The director-general of Niger state Pensions Board, Alhaji Usman Tinau Mohammed, spoke on the resumption of the state’s Contributory Pension Scheme (CPS) and the success recorded by the administration of Alhaji Abubakar Sani Bello in the payment of retirees’ benefits amidst reforms in pension administration in the state. AIDELOJE OJO brings excerpts.
Four months ago, the state resumed the implementation of the New Contributory Pension Scheme; at what stage are you now?
Yes, you will recall that the governor, Alhaji Abubakar Sani Bello, instituted a committee to look at ways and means of resuming the new pension scheme known as the Contributory Pension Scheme (CPS) sometime last year. It was a robust committee of 18 members headed by the deputy governor, Alhaji Ahmed Mohammed Ketso. We deliberated for over 15 months and got inputs from all concerned stakeholders including the Nigeria Labour Congress and Nigeria Union of Pensioners who made tremendous contributions. You will also recall that the scheme has been suspended since March 2015, which means there was no contribution or deductions from both the employer and the employee. The committee, however, made very useful recommendations. The committee established the fact that the resumption of the new pension scheme will be of utmost benefit to the workers on retirement because its implementation is no longer budgetary bound as it was in the old scheme.
In the old scheme, government made budget provisions every year, but in most cases there was no release of funds which was then a major challenge. There were lots of new innovations introduced in the new pension law passed in 2017 one of which is the increase of government counterpart contribution from 7.5 per cent to 10.5 per cent, while workers own contribution remained 7.5 per cent. Again, in order to fill the zero or missing gaps arising from the suspension of the scheme, government also agreed to increase the employer contribution 2.5 per cent making it now 13 per cent. In addition to this, the law also provided for five per cent redemption bond contribution from government as funds kept aside to pay accrued rights for people that will retire under the CPS and served before the commencement of the scheme.
So, the time you have spent before the resumption of the new scheme will be calculated and paid through the accrued right funds kept for that purpose. That has bridged lots of the funding problems we have in the past especially the gaps created after the suspension of the scheme in the state. We also have another two per cent additional contribution on the five per cent redemption bond fund contribution by government. In total the state government is contributing 20 per cent monthly to the pension scheme while that of workers is 7.5 per cent. I am happy to announce to you that the new contributory pension scheme commenced in June, this year, and so far it has been successfully implemented. I want to use this opportunity to appreciate Governor Abubaker Sani Bello and the deputy governor, Ahmed Mohammed Ketso, for supporting the board with the political will towards successful resumption of the scheme.
There is always the challenge of proper coordination of Pension Funds Administrators (PFAs) in pension management; what is the situation in Niger state?
As I have said earlier, Governor Abubakar Sani Bello approved the commencement of the scheme from June 2020 and we have started full implementation. However, we do not want to have problems in who is handling the funds. In other words, we have to be very careful to avoid double registration or double payment into account of beneficiaries. In doing this, we have to revalidate the accounts of all the 19 PFAS operating in Niger state. We have scrutinised their performances in respect of their operational environments, ICT capability and staff strength. The board sent out a committee to investigate all the above criteria which have submitted its report. I should say that the report was very revealing and it was discovered that some of PFAs have more agents than staff in their offices. In fact, some of them have only one person in cubicle which served as office, imagine the use of one small room as an office. We also had agreement with NLC Niger state chapter to carry out a similar exercise. The NLC went round the state and came out with very tangible report which we have used alongside with ours to correct all these imbalances. I have also seen one of the PFAs that have only one local government with 600 people. When we visited their office, they have only one cubicle with one staff who is an agent. So, we need to be very serious in looking at all these things.
What are the measures taken to strengthen the PFAs operating in the state towards ensuring return on investment by the board?
