By Obike Ukoh.
Pensioners.
(c).inspenonline.
The recent palliative measures announced by many state governments for their civil servants and pensioners, have once again brought to the fore the inherent shortcomings of the Contributory Pension Scheme (CPS).
The CPS was introduced in 2004 by the then President Olusegun Obasanjo’s administration in order to address the problems of late payment of pensions and gratuities to retirees.
The CPS, established via Pension Reform Act, 2004, covered both the public and private sector workers.
For federal workers, the CPS is compulsory since inception, while some states Edo, among others are implementing the scheme.
However, the problems associated with the Defined Pension Scheme had started to rear its ugly head. Under the CPS, retirees are supposed to be paid their entitlements three months after retirement. That was so at the initial stage, but not now. Federal civil servants that retired in September 2022 are yet to receive their pensions and gratuities.
In addition, the monthly pension is nothing to write home about, which had necessitated calls for a review of the scheme.
Amid calls for the review of the CPS, the implementation of the government’s palliative programmes, following the removal of petroleum subsidy have further exposed the other unfavourable conditions of CPS to retirees.
In all the remedies so far announced by some state governments, pensioners under the CPS were not accommodated, though many of the states are yet to commence the implementation of the CPS.
Nasarawa State Governor Abdullahi Sule, to mitigate hardship associated with petroleum subsidy removal, directed immediate commencement of payment of N10,000 monthly to civil servants for six months, while pensioners in the same vein, will receive N5,000 for the same period.
On his part, Gov. Chukwuma Soludo of Anambra, directed for 10 per cent salary increase for all public servants and pensioners.
He also directed for monthly flat non-taxable cash award of N12,000 for every pensioner and public servant from September 2023 to December 2023.
For Abia State, Gov. Alex Otti, via Dr. Ngozi Okoronkwo, Commissioner for Health, said no fewer than 4,700 pensioners have enrolled to receive free healthcare.
According to her, the beneficiaries, prior to their retirement were not above the rank of deputy director.
Though some of the states that listed palliatives for their retirees have not keyed into the CPS, the Federal Government is yet to announce any welfare package for retirees under the CPS.
Unarguably, if there is salary review, pensioners under the old scheme will benefit. What is the fate of retirees under the CPS, Alhaji Dada Ahmed, a retiree under the CPS queried.
Before now, experts had opined that the two pension options : Programmed Withdrawal and Annuity, open for retirees under the CPS is not an Eldorado.
Oge Igboanu, an economist and associate of the Certified Pension Institute of Nigeria, in an article titled: Programmed Withdrawal or Annuity: Which is the Better Pension Plan for You?, ex-rayed the pros and cons of both.
Igboanu, wrote inter alia: “The choice of a suitable retirement plan can be a daunting task for many retirees under the CPS. This task is not made any easier by the cacophony emanating from various pension marketers desperately pitching their respective pension plans to the hapless retiree.
“Annuity marketers from the insurance companies would make their sales pitch on long retirement years without any financial worries or fears of running out of retirement income.
“The Pension Fund Administrators (PFAs) in a bid not to be outdone, would argue that with good investment returns, there is no reason why a Programmed Withdrawal plan should not only provide pension for life, but would also leave the bulk of the Retirement Savings intact for a named beneficiary to inherit.
“With each group marshalling out points and counter points on the superiority of their own retirement pension plan, it is no wonder that many retirees end up with information overload without any useful headway made in grasping the core issues at stake.
“However, if sentiments were put aside, the simple truth that neither the PFA nor the insurers would admit is that neither plan is universally superior to the other.
“The reason for this is that the risk-reward trade-off inherent in both pension plans places them at par,’’ he stressed.
Indeed, it is information overload that made the retirees to be oblivious of their fate, if the country finds itself in this type of present situation, where serving workers are agitating for “ galloping salary increase,’’ whereas the operators of the pension schemes will remain stoic to the terms of the contract.
Alhaji Dada Ahmed, who retired in 2020 from the News Agency of Nigeria (NAN) as an Assistant Editor- In-Chief under the CPS, said what is happening under the scheme is baffling.
He lamented that retirees under the CPS appeared forgotten in the scheme of things.
Ahmed noted that the CPS retirees were not being carried along in the measures announced by the Tinubu-led government to cushion the harsh effects of the petroleum subsidy removal.
He regretted that retirees under the CPS have continued to suffer untold hardship, unlike their counterparts that retired under the old scheme.
“Recently, retirees on the old scheme got their monthly pension reviewed upwards, leaving those on the new scheme to their fate.
“The meaning of this lacuna is that, while the retirees on the old pension scheme continue to have it easy, coping with hyper inflation in the country because of the increase in their monthly pension, pension of those on the CPS remain starkly static.
“This is to say the least, most unfortunate and unfair in the scheme of pension administration in Nigeria.
“It is instructive to note that both retirees on either old or new pension schemes are patriotic citizens of Nigeria, who spent their active years in the service of the country and most of them left the public service with their heads high.
“ Therefore, it is most unfortunately that any time there is any national largess for retirees in the country, pensioners on the CPS are usually forgotten.
Empirical evidence shows that many of the retirees on the CPS have continued to move their pension fund from Programmed Withdrawal to Annuity, irrespective of all the risk involved, because their take home pay under the Programmed Withdrawal is less than that on Annuity.
Even that maginal increase under Annuity is an incentive, as many of the retirees that opted for Programmed Withdrawal did not receive any increment for years in their monthly pension as anticipated.
Ahmed said that social justice demands that the Federal Government addresses the inherent contradictions in the CPS.
On his part, Mr Michael Mbonye, who retired in 2018 as a Managing Editor (Director) from the News Agency of Nigeria (NAN) and opted for Annuity with Leadway Insurance, also said that retirees under the CPS should be accommodated in government’s welfare programmes.
“As a retiree under the Contributory Pension Scheme, I join colleagues in appealing to the Federal Government to factor such retirees in the provision of palliatives, to cushion the adverse effects associated with the sudden petroleum subsidy removal.’’
Mbonye said that the retirees under the CPS, just like retirees under the Defined Pension Scheme, meritorious served the country
in various capacities as civil servants.
“ Many of the retirees, do not have other means of income, except the monthly pension, which is barely enough to meet some basic needs.
“We urge the government to also consider providing palliatives and other welfare packages to retirees in our category.
“It could be in the form of enhanced allowances to complement our present monthly pension.
“It is important that government should consider us in all scheme of things, as that will give us a sense of belonging,’’ Mbonye pleaded.
Mbonye said that the government should not do anything to make retirees under the CPS to yearn for the Defined Pension Scheme and to see the CPS as End of The Road.
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