Pensioners deserve better deal

The Federal Government recently unveiled plans to raise bonds worth N758 billion to clear accumulated pension debt owed retirees. This is good news for millions of federal pensioners who are going through untold hardship due to arrears of unpaid pensions and gratuities. State governments should take a cue from the federal government’s initiative. Minister for Finance and Coordinating Minister of the Economy, Wale Edun, who disclosed this after the Federal Executive Council (FEC) meeting in Abuja, presided by President Bola Tinubu, said the Debt Management Office (DMO) has been authorized to raise the bonds.   

The minister said that the funds to be raised through the government’s bonds will be used specifically to clear the outstanding pension liabilities for retirees who were part of the “Defined Benefit Scheme” prior to the establishment of the current Contributory Pension scheme in 2004.  The ‘Defined Benefit Scheme’ under the Pension Act refers to a retirement plan where the employer guarantees a specific amount of pension payment to an employee upon retirement. It is calculated based on factors like years of service and final salary. It means that the employee knows exactly how much pension he or she will receive regardless of market fluctuations, unlike the Contributory Pension scheme.   

But, to fully benefit from the Defined Benefit Scheme, workers yet to retire will have to top-up their contribution every time there is a wage increase, at least every five years. According to the Finance Minister, the accumulated pension debt was largely due to periodic wage increment in the country. He noted that clearing the outstanding pensions would be a great relief for pensioners. This is rightly so if the government will walk the talk without further delay. As Edun stated, pension is a fundamental issue of social intervention.                          

We welcome the federal government’s plan. It must be in line with the objectives of the Pension Act, as stipulated in Section 2, which aims to ensure that every person who worked either in public service of the federation or the private sector receives his/her entitlements as at when due, as well as assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. But it requires a uniform set of rules, regulations and standards for administration and payment of retirement benefits for workers in federal employment and those in the Federal Capital Territory.                          

Despite the existing legal framework, the administration of pension in the country has remained problematic for many years. Undoubtedly, it has been a harrowing experience for millions of Nigerian pensioners, at both federal and state levels. It is worst at the sub-national level where pictures of haggard-looking retirees have reportedly collapsed on the queues waiting for either their meagre pension or during verification exercises. Very often, it is the issue of non-payment or underpayment of entitlement, omission of pension names from the payroll, delayed payment of retirement benefits/gratuities.              

Retirement, which should be embraced with joy after 35 years of service, has turned into sorrow and frustration. Pensioners are also extorted and at times, the pension fund is embezzled. It is time to strengthen the pension scheme and alleviate the plight of pensioners. They deserve a better deal. Clearly, Nigeria’s pension scheme has not been adequately funded. It is poorly regulated. This has led to mounting liabilities.                    

The flaws have resulted in the repeal of the 1979 Pension Act, and subsequent amendments of the Nigeria Social Trust Fund Act of 1993, as well as the Pension Reform Act 2004 that set up the Contributory Pension Scheme for the payment of retirement benefits of employees in both public and private sectors. Still, pensioners face predicaments due to the multiple flaws in the pension administration system. We advise government at all levels to take active interest in all matters concerning pensioners. That is what responsible governments all over the world do for their retired “senior citizens.”                   

But in Nigeria, greedy politicians divert pension funds to their personal accounts. That is wickedness of the highest level. Going forward, the federal and state governments should apply the strategies that have worked in solving pension issues in other countries. The most effective strategies include ensuring a timely and accurate pension payment system, implementing stricter regulations, increasing government funding, as well as establishing a robust pension stabilisation fund.

Other recommendations include improving access to healthcare for retirees and promoting financial literacy that will encourage better retirement planning among working individuals. Besides, government should deem it necessary to prioritise budget allocations to pension funds and holding relevant authorities accountable for timely disbursement. Concrete efforts should be made to strengthen pension administration that will prevent mismanagement and ensure transparency. The government should engage pension groups and civil society organisations to raise awareness about pension issues and advocate for policy improvements. Altogether, a humane leadership across all strata of government is required to alleviate the plight of the pensioners.