Fixing an unbroken pension system

We are quite familiar with the wise sayings that “if it’s not broke don’t fix it.” However, in our national life, we are always seeking to fix what is not broken and refusing to fix those things that are clearly broken. Last time, it was the Nigerian Liquefied Natural Gas (NLNG) establishment act that our legislators were seeking to fix to compel the company to remit 3 percent of its annual budget as funding to the Niger Delta Development Commission (NDDC) even when the company’s establishment act exempts it from paying the levy. They didn’t mind that the action could destroy perhaps, one of the most successful enterprises the Nigerian government has, prevent further investments in the gas sector and blacklist Nigeria as a credible investment destination. Now, it is the hugely successful contributory pension scheme that the legislators are after, threatening to unravel the over N6.5 trillion pension funds, fragment the PFAs, rob the economy of investible long term funds, impoverish retirees at old age, return the pension industry to its despicable past where government is unnecessarily saddled with huge pension liability with the attendant widespread corruption and embezzlement that usually characterise the old system.

Two bills currently before the National Assembly, one sponsored by Oluwoke Oke, which passed a second reading, seeks to amend the Pension Reform Act 2014, to exclude members of The Nigeria Police, The Nigerian Security and Civil Defence Corps, Nigeria Customs Service, Nigeria Prison Service, Nigeria Immigration Service and The Economic and Financial Crimes Commission from the Contributory Pension Scheme.

The other before the Senate sponsored by Aliyu Wamakko, representing Sokoto North, also seeks to amend the 2004 Pension Reform Act to allow retirees to withdraw a definite rate of 75 percent of the value of their RSA upon retirement, leaving only 25 percent to be spread over their expected years of retirement as periodic pension payments.

This move, at a time the federal government is clearly overburdened with and struggling to meet up with payment of pensions and gratuities, shows little appreciation of the current political economy of country and will be hugely detrimental not only to the government but to the personnel of the institutions being proposed to be exempted. Besides dismantling the institutions, systems and processes that government put in place in the last few years towards the implementation of the pension, including the culture of national savings as well as the efforts to eradicate the structures that encouraged corruption during the pre-pension reform era, the move will erode the pool of long term investible funds accumulated over the years, lead to a loss of confidence in the pension reform and other reform initiatives of the government and ultimately lead to a life of dependency and insecurity for the retirees, who, inexperienced in handling and investing bulk sums, will easily fall prey to unscrupulous business opportunities and fraudsters. What is more, the retirees will be forced to return to active life rather than retirement, thereby reducing their life expectancy.

We urge the National Assembly, in the interest of long-suffering workers to perish the idea of fixing a bill that is working seamlessly. In the alternative, civil society groups, workers and other pressure groups such as the press must stand up to the National Assembly to ensure they do not temper with the bill as it currently is.