We have actually taken steps to strengthen our operations with the PFAs in terms of the people we appoint to handle our pension activities. For example, in the country we have 22 PFAs registered and 19 are in Niger state. People often ask the question of why 19 PFAs in Niger state alone. As I said earlier, the reports available to us show clearly that some of them have less than 1000 RSAs while others even have fewer. Some have more agents than staff. If Lagos state with all its muscles, funds and capacity is having just 5, how could Niger state be having 19? It is obvious that some of them just rushed to Minna because of its proximity to Abuja or that due diligence was not followed in the process as provided in the law as amended in 2017. So, this management is now saying no to such arrangements, we have looked at it very well because it is not in the numbers, but how perfect and efficient they are in terms of service delivery. So, we looked at all these issues and then began to understand that we do not really need 19 PFAs. We are fortunate that PenCom has agreed to open what we call transfer window soon. It means that people can move and the PFAs can provide pin for them although it’s already in the law that you can change your PFA every year if you want. The law has given us the leverage to work assiduously and make the PFAs work. We have to make them work because we are giving them our money.
Can you let us know the type of investments you channeled the pension funds and what is the prospect of returns?
From 2007, when we started we have only one lead PFAs which amounts to one management of funds, however, we have realised that there is the need to have competition which will give us better return on investment. I am happy that the return on investment if not for Covid-19, is within the range of more than 20 to 22 percent. We have already made some investment in bonds, treasury bills and other instruments that are not too highly risking. I am also glad to see another grading of states by PenCom which says that Niger state is now doing well despite the fact that we just resumed from suspension of the scheme. It said that Niger state suspended its scheme in 2015, but it has now resumed on a sound footing. In addition, when we sent a letter to PenCom on our activities, it commended Governor Abubakar Sani Bello for resumption of the scheme. As we all know, due to paucity of funds in the country, most infrastructure funding now come through bond issuance and there is that requirement stipulating that any state that wants to float a bond must resume Contributory Pension Scheme. Apparently, that is why you now see many states coming up with laws to implement it pension scheme.
The sustainability, is another major challenge of the scheme at states levels, how will you handle this in Niger state; what is the level of support from the state government in the implementation of the scheme?
I am very much happy with the resolute stand of Mr. Governor on the sustainability of the scheme in the state. When the governor said we should resume in June he followed it with directives that the funding should start immediately and like I said it has started. For example, from the state, we have already gotten government counterpart contributions for the months of June, July, August, and September. This means that for those four months there is no problem and I can assure you that there will be no problem in the future. I expect also that local government will follow soon. There is that assurance from the ministry for local government that they will also provide funding.
I am very much confident that this time around except if there is a point where the ministry of finance and that of local government circumvent the transmission of the fund to pension board, I believe what happened in 2009 and 2015, will not repeat itself. If funds were transmitted to pension board that problem that happened would have been of the board, but it was not. However, now we have our records intact and the past problem will not occur again.
Can you summarise what was on ground at the pension board when you assumed office in 2016 and the situation now?
When I came in 2016, we had met on ground about 4420 retirees under the CPS before that law was signed. What we did first was to find out what we have in arrears as the accrued rights of those we met on ground. The accrued rights have not been paid for long before we came on board, therefore we have huge amount in arrears of about N1.4 billion. However, we quickly settled down to clear those arrears and also ensured that we pay all accrued rights during this administration. In fact, we have paid accrued rights to very large number of people totally 1,700. In order to answer your questions directly, I am guarded by the political will of Governor Sani Bello to back the board to work efficiently. We drew up a road map in 2016 which the governor approved. One very important issue we quickly resolved is how to attend to retirees without administrative bottlenecks. Do we allow people to use influence to get paid their entitlements? We settled for batching system.
So, if you come and your name is not out in the batch we ask you to wait for your turn. In fact, the batching system really helped us in solving some of those problems. Well I am a human being and not perfect, but I think we have reduced those kind of nepotism to the barest minimum in the board. Let me at this point emphasise the fact that the government has been consistent with release of its counterpart fund contributions to the scheme since it commenced in June 2020.
However, for now as you know, the screening to improve the data of pensioners is ongoing to have more authentic list of pensioners, but the monthly payment to the contributory scheme as the last point of discussion is N454 million. Let me assure you that the screening has also provided more windows of opportunity for the board to be more critical in its operation. We must synergise more with all stakeholders and we have started doing this. Therefore, I want to call on Nigeria Union of Pensioners at the state and local government levels and the PDOs desks officers to work diligently towards improved service to their members.
