated that the Federal Government had a pension liability of over NGN 2 trillion.
He added that “it will take another N1.8 – N2 Trillion to return the Nigerian Police Force to the Defined Benefits Scheme
“This was a time when retirees had to depend on a defined benefit system; where the federal government paid monthly pensions to retirees directly from its coffers,”
Speaking further, Agudah noted that “Past experiences have proven that this system puts a lot of burden on the federal government, making it unsustainable. The sustainability of moving the police back to the pay – as – you – go Defined benefit scheme under their proposal is near impossible, given the Federal government’s struggling finances at the moment.,” he said.
He recommended that from the rank of Assistant Inspector General of Police (AIG) upwards, their pensions should be treated under the category of political appointees who retire with full benefits as stated in the PRA 2014 as their appointments are political in nature.
On the Bill to allow contributors take at least 75% of their RSA balance at retirement, the PENOP’s CEO said the people that have issues with the lump sum that they collect at the moment are those who have not been able to accumulate enough funds in their RSAs prior to retirement.
He said what the 75% essentially is looking to achieve is a gratuity type payment to retirees, adding that the PRA in its current form does not preclude the payment of gratuities by employers as many Department and Agencies of the Government already pay gratuity to their staff on retirement.
“What we suggest is that employers should be encouraged to pay gratuities at retirement and/or increase their level of monthly contributions in order to boost the balances and subsequent pension payout of their staff,” he said.
Speaking further, he said the CPS has a safety management system from the PFAs as well as an articulated check and Balance mechanism.
He harped on the need “To improve the transparency of the scheme because how much you contribute determines how much you will get.
He acknowledged that the Contributory Pension Scheme is not Perfect but could be improved.
“The CPS has been running consistently for 16yrs now and the reason why people are even agitating for increase is because they can see their balance.
“As such if we can have a transparent system like this, then there is no need to go back to the old DBS system,” he added.