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Contributory Pension Scheme: What Stake For Rivers Workers?

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The Pension Reform Bill which President Olusegun Obasanjo signed into law on June 25, 2004 did not provide coverage for state and local government employees.

Unlike the 1990 Pension Act which it replaced, and which gave coverage to all retiring workers in the state service based on counterpart financial payments by the federal and state governments, the new Act is clearly restricted to federal and private-sector employees.

This is clearly expressed in Section 2 of the Pension Act which states as follows: “The scheme shall apply to all employees in the public service of the federation, federal capital territory and the private sector.”

It is also instructive to point out that even as the law makes contribution to the scheme mandatory for all federal civil servants and FCT workers, its application to the private sector is only limited to firms with five or more employees.

As for workers at the lower tiers of government, the Pension Act leaves the decision to the discretion of their respective employers. This simply means that states and local councils are at liberty to decide on whether or not to enact laws that will enable their workers participate in the contributory pension scheme (CPS).

The National Pensions Commission (PenCom), which is the apex regulatory body for pension matters in the country, said it has, however, continued to engage states and local governments in discussions aimed at persuading them to key into the new pension system.

The Commission’s efforts appear to have been yielding results, after all. This is because available statistics indicate that as at December 2011, six states had commenced full implementation of the scheme; 11 were already working out structures for its take-off; 17 still had theirs pending at their state legislatures; while two states were yet to initiate any visible action on the matter.

In enacting the new Pension Act, its proponents may have wished for a system which would ensure that workers save toward their retirement and that receipt of retirement benefits is made regular and much easier.

This is surely designed to significantly reduce (if not completely eliminate) the sufferings of pensioners. These sufferings include but are not limited to: dying without receiving a dime of their benefits even after some years into retirement; collapsing from hunger and exhaustion while on queue for the many identification exercises that precede each payment; giving up a large chunk of their benefits to fraudulent pension officials in order to avoid the unnecessary delays associated with the processing of pension documents.

In general terms, the CPS requires that each participating worker opens a Retirement Savings Account (RSA) with any Pension Fund Administrator (PFA) of his choice. This account is to be operated with a Personal Identification Number (PIN).

The initial rate of monthly contributions by the worker and his employer is a minimum of seven and half per cent each. This means that every worker will have at least seven and half per cent of his emolument (annual basic salary, transport and housing allowance) deducted from his monthly salary. In the same vein, his employer will also make a contribution of, at least, the same amount on behalf of the worker. Their combined minimum of 15 per cent contribution is then paid into the account of the worker’s chosen PFA with a Pension Fund Custodian (PFC) which, in turn, advises the PFA to credit the worker’s RSA.

Again, whatever may be a worker’s monthly cash contribution, such social insurance expense is regarded under the Pension Act as a tax-deductible expenditure. This means that the money is tax-free and should be deducted from the worker’s salary before his personal income tax is computed. The same goes for his employer with regard to any company income tax assessment.

But even with all the strict measures outlined in the Pension Act to effectively regulate the administration of pension funds in Nigeria, sad tales have continued to trail the CPS.

The recent revelations concerning the alleged misappropriation of N88 billion police pension money by Mr. Abdulrashid Maina, chairman of the Presidential Pension Recovery Task Team (PPRTT) has become a cause of serious concern to existing and potential contributors. Even the ongoing probe of the pensions sub-sector by the National Assembly has done little to douse such apprehension.

PenCom helmsman, Mr. Muhammad Ahmad, has, however, continued to assure the nation that the CPS is very much on course. According to him, about 5.01 million workers are already registered under the scheme in both the public and private sectors. Of this number, 31 per cent are federal employees while 23 percent and 46 percent are state and private-sector workers, respectively.

He said that the value of pension assets under the scheme stood at N2.45 trillion in December 2011 with a monthly contribution of N20 billion and 30 per cent annual growth rate.

Ahmad also disclosed that the Federal Government had, as at the same period, remitted N604 billion into a Contributory Pension Account with the Central Bank of Nigeria (CBN) out of which N449.35 billion was paid into the various RSAs.

