Recently, a bill for exemption of the Nigerian Police Force (NPF) from the Contributory Pension Scheme (CPS) like their military colleagues and the launching of police pension board was passed; this was not until after serious arguments between the police officers, and the National Pension Commission (PenCom) and pension fund operators. There was a strong opposition of the bill by PenCom, the Nigerian Labour Congress (NLC) and the pension operators. The bill was passed due to the claims of retired members being denied of their total accrued benefits.
Majority of the retired police officers argued that their individual salaries are very meagre and inadequate to live on, unlike their military counterparts. Some even lamented that they do not receive more than N30,000 ($39.8) as pension. Officers stated that the Contributory Pension Scheme tackles many challenges of previous pension schemes in Nigeria, but current PFA have not been able to tackle challenges in the Police Force. Some of these peculiarities include the pending reconciliation of police personnel data which is essential to obtaining the accrued pension from the Central Bank of Nigeria (CBN).
Experts say exemption of the police from CPS would affect the economy.
However, this attempt of the Nigerian Police Force to leave the CPS is not the first as there have been several attempts before now. Signing the bill into law has a likelihood of reversing the benefits of the pension reform process. Also, the federal government will become completely responsible for police pensions which, according to PenCom, would cost the government trillions of naira as time goes by. Prior to the establishment of the 2004 pension reform, this practice resulted in unfunded pensions and many pension liabilities which amounted to the fiscal debt of trillions of naira.
According to industry experts, the current state of the contributory pension scheme alongside total contributory pension scheme and Retirement Savings Account (RSA) with Pension Fund Administrators (PFA) would bear negative impacts that would affect the level of per capital income of every Nigerian. Official records of PenCom as at March 31, 2023, asserted that the estimated pension assets had increased to more than N15.58 trillion. The funds in this record is available to be borrowed by public and private sectors to finance infrastructure and investment to improve the economy.
Senator Ishaku Abbo agrees with the idea of exemption.
Reports have it that the single largest sum of the pension funds is contributed by police with its staff of about 320,000. Its contribution of pension funds is the reason why those who are against exemption of the police from the CPS emphasize the risk it poses to the financial system of the country. The Chief Executive Officer of PenOp, Oguche Agudah, stated that withdrawing Nigerian Police funds from the CPS would result in a burdened financial system, taking Nigeria back to the “dark ages” before pension reforms, because the nation’s financial ecosystem is linked.
Another financial analyst, Stephen Kanabe, asserted that there is a high tendency that it would be impossible to sustain the transitioning of the police back to a defined benefit scheme due to the country’s unstable economy. He stated that the transitioning would bring about loss in investments value due to forced sale. He described the move as “counterproductive”. On the contrary, Senator Ishaku Abbo believes that the difference in the contribution of pension savings and monthly pensions after retiring from active service between the police and other security agencies is enough reason for exemption of the police.
President Bola Ahmed Tinubu decides whether or not to assent the bill.
Industry experts who opposed exemption agreed that since the current system is not efficient enough, the pensions of officers from the rank of Assistant Inspector General of Police (AIG) upwards should be overseen under the category of political appointees whose retirements are with full benefits as affirmed in Section 6 (2) of the PRA 2014. Despite the debate over practicability and sustainability of the idea, the decision can only be made by President Bola Ahmed Tinubu, who can decide to assent to the bill or not.
Related Link
Pension Nigeria: Website
