•Urges states to adopt CPS for employees under 10 years

•Hints on award, recognition for state on pension reforms

By Victor AhiumaYoung

The National Pension Commission, PenCom, plans to engage the 26 states yet to adopt the Contributory Pension Scheme, CPS and Contributory Defined Benefits Scheme, CDBS, aimed at expanding the coverage of CPS.

Acting Director General of PenCom, Ms Omolola Oloworararan, gave this indication in Lagos, at the Commission’s quarterly consultative forum for states and the Federal Capital Territory, FTC, Pension Bureau.

Among others, she said: “Pension fund assets under the CPS continue to grow, with total assets under management soaring to N20.79 trillion as at July 2024. We are pleased to note the steady remittance of contributions by States, with over N236.7 billion remitted by States between January 2020 and the second quarter of 2024.

“Based on our record as at today, 25 states including the Federal Capital Territory, FCT, have enacted pension laws on the CPS, while six are at the Bill stage. Six other states have adopted the Contributory Defined Benefits Scheme, CDBS, a hybrid of the CPS. However, only eight States are fully implementing the CPS, out of the 25 states that have enacted pension laws.

“It will interest state governments to note that one of the significant benefits of adopting the CPS is access to accumulated pension funds for infrastructural development through issuance of state bonds. Indeed, five states, including Lagos, Niger, Osun, Ekiti, and Delta, have successfully issued state bonds that were subscribed by pension funds. Notably, the Lekki-Ikoyi Bridge in Lagos was partly financed by pension funds.

Under my leadership, the Commission is committed to ensuring that all retirees, from both the public and private sectors, receive their retirement benefits as and when due. In this regard, the Commission shall focus on 26 States with CPS or CDBS laws, but are yet to commence implementation. Our focus will be to constructively engage these States in a sustained manner and work towards expanding the coverage of CPS at the subnational level. We will also intensify our efforts with relevant State Government Agencies to resolve the backlog in accrued rights payments to CPS retirees.

“As part of our strategy towards pension reforms in greater number of States, PenCom encourages  some flexibility in the adoption of Contributory Pension arrangement in a manner that suits each state. In this regard, the Commission proposes that states adopt the CPS for new employees and/or those employed for 10 years or less. This would substantially reduce the burden of accrued pension rights payable upon retirement under the CPS. “Furthermore, the Commission shall, effective December 2025, introduce a Recognition and Award System to encourage and reward pension reforms by supporting states.”

She encouraged “states that have made significant progress in implementing the CPS and other pension arrangements to share their experiences with states that are in the early stage of implementation of the reform.”

Vanguard News