Here in Rivers State, it’s only a matter of time before public servants join their counterparts from the few states that have started to implement the new pension scheme. This follows Governor Chibuike Amaechi’s recent assent to a Contributory Pension Bill by the Rivers State House of Assembly and the earlier assurance by the Chairman of the State Pensions Board, Mrs. Edna Alikor, to the effect that modalities are being worked out for an effective commencement of the scheme in the state.

Alikor was said to have given this assurance after a maiden meeting of her board with relevant stakeholders in the state, including the Head of Service, Mrs. Esther Anucha, and the Finance Commissioner, Dr. Chamberlain Peterside.

She also disclosed that workers who have less than seven years to retire would not be eligible to participate in the scheme as stated in the pension bill.

While noting that workers retiring from the state’s public service currently receive their pensions and gratuities within two months of retirement, the board chairman also described as pitiable a situation where long-retired persons still receive a monthly pension of less than N500, coupled with the existence of names of dead retirees in the government’s payroll.

Unlike some states which rushed into the new pension scheme in order to satisfy a Debt Management Office (DMO) condition for bond issuance, and are now many months in default of their pension contributions, Rivers State cannot be said to be in any such haste even as it strives to work for the overall interest of its indigenes, workers inclusive.

The establishment of a dependable pension scheme for a state’s workforce certainly requires the exercise of due diligence on the part of the pensions board, especially in a system that allows the option of selecting PFAs and allocating ministries, departments and agencies (MDAs) to such pension managers.

Even as the rule requires that PFAs invest pension funds strictly within the objectives of safety and fair returns on the amounts or assets invested, it goes without saying that Rivers workers and, indeed, the entire state stand to benefit more if contributions from civil servants are saved with those PFAs that have always identified with the state and are most likely to channel such investible funds into safe and viable projects located within the state.

But while workers patiently await the commencement of this laudable scheme, let it be said that the reintroduction of pay advice into the salary payment system is long overdue. It beats most minds to realise that Rivers workers received pay slips along with their salaries some years ago when the civil service system knew next to nothing about computers and information technology whereas such rights are lacking now that the entire system is computerised.

As of right, a worker deserves to know how much increments and or deductions that apply to his income even before such is paid.

 

Ibelema Jumbo

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Nigeria’s Revenue-To-GDP Ratio Lowest, Private Sector Choking – World Bank

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Nigeria’s revenue-to-Gross Domestic Product ratio, which fell to between five and six per cent last year, is the lowest in the world, the World Bank said on Monday.
The Country Director for Nigeria, World Bank, Dr Shubham Chaudhuri, said this during a panel session at a virtual public sector seminar with the theme ‘Nigeria in challenging times: imperatives for a cohesive national development agenda’ organised by the Lagos Business School.
Chaudhuri, who stressed the need for private investment for the country to realise its potential, said the private sector in the country ‘is struggling to breathe’.
“In Nigeria, I think the basic economic agenda is about diversification away from oil because oil has really been like resource curse for Nigeria on multiple dimensions,” he said.
He noted the aspiration of the President, Major General Muhammadu Buhari (retd.), to lift 100 million Nigerians out of poverty by the end of the decade.
He said, “Nigeria is a country with tremendous potential. If you look at the synopsis for this panel, it suggests that Nigeria is at a critical juncture – almost at the moment of crisis.
“Despite all of that, Nigeria is still the largest economy in Africa. So, just think about the potential that Nigeria has because of its natural resources, but more than that, because of its dynamism and all of its population. Nigerians are more entrepreneurial by nature.
“No country has become prosperous and realised its potential, eliminated poverty without doing two simple things: investing in its people, and unleashing the power of the private sector in creating jobs by investing and growing business. And then, of course, the basic function of the state is to provide security and law and order.”
According to Chaudhuri, to invest in people entails basic services, basic education, primary healthcare and nutrition, among others.
He said, “On this, Nigeria at the moment ranks sixth from the bottom in terms of the human capital index that we produce every year.
“So, obviously, there is a huge agenda in terms of investing in human capital. Nigeria spends more on PMS (premium motor spirit) subsidy than it does on primary healthcare in a year, and we know who the PMS subsidy is benefitting.”
He indicated that despite the country’s huge potential to attract private capital, the non-oil part of the economy ‘is not growing that robustly and certainly not generating revenues that the government needs’.
Chaudhuri said, “So, we see as priorities investments in human capital. But for that, one needs revenues. And there again, Nigeria unfortunately has the distinction of having about the lowest revenue-to-GDP ratio in the world.
 ”The standard rule of thumb is that for government to provide the basic services and law and order, it needs between 15 to 20 per cent of GDP as being revenue, and this will be both at the federal and state levels combined.
“In Nigeria, it was eight per cent in 2019. In 2020, in the middle of the Covid-19 crisis and with the fall in oil prices, that went down to about between five and six per cent.
“So, domestic revenue mobilisation is huge. And then the third is enabling the space for private investment. You have to fix the power problem. Power is like the oxygen of an economy. In Nigeria, the private sector is struggling to breathe.”

