Pension Reform Act 2014: Strengthening capacity to ensure success of PITAD

Pension Reform Act, 2014 has come to strengthen the operational framework of the Country’s Pension system to not only protect retires in the Contributory Pension Scheme (CPS), but to ensure that retires under the Defined Benefits Scheme enjoy similar comfort and protection.

Nigeria no doubt has crossed a milestone in reforming its pension system, and still desiring to ensure that never again would retirees, who have served their fatherland and contributed to national development roam the streets begging for alms.

The ongoing pension reform in Nigeria started with the enactment of the Pension Reform Act, 2004; which established the National Pension Commission (PenCom) and the Contributory Pension Scheme (CPS).  That became necessary because the Defined Benefits Schemes were not fully funded by governments across the country.  Relief came the way of retirees under the old scheme in 2013 when the Federal Government reformed the Defined Benefits Scheme with the establishment of the Pension Transitional Arrangements Directorate (PTAD).

One year after PTAD was established, the Pension Reform Act, 2014 was enacted to repeal and replace the 2004 Act.  The new law gave PenCom regulatory roles over PTAD and further strengthened the latter to deliver on its mandate of ensuring that pensioners under the Defined Benefits Scheme get their pensions as and when due.

Kabiru Gaya, chairman, Senate Committee on States and Local Governments observed that prior to pension reform in the country, issue of pensioners roaming the streets of major cities and begging for alms as a result of non-payment of their pension or negligence on the part of those coordinating the pension system was a common place.

Gaya addressing participants at the just concluded stakeholders Sensitisation Conference on the Pension Reform Act, 2014” in Abuja, observed that under the Defined Benefits Scheme, many retirees died because of delay or refusal of government to pay their pension while negligence on the part of those who managed pension fund contributed to the plight of retirees.

Reflecting on“Consolidating the Gains of Pension Reform in Nigeria” Gaya painted a gloomy picture of the DBS prior to the establishment of PTAD, in 2013.

According to him, the DBS was plagued bylack of funding, insufficient budgetary provisions, mismanagement, maladministration, inadequate legal framework and constant death of retirees while awaiting their entitlements and high corruption” among other things.

Also, giving an insight into the findings of the National Assembly Investigative Panel on Pension, the law maker said pensioners found it difficult to get their entitlements.

“Some of our members cried when they saw the pains these pensioners were going through.  Some of them have gone mental because they were asking for their claims and they could not get them and some of the people handling pension fund were having good time and good foods on their tables.”

“During our investigations, we found that money was kept in banks for years and pensioners were not being paid.  One organisation paid N5 billion while it had N21 billion in its purse kept in banks generating interest whilepensioners were hungry” he related.

On some of the challenges the National Assembly surmounted in the course of making the pension laws he stated “during our pension probe we had situations where some members of the Task Force became forces that we cannot fight.When we collated the report for the Chairman of the task force and members of his team to account for N195 billion, we invited him but he refused to appear.”

Legislators’ Effort

Members of the National Assembly have observed that with the establishment of PTAD, the gory tales of old pension scheme is now a thing of the past.  The Directorate is working very hard to bring back smiles on the faces of pensioners under the DBS, so there is need to further strengthen PTAD by fully implementing the new pension law, the law makers argued.

He however assuredPenCom of the support of the National Assembly inimplementing the Pension Reform Act, 2014fully, to meet the expectation of workers and retirees in the country.

He also encouraged the stakeholders in the pension industry to uphold best practice in the administration of retirement benefit fund in the country saying “PenCom, PTAD and all others should be diligent, prompt, transparent, honest and sincere in their days of service because they are also close to the net.”

“For us to move forward in this country, we have to fight corruption.  We have to be sincere in our jobs and for those who steal so much, once you cross a certain level all the money you accumulate is a waste,” Gaya admonished.

Samson Okwu, deputy chairman, House of Representatives Committee on Pensions,  also supported Gaya on the need to fully implement the new pension law.

He encouraged pension stakeholders to fashion out ways to fully implement the new pension law to ensure that self-employed people and workers in the informal sector are brought under the Contributory Pension Scheme.

“I charge professionals to look into the law and system such that we can give guarantees to contributors.  Your contributions will pave the way for us to learn how all Nigerians can key into the system such that we will have a guaranty of savings for all Nigerians such that even the welder by the road side can be part of the scheme.”

“The 8th National Assembly will partner the industry and we will work together to make the pension system better,” Okwu assured.

Justifying their push for full implementation of the law, the legislators observed the CPS is working perfectly and according to plans.  The Scheme, is fully funded and retirees under it are getting their pension as and when due. There has not been any case of fraud or corruption in the system from inception, they said.

The Legislators however, notedthat theonly way to ensure that the gains so far made with the Defined Benefits Schemewill not be reverse is to fully implement the Pension Reform Act, 2014.  This will also ensure that situations where fund managers under the old scheme come in contactwith pensioners’ money and may be tempted to divert or mismanage will be completely avoided.  The era where managers of the scheme deposit pensioners’ money to earn interest while pensioners wallow in abject poverty will be gone for good with the full implementation of the new pension law, they maintained.

According to the law makers, for the Defined Benefits Scheme to succeed, it is important to further strengthen PTAD and ensure that the Central Bank of Nigeria (CBN) continue to keep custody of all the money meant for pensioners under the Defined Benefit Scheme and pensioners’ entitlements continue to be transferred directly to their bank accounts from the apex bank after verification.  They want retirees under the old scheme to enjoy good life in retirement as much as their colleagues under the Contributory Pension Scheme, insisting that it is only the full implementation of the new pension law that will make all these possible.

About PTAD

Established August 2013 in line with provision of Section 30(2)(a) of the Pension Reform Act, 2004 and now Section 42(1) of the Pension Reform Act 2014, the PTADtook over the management of the Defined Benefits pension schemes of federal parastatals and agencies and has been implementing a new structure,which is a clear departure from the old system and also introduced a new orientation to service delivery to meet the needs of pensioners.

The Pension law directed Directors of the Civil Service Pension Department, Police Pension Department and Customs, Immigration and Prisons Pension Departments to report to the Executive Secretary of the Directorate.  Also, all the Boards of Trustees of pension schemes being operated by FGN parastatals report to PTAD.

The agency however prides itself as “progressively working hard” to sanitise the pension administration system and restore public confidence through effective management, accountability and transparency and alleviating the sufferings of pensioners through regular and prompt payments, constant communication and easy accessible.

The Directorate also said it is improving service delivery to pensioners, ensuring effective planning and management of pension under the Defined Benefits Scheme and ensuring transparency and accountability in the management of pension funds while restoring confidence and trust in the system.