Contributory Pension Scheme: My urgent call for life-saving review

By Chris Eze Ezeilo

I mourn a former colleague of mine at the Federal Ministry of Budget and National Planning as I write this article who passed on a week ago and the news only got to me yesterday. May his gentle soul rest in perfect peace, amen.

He was the 5th person among the Directorate cadre that I worked with to have gone to the great beyond since I retired from service in April 2017, and the second person this year alone.

The quickened pace to the great beyond for retirees is, among other factors, being fueled by the Contributory Pension Scheme (CPS) birthed through the Pension Reform Act 2004 by the Obasanjo Administration, when retirees were simply rail loaded into Annuity plan operated by Insurance companies or Programmed Withdrawal operated by Pension Fund Administrators (PFAs).

What Federal Civil servants thought would be a glorious retirement into old age on attaining 60 years of age or having served their country and given their very best for a continuous period of 35 years ( whichever comes first), has turned into a degraded life of poverty and penury, and with the constant reminder of death knocking at every minute of each new day. It is nightmarish being under the unprogressive, in fact regressive CPS!

What was hyped as a solution to the failure and inability of Federal Government to discharge its responsibility to a very important and significant section of the country’s ageing population has turned, unfortunately for the retirees, into a life of hunger, want and untimely extirpation.

To make matters worse, nobody remembers them when palliatives such as even rice (the seeming new found staple food elixir/ solution to every problem in the country), are being distributed by the tiers of government in the country. The current news in the firmament is that Ministers of the Federal Republic of Nigeria have been given 1200 bags of rice for distribution to the populace battling with hunger. This is sequel to rice allocations to the States and members of the National Assembly; which apparently, very insignificant few saw and fewer collected. However, partaking in token rice largesse is not what retirees under the Contributory Pension Scheme are crying for.

They simply want their retirement benefits, as guaranteed under the 1999 Constitution of the Federal Republic of Nigeria (as amended), paid promptly, seamlessly and as at when due. This would capacitate them to buy food for themselves and their dependents; ensure ease of access to essential drugs and medical treatment if and when the need arises, thus enabling them to live meaningful lives devoid of pain, frustration, depression and listlessness. And, avoidable death!

The journey to this dismal situation began when Government at the Federal, States and Local Government levels failed miserably in meeting their obligations to the pensioners. During the second Republic, the ill-fated third Republic and now fourth Republic, it has been a recurring tale of woes for retirees at the Federal, State and Local Governments in terms of the payment of their gratuity and pensions. Even as I write this article, many States that have not joined the Contributory Pension scheme still owe pensioners their entitlements such as their gratuity and pensions. States like Enugu have not paid the gratuity of their workers since 2010 while pensions are paid at the pleasure of some officials with endless parade of retirees for so-called data verification and capturing.

The issue of pension was the cause of the altercation between the current administration of Dr. Alex Otti in Abia State and his predecessor, Dr Okezie Ikpeazu over the non-payment of pensioners for more than 20 months. The poor story is same in most states of the Federation.

At the Federal level, the Contributory Pension Scheme has reduced retirees to lives of penury and perpetual want. While a large segment of these pensioners still have children and other dependents in schools, others have struggled with ill-health which once it sets in, is like a roller coaster to the grave. Many cannot afford the expensive drugs priced beyond their reach which has been made worse by the present administration’s Bretton Woods Institutions- driven economic reforms comprising the devaluation of the Naira and the removal of fuel subsidy at the same time.

So what is wrong with the Contributory Pension Scheme that the retirees are gnashing their teeth over their conditions? Let us establish that Pension Rights are protected under the 1999 Nigerian Constitution as amended.

Sect. 173(1) to (3) states that the right of a person in the public service of the Federation to receive pension and gratuity shall be regulated by law such as the Pension Reform Act. Any benefit to which a person is entitled to shall not be withheld or altered to his disadvantage and that pension shall be reviewed every five years or together with any Federal civil service salary reviews whichever is earlier. The issue of Pensions is in the Exclusive list of the Constitution which only the Federal legislature can act upon.

Sub-section 3 states clearly that pensions shall be reviewed every 5 years or together with any Federal civil service salary reviews whichever is earlier. That Section of the 1999 Constitution as amended has not segregated between pensioners. It is clear that such reviews must not be to the disadvantage of the pensioners. However, this all-encompassing portion has not been applied to retirees under the Contributory Pension Scheme since it came into force in 2007. For twenty-three years now, this group of pensioners have not benefited from the more than three reviews of salaries under Presidents Goodluck Ebele Jonathan, Mohammadu Buhari and now President Bola Ahmed Tinubu.

