Nigeria’s pension scheme is in deep crisis and no one knows how to rescue it. The Pension Commission (PENCOM) sees the N7.5 trillion in the pension account as a huge achievement.
PENCOM is busy flaunting the figures and has forgotten about the fate of more than 38 million workers outside the pension net. One source argued last week that only seven million out of an estimated 45 million workers are in the contributory pension net.
Nigeria is probably the only country where more eligible workers are outside the pension net. There are two categories of pension law defaulters in the private sector. Employers in the first category of defaulters make monthly deductions from their workers’ salaries but refuse to remit them to pension fund administrators (PFAs).
Those in the second category do not make deductions because they have no pension scheme. Under Nigeria’s contributory pension scheme, any employer with 10 workers must compel each of the workers to open an account with a PFA of his choice where his monthly pension deductions would be deposited.
The law mandates the employer to contribute 15 per cent of the worker’s basic salary, deduct eight per cent of each worker’s salary, and remit a total of 18 per cent of the worker’s monthly pay to the PFA chosen by each worker. Ironically PENCOM has maintained graveyard silence on the fate of the two categories of employers who have flagrantly flouted the country’s pension laws. In recent times the commission has restricted its functions to that of monitoring the income of those in the pension net.
PENCOM does not even know the number of employers cheating their employees by either deducting and not remitting the funds to PFAs, or not operating a pension scheme at all. Sometime in 2012 the commission staged a perfunctory harassment of employers who had no pension scheme for their workers.
Most of the employers rushed to open accounts with various PFAs for the affected workers. In the hurry to placate PENCOM, most of the workers were not given the privilege of choosing their PFAs. Some workers, who even had accounts with other PFAs before joining new employers, were not allowed to operate their previous accounts.
They were compelled to operate new accounts with their employers’ chosen PFAs. Some of the companies remitted the pension deductions for a few months and stopped when they were convinced that no one in PENCOM was tracking them. Deducting workers’ pay for pension without remitting it is a criminal offence. Unfortunately, PENCOM has not arraigned any employer for this heartless crime. In the next 20 years, most of the young men and women burning their youthful vigor in the services of merciless employers would be out of service hoping to fall back on their pension funds for the rest of their lives.
Since there would be nothing for them to fall back on, they would simply become a burden on a society that has remained perpetually unprepared for its senior citizens. PENCOM has mortgaged the future of millions of Nigerian workers for the selfish interest of cruel employers who live above their means at the expense of their hapless workers.
The treatment of workers’ pension with levity is not restricted to the private sector. Thousands of impoverished pensioners who spent their youthful vigour serving the federal, state or local governments are now languishing in abject poverty as their former employers fail to pay their monthly pension. A 76-year-old former electrician with the Federal Ministry of Works living in Lagos has not been paid even a month pension since 2010. The man is wallowing in abject poverty.
The landscape is dotted with thousands of people suffering the avoidable penury imposed on pensioners by an odd combination of corruption and lack of planning by the three tiers of government.
Even with the emergence of a contributory pension scheme designed to reduce the burden of funding pension on the three tiers of government, the impoverished pensioners who labored in vain for their country would soon be joined by thousands from the private sector who would become destitute because the managers of PENCOM have bluntly refused to enforce the law of the land.
Since 2014, the federal government has embarked on an endless verification of pensioners that has failed to yield the cheques that would move the aged pensioners out of penury for the few years left for them on this planet. If the current pensioners are groaning for delayed pension arrears, the ones emerging from the private sector under PENCOM’s watch would soon be waiting for pensions that would never come.
The deductions were not remitted in the first place and no one is taking steps to ensure that employers play by the rule of the game. The federal government owes Nigerian workers an obligation to ensure that they retire to a life above poverty line.
Government must compel PENCOM to enforce the country’s pension laws by ensuring that employers of labour remit pension deductions monthly to the PFAs. PENCOM, as presently constituted, lacks the capacity to track thousands of lawless employers gambling with workers’ future. Government must give PENCOM the legal teeth and financial muscle t