Yemisi Izuora
The National Pension Commission (PenCom) has warned governors in the north west to avert incuring pension liabilities by implementation the Contributory Pension Scheme (CPS).
Director General of the Commission, Chinelo Anohu-Amazu who made the call at a sensitization conference on Pension Reform Act 2014 in Kaduna noted that the challenge of instituting effective and sustainable pension systems remains an issue in Nigeria as well as most African countries.
However, she said the Federal Government of Nigeria took a remarkable step in changing the pension landscape through the enactment of the PRA in 2004.
The Act provided novel solutions to what appeared then, as intractable challenges of the Old Defined Benefit Scheme and instituted the Contributory Pension Scheme (CPS) and established PenCom as the regulator of pensions in Nigeria.
“The quest for delivering better pensions to retirees guided by experiences garnered in the ten years of implementation of the pension reform necessitated the revision of the 2004 Act.
After an extensive review, stakeholder consultations and legislative scrutiny, a new Pension Reform Act 2014 was enacted, which came into effect on 1st July 2014” she explained.
The D-G further noted that the Pension Reform Act 2014 re-enacted the fundamental provisions of the repealed PRA 2004, which include inter alia, the establishment of the Contributory Pension Scheme, uniform standards for pension administration as well as the National Pension Commission as the sole regulator and supervisor of pension matters in Nigeria.
“However, there are new developments introduced by the PRA 2014, such as the upward review of the minimum rate of pension contribution and the sanctions and penalties against infractions of the provisions of the Act. Furthermore, the PRA 2014 has introduced a provision that allows contributors seeking to own their primary homes, to apply part of their Retirement Savings Account (RSA) balances as equity contribution for residential mortgages, subject to the Guidelines issued by the Commission.
I am pleased to inform that we are on the verge of concluding these Guidelines having discussed extensively with all stakeholders including experts in the mortgage industry. Once implementation commences, it is our expectation this would facilitate access to home ownership by pension contributors while also bridging the housing deficit in Nigeria” she said.
Anohu-Amazu informed the stakeholders that with the enhanced provisions of the PRA 2014, the Commission is intensifying efforts at extending coverage of the CPS to the underserved economic segments such as the Informal Sector, through the Micro Pensions initiative.
She said the North-West Zone is home to many industries especially in textiles and other manufacturing concerns, adding that recently, the Commission partnered with the National Union of Textile and Garment Workers of Nigeria, Kaduna to host a workshop, as part of sensitization efforts preparatory to the commencement of Micro Pensions.
She said that many States in the Federation have adopted the Contributory Pension Scheme and are at various stages of its implementation, stating that the PRA 2014 gives additional impetus for participation in the CPS by explicitly prescribing the coverage of States and Local Government employees, in addition to the Federal Public service and private sector.
“The scorecard for the North-West Zone is somewhat encouraging. Three States in the Zone, including our host Kaduna, have commenced implementation of the CPS.
However, there are some implementation milestones that should be attained by respective States.
I would therefore like to fervently appeal to all the States and Local Governments in the North-West Zone that are yet to adopt or implement the CPS to immediately comply in order to avail their employees of the numerous benefits of the Scheme, while avoiding huge future pension liabilities” she warned.