The import of this is that they have been on the same take home pay despite the massive and devastating devaluation of our currency over the years. The worst punishment meted out to this beleaguered people is that they contributed part of their salaries to their pension unlike the Defined Benefit Scheme operated before 2004 and now taken over by PITAD.

It might interest you to note that 7.5% of Pensioner’s monthly salary was deducted from the little take home pay but whatever was accumulated during his working life has been massively devalued over the years by the economic policies of successive government without providing any buffer. For CPS pensioners therefore, it is double jeopardy or as late Fela Anikulapo Kuti would say ‘double wahala’ for dead body.

The second thing wrong with the CPS is that under the Programmed withdrawal by PFAs or Annuity by Insurance Companies, accumulated funds after the payment of 25% lump sum to the retiree, ought to be invested and interest generated paid to the retiree. This has proven not to be the case. As I pen this article, not a dime has ever been paid and nobody mentions it.

What has been observed is that PFAs and insurance companies are feeding fat on this fund deposited with them, plus interest that should accrue to the retirees. What do we call this: 21st Century slavery and nothing else.

This unfortunate situation has forced the retired Federal Directors to organize themselves to fight this obnoxious system by insisting that they be covered as well in the reviews of pension or salary as provided for by the 1999 Constitutional. They are using dialogue and persuasion including taking legal action to fight for their rights to decent life and survival.

The third angle to what is wrong with the scheme is the notion that an adult at 60 cannot manage his financial affairs. It is preposterous and out rightly insulting to posit or insinuate that a man who has served his country for 35 years in sensitive government positions, making policies and taking strategic decisions that affect millions irrespective of his profession, would not know how to invest his money, if they were paid to him on retirement.

The 25% of the accumulated funds usually paid to him is too small to enable him start any business. The rest of his accumulated money saved in the CBN is transferred to people in starched suits and shirts who did not work for the money nor know what he went through to earn it.

The law enables both the Pension Funds Administrators and Life Insurance Companies to literally play ‘kokoma’ with the sweat of the Pensioner.

The CPS has strengthened the Insurance industry to the extent that every Dick and Harry including the banks now own insurance firms based on the free funds worked by retirees’ sweat at the expense of the retirees.

The CPS should be urgently reviewed and pensioners’ money should be paid to the Pensioner who worked for it. Let him have the liberty to manage his money including investing in the same Insurance firms at negotiated and agreed terms.

A germane supportive cause of action by the Government is to organize entrepreneurship program by Consultants for retirees as they do for the Armed Forces. This should be included in the mandate of the Public Service Institute of Nigeria (PSIN).

The non-salutary and obnoxious nature of the scheme is the reason why the Armed Forces, the Police and lately the Universities have pulled out of the Contributory Pension Scheme, remaining the civil servants and some paramilitary agencies who seem helpless and lacking on what to do to salvage themselves. Recently, the Correctional Officers Pencom Retirees Association of Nigeria wrote a petition to the President on 28th August 2024 saying that the CPS is worsening the challenges of retirees. It is time, after 23 years of operation of the Scheme, for its total and comprehensive review.

The fourth thing wrong with the scheme is the unduly long waiting period between leaving the service and when the Pensioner’s money is paid as lump sum and periodically.

The period has dragged from one year when I left the service to two years now before retirees can access their funds. Nobody in authority has given thought on how these people are expected to survive that long period.

The day you leave service is the day you stop earning salary and you have to fend for yourself and find ingenious way of taking care of your family. Not every civil servant is ‘lucky’ to be in so called juicy position where he could put his hands into the till.

It is fear of the unknown that forces some civil servants to continue to adjust their ages because of the uncertainties of post retirement life.

The process of retirement begins six months to the exit door and I think it is long enough to tidy up whatever administrative processes that needs to be handled. The Nigerian Pension Commission should automate their processes such that at most three months from retirement, every retiree should access his money. Otherwise one would be safe to assume the idea was to force retirees into their early graves.

In order to dispel this notion among some retirees that the PCS was instituted by Government to find a liquidation and permanent solution to the irritation of catering for people who are no longer productive, the Pension Reform Act 2004 as amended, should be reviewed urgently so all pensioners are covered in all reviews of pension or salaries and the payment of gratuity to those who were not paid from 2007 effected.

CPS as presently constituted is a slave whip for the CPS pensioners and an urgent comprehensive review of the scheme needs to be undertaken by all the stakeholders.

•Sir Ezeilo, is Management Consultant/Retired Federal Director

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