By Dada Ahmed,MNGE.
Phot credit: Business Day.
The recent remarks made by a Nigerian retiree depicting the pitiable condition of retirees on the contributory pension scheme in Nigeria call for sober reflection and a serious rethink of the implementation of the 20-year-old contributory pension scheme.
In an article entitled “Food For Thought: RETIREMENT, A DEATH SENTENCE IN NIGERIA?” published by an online publication, Flowerbudnews.com, the writer, who declined to identify himself, described the pathetic state of existence of pensioners on the contributory pension scheme in the country.
He writes: “From all indications, to retire, especially as a Federal civil servant, appears to be a misfortune in Nigeria. Honest and diligent public servants who put in 35 productive years of their lives into serving their nation are treated as trash upon their retirement. This is very disheartening and it causes our hearts to bleed. This group of people is forced into a scheme called contributory pension.”
He goes on, “Neither gratuity nor pension is even paid or commenced until after 12 to 18 months of retirement. God help you if you don’t have other means of income or children and relatives who have the capability to factor you into their own budget, judging from the present economic reality. The retiree is as good as being sentenced to an untimely death, with no money to feed, buy drugs, and maintain primary needs.”
Other concerned Nigerians are also worried about the deplorable conditions of retirees on the new pension scheme, describing the development as a reminder of the obnoxious apartheid in South Africa that has gone into limbo.
Confirming the observation of the Nigerian retiree and the author of the worrisome piece, Mohammed Ali, who retired from federal government service four years ago, also narrated his ordeal under the pension while waiting for his retirement benefits. He described the new pension scheme as an abysmal mockery of retirees under the new scheme.
He recalled with regret: “I retired from federal government service on grade level 16 and on a salary of about N300,000 monthly. I could not access my lump sum until after 15 months of my retirement. Waiting for the pension, I went into selling some of my belongings to feed my family. When my pension finally came, pension authorities placed me on a monthly pension of N58,000.Out of the money,”the”crazy electricity bill alone takes N15,000 every month while the balance is expected to take care of myself, my five children, and my wife for 30 days in the ever-increasing cost of living in Nigeria. The so-called lump sum quickly went into the completion of my house, children’s school fees in secondary and university, as well as other sundry family upkeep. This is my story as a pensioner under the contributory pension scheme.”
There is no doubt that pensioners operating under the new pension scheme are not finding life easy coping with hyperinflation in Nigeria, hence the urgent need for the federal government to review the policy concerning the new pension scheme.
Social and economic analysts argue that this has become imperative to enable this category of retirees not only to breathe but to be at par with their counterparts on the old pension scheme. For instance, while retirees on the old pension are entitled to a periodic review of their pension, pensioners on the contributory pension scheme have their pension stagnated for the rest of their lives. Secondly, while sources have it that retirees on the new pension scheme will no longer receive a pension after 10 years, those on the old pension take a pension until the end of their life.
Records show that the Pension Reform Act of 2004 in Nigeria does not explicitly include provisions for gratuity as it focuses primarily on the establishment and regulation of the contributory pension scheme for employees in the public and private sectors. However, the act primarily deals with the management and regulation of pension funds and does not directly address the payment of gratuities. Gratuities are often covered under separate regulations or employer-specific policies.
Section 1(1) of the Act states: “There shall be established for any employment in the Federal Republic of Nigeria, a Contributory Pension Scheme for payment of retirement benefits of employees to whom the Scheme applies under this Act.” This section also indicates the establishment of the pension scheme without directly mentioning gratuity. These omissions, many retirees say, form the contradictions hampering the implementation of the pension scheme in Nigeria, which must be reviewed in favor of pensioners on the new scheme.
There are many facts adduced to justify the need for a pension review in Nigeria. First and foremost, are the retirees on the new pension scheme different from those on the old pension scheme in terms of the services they rendered for the growth and development of Nigeria? Are the paper qualifications of pensioners enjoying the benefits of the old pension scheme superior to their counterparts grouped under the new pension scheme when they joined the civil service? What offense did pensioners on the old commit to warrant being boxed into receiving a stagnated pension and excluded from gratuity, unlike their colleagues in the old pension scheme?
By global standards, retirees are senior citizens of a country who have spent productive years in the public and private service of their fatherland and retired from public work upon attaining retirement age to enjoy the fruits of their labor in retirement. But pensioners under the new pension scheme in Nigeria are singing a different song, crying that many of them are dying in silence and others living in squalor amidst injustice under the new pension scheme.
Labor analysts believe that taking a critical review of pension administration in the country, with a view to paying gratuity to pensioners on the contributory pension scheme, would go a long way in alleviating their agonizing experiences as senior citizens of Nigeria and uproot them from induced poverty and squalor.
They, like their counterparts on the old pension scheme, have worked so hard to put Nigeria on the course of social, economic, and political growth and development during their active years.
The loud cry for justice by pensioners on the contributory pension scheme has also gained the attention of the National Pension Commission (PenCom.
According to Arise News,(PenCom) has disclosed that the federal government’s total liability from the implementation of the pension increases in 2007 and 2010 as well as the 2019 consequential adjustment for retirees under the Contributory Pension Scheme (CPS) stood at N314.58 billion in 2023.
This came as PenCom has further sought approval for an increase in pension rates for pensioners under the Defined Benefits Scheme (DBS), following the recent increase in salaries for employees of treasury-funded Ministries, Departments and Agencies (MDAs).
The request for approval for the implementation of new pension template was conveyed in a correspondence by the Director General/Chief Executive, PenCom, Aisha Dahir-Umar to the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, which was dated May 3, 2024.
Dahiru-Umar, in a memo:Pencom/DG/CSLD/May3,2024,Pencom,urged the Minister of Finance to direct the implementation of the following benefit of retirees on the contributory pension scheme.
The benefits, she said are:12 % increment in 2007,33% increment in 2010, consequential adjustment in 2019, following the increment in minimum wage and 20 % to 28% increment in 2024.
The commission is seeking to raise the new pension rates under the DBS by between 20 per cent and 28 per cent in 2024.
Dahiru-Umar, while urging the minister to approve the new rates, however, drew attention to the omission of pensioners under the CPS in the current rates review.
She said the exclusion of pensioners under the scheme from the implementation of the new and previous pension increases remained a “cause for serious concern”
The DG added that it would amount to a fundamental breach and denial of their constitutional rights as enshrined in Section 173 (3) of the 1999 Constitution, adding that such action would undermine the pension reform of the federal government.
Concerned Nigerians are also of the opinion that retirees on the new scheme should not be denied the goodies of retirement extended to their colleagues on the pre-2004 pension scheme, because that will be a negation of the principle of social justice.
They further argue that giving this class of retirees their rightful entitlements would erase the fear of retirement in the minds of potential retirees and stem corruption in public service.
Once potential retirees know that they have gratuity and monthly pension ready for them in retirement, they will not indulge in corruption tendencies in public service in the discharge of their official responsibilities to their father land.
Dada Ahmed, a journalist ,media consultant and a federal retiree, publishes The Reporters.
