Nigeria To Incur Additional N2tn Liabilities as Senate Passes Police Pension Board Bill

The Senate has passed the bill for the Establishment of a Police Pension Board, a move that would balloon federal government’s pension liabilities.

With this, the National Pension Commission (PenCom) may have lost the battle over the Nigerian Police Force agitation for exemption from the Contributory Pension Scheme (CPS).

The bill excludes the Nigeria Police Force (NPF) from the CPS and returns the force to the old Defined Benefit Scheme (DBS).

The CPS has a special feature of being funded by both the employee and the employer who make contribution of 18 per cent of the worker’s monthly pay to his Retirement Savings Account (RAS) in order of minimum of 10 per cent contribution by the employer and eight per cent contribution by the employee of which the employer is mandated by the CPS law to remit the same every month.

This is in in contrast with the unfounded DBS which is totally dependent on government’s budgetary allocations. Before the advent of the CPS, one of the demerits of the DBS was arrears of unpaid retirement benefits owed to retiring workers and pensioners by government because most times the quantum of fund allocated to pension in the budget is either not enough or is cornered by the pay masters and custodians or managers of the fund.

Evaluation, according the industry stakeholders, indicate that it would cost the federal government an additional N2 trillion in pension liabilities for the 300,000 police personnel.

Under the contributory scheme, employees and employers contribute towards pension but the government takes full responsibility under the defined scheme and this had led to irregular pension payments because of budgetary constraints for the federal government.

The upper chamber announced on its Twitter handle on Tuesday, that it had passed the bill, despite opposition from industry stakeholders at the public hearing organised by the Senate Committee on Police Affairs on January 20, 2023.

 The National Pension Commission (PenCom), which regulates the industry, the Pension Fund Operators Association of Nigeria and the Nigeria Labour Congress (NLC) all opposed the bill.

The former Secretary to the Government of the Federation (SGF), Mr. Boss Mustapha, had written to the Inspector General of Police in January 2022, to reiterate that an SGF circular Ref. 59149/S.1/C.1/11/266 dated July 20, 2021 which said the police must be under the CPS remained in force.

The ex-SGF had also referred to the White Paper on the report of the Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies which expressly forbids any government body, apart from the military and the intelligence services, from exiting the CPS.

In 2004, the Olusegun Obasanjo administration had carried out a comprehensive pension reform to address the plight of pensioners who were always owed years in arrears.

Nigeria moved from pension liabilities of N2.4 trillion to accumulated pension assets of N15.45 trillion as at February 2023.

Under the bill passed by the Senate, the federal government would now be fully responsible for police pensions.

Sunday Aborisade and Ebere Nwoji

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