Labor unionism, ignorance and misconception about contributory pension scheme

That there is a mutual distrust between the Labor Unions and the government is not news. But, how far should this distrust be allowed to interfere with other rational and national issues, where both must collaborate?

I was at a state public hearing to domicile the Pension law. The skepticism and negativity that greeted the hearing steered a thought and worry in me. This was my third experience in different states. Some are wrong. There is still a serious gap in understanding the Contributory Pension Scheme (CPS). The passion and negative emotions of those fighting implementation was palpable.

Some information making rounds is that the states that adopted the CPS are failing,example Kaduna and Niger, which were clearly not true because we have facts of the schemes. The mix-up is coming from the challenges of transition from the old scheme to the new one. This is especially so for those caught in between both schemes. This will disappear with time. There is also challenge of remittances from government which is not uncommon with the defined benefits scheme. This has nothing to do with the CPS.

Some retirees were agitating for and preferring full payments of their Pensions.

This negates the Pensions idea of a steady and regular income for the period of reduced energy to engage in serious business adventure. Many retirees are not skilled in business. Not even at the retirement age when it would be difficult to learn new skills.

True, some agitate to use the money to finish their unfinished accommodations. These are likely future innovations but that will be carefully handled. What next after the building, with empty retirement account?

No doubt, the fears of the recent past bad experiences with the defined benefits schemes, the syndicated looting of the fund, the long and horrible annual verification of retirees and the long processing and wait for payment of benefits after long retirement were painful to both retirees and their children.

However, we cannot remain in the past. It is not news that the burden of pension payment by the government is increasing and its power to continue paying is dwindling worldwide and local economies are becoming not only capable to carry on with this, but no longer in vogue.

All governments, world over are unburdening themselves in matters of public utilities, health management (as in the Obamacare health plan or our HMOs) and some others and seeking public private partnerships both to manage costs, efficiency and effectiveness.

Rather than stay afar off the CPS scheme to criticize it and throw stones at it, it is better wisdom for the labor leaders to get a think tank team(s) to fully understand its strength for critical advice. Change is constant. The world has globalized. Delays, as we have done in imbibing ICT and other technological progress and attitudes leaves trailing as always and compounding our economic challenges.

Their complaints that the CPS has smaller terminal benefits and pension may be so, but the reality is that it is no longer sustainable. The government cannot continue on that basis. It would pile up pensions debts and further compound present positions.

However, the investment style of the scheme benefits all. It grows the scheme on compound interest basis, annually. When I asked for statement recently, I saw that my/employers’ contributions had grown with about 40 percent over time.

For one thing, it is transparent and scientific. You can know your monthly position,enquire about and target or influence a minimum monthly allowance at retirement through Additional Voluntary Contributions. The monthly payments, once determined, are automated and steady as determined.

The Contributory Pension Scheme is a global trend slightly adapted in different countries. It is not experimental. It is working and efficient. It is open to all for scrutiny and investigation.Consequently, our friends inLabor should review their various positions and fears.

Glory Etaduovie

Glory Etaduovie

MD/CEO

IEI-Anchor Pension Managers Ltd