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CBN Stops Sale Of Forex To BDCs

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The Central Bank of Nigeria (CBN) as announced immediate discontinuation of sale of Foreign Exchange (forex) to Bureau de Change (BDC) operators in the country.
Mr Godwin Emefiele, the CBN Governor , made this announcement yesterday, while presenting a communique from the apex bank’s Monetary Policy Committee (MPC) meeting in Abuja.
Emefiele said that the decision was informed by the unwholesome business practices of the BDCs, which he said had continued to put enormous pressure on the Naira.
He  said ,  henceforth,  the apex bank would sell forex to deserving Nigerians through the commercial banks.
“ The BDCs were regulated to sell a maximum of 5000  dollars per day,  but CBN observed that they have since been flouting that regulation and selling millions of dollars per day.
“The CBN also observed that the BDCs aid illicit financial flows and other financial  crimes.  The bank has thus, decided to discontinue the sale of forex to the BDCs with immediate effect.
“We shall, henceforth,  channel all forex allocation through the commercial banks,” he said.
He urged the commercial banks to ensure that every deserving customer got their forex demand,  adding that any bank found circumventing  the new system would be sanctioned.
“Once a customer presents all required documentation to purchase forex, the commercial banks should ensure they get the forex.
“Any customer that is denied should contact the CBN on 0700385526 or through the email- cbd@cbn.gov.ng “ he said.
The Tide source reports that stakeholders have been calling on the CBN and its MPC to take urgent steps to halt unending depreciation of the Naira.
Recently,  a past President of the Chartered Institute of Bankers of Nigeria (CIBN),  Mr Okechukwu Unegbu,  urged the MPC to focus on policy decisions that would curb rising inflation and stabilise the Naira.

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RSG To Privatise Songhai, Fish Farms

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There are strong indications that the Rivers State Government has concluded plans to privatise the moribund Songhai Farm in Tai and Fish Farm in Buguma.
The State Chairman of the Peoples Democratic Party (PDP), Amb. Desmond Akawor, gave this indication while appearing in a phone-in radio programme organised by Silverbird Communications in Port Harcourt at the weekend.
He explained that the previous administration in the state failed to put in place a sustainability programme for these farms, hence they went moribund.
In order to reverse the situation, he said that the present administration was now contemplating a rehabilitation scheme to be driven by a privatisation policy to enable those investments come on stream.
He said the scheme had reached an advanced stage and is to executed by the State Ministry of Agriculture.
On the issue of job creation, Akawor said the administration of Chief Nyesom Wike was using the various construction projects around the state to empower the youths.
He explained that the government had floated a special scholarship scheme in Law and Medical Sciences to create opportunities for young people in various professions.
He called on the opposition to desist from de-marketing the state through propaganda as it’s capable of scaring investors away from the state.
Akawor insisted that the Wike led administration has provided an enabling environment for businesses to thrive through infrastructure and improved security.

By: Kevin Nengia

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