State, LG employees now have the right to be part of CPS

It is good news for public service workers under the employment of states and local government councils in Nigeria as the new Pension Reform Law 2014 has made it compulsory that government at these levels would have to adopt the Contributory Pension Scheme (CPS) for the benefit of their employees.

Unlike in the past, under the Pension Reform Act 2004, when states were only wooed and motivated with promises of different kinds of benefits, like opportunity for bonds issuance, mortgage financing options among other things by the regulator, the National Pension Commission(PenCom) to adopt CPS, it is now a legislative requirement.

This means that State and Local governments that were yet to adopt the CPS would have to do so quickly or face sanctions as may be pronounced soon by the industry regulator, PenCom, having been empowered by the Pension Reform 2014 to enforce CPS at all levels of public service and reasonable part of the private sector.

Like Chinelo Anohu-Amazu, the director general, PenCom, puts it “The PRA 2014 has taken states and local government participation in CPS to the next level by express legislative statement on coverage of employees of States and Local governments.

“I would therefore like to passionately appeal to all the States and Local Governments in Nigeria that are yet to adopt or implement the CPS to quickly embark on doing so in other to avail themselves and their employees of the numerous benefits of the scheme.”

For employee of States and the over 700 local governments across Nigeria, you have the right now to demand from your employers(Governments) to adopt the CPS as quickly as possible to benefit from the numerous benefits coming from the system, which has shown sustainability, safety, and more scientific with international best practice.

Labour unions and electorates in the affected States and local governments could as well push these demands, and make governorship aspirants and other political office holders see this as an important need of the workers.

Looking at Lagos State as case study, which has adopted the scheme since 2007, workers in the state are better assured of a retirement plan and would have the opportunity to enjoy other benefits accruable from the scheme including mortgage financing which the scheme promise to provide in its new phase of expanded benefit.

About 4,990 employees who retired from the Lagos State Public Service under the Contributory Pension Scheme have so far received over N26.2bn from 2010 till date.

The State has from inception of the scheme till date, contributed N51.64bn being the monthly deduction of 7.5 percent from the salary of every employee and the counterpart 7.5 percent contribution by the State government into the Retirement Savings Account (RSA) of every employee with the Pension Fund Administrators (PFAs).

The objectives of the Pension Reform Act 2014 enacted and signed into law by President Goodluck Jonathan on 1st July 2014 are to establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the public service of the Federation, the public service of the Federal Capital Territory, the public service of the state government, the public service of the local government councils and the private sector.

It is also to make provision for the smooth operations of the contributory pension scheme; Ensure that every person who worked in either the public Service of the Federation, Federal Capital Territory, States and local government or the Private Sector receives his retirement benefits as and when due ; and Assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

The provisions of this Act shall apply to any employment in the public service of the Federation, the public Service of the Federal Capital Territory, the Public Service of the state, the public service of the local governments and the private sector.

In the case of the private sector, the scheme shall apply to employees who are in the employment of an organisation in which there are 3 or more employees.

Notwithstanding the provision of subsection (2) of this section, employee of organisation with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by the National PenCom Commission.