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16yrs after, Yobe takes action on contributory pension

A file picture of retirees on queue for verification
A file picture of retirees on queue for verification

The Yobe State Government has taken the first action towards the adoption of the Contributory Pension Scheme (CPS) in the state.

This development is happening 16 years after the introduction of the scheme in Nigeria in 2004.

Recently, Governor Mai Mala Buni of Yobe State approved the appointment of Alhaji Muhammad Nura as the Chairman and 13 others as members of a committee for the adoption of the CPS in the state.

This development is the first indication that the state is about to dump the Defined Benefits Scheme (DBS) and replace it with the contributory scheme.

Details from the National Pension Commission (PenCom) show that Yobe State is the only state in Nigeria that has not initiated moves to adopt the CPS.

PenCom’s records show that Yobe State has not enacted an Act to guide the implementation of the Scheme in the state.

The enactment of the law, which would be substantially in tandem with the provisions of the PRA 2014, is the first major step towards the domestication of the CPS at the sub-national level.

One of the key intents and purposes of the Pension Reform Act 2014 is to ensure the domestication of the CPS at the sub-national level in Nigeria.

This motivation is enshrined in Section 2(1) of the PRA 2014 which made the provisions of the Act applicable to any employment in the Public Service of the Federation, the Federal Capital Territory, the States and Local Government Councils as well as the Private Sector.

Meanwhile, a statement signed by the Secretary to the Yobe State Government, Alhaji Baba Mallam Wali, outlined the mandates of the committee: to study the CPS, recommend the percentage of monthly pension to be remitted and prepare a draft bill for consideration by the State Executive Council.

Many countries have shifted from the public pay-as-you-go social security to the defined contributory pension scheme drawing from the Chilean experience with a variety of individual characteristics.

In a recent interview with Daily Trust, PenCom’s Acting Director General, Aisha Umar-Dahir, said the Commission would not be able to force states to adopt the CPS as its regulatory oversight of States and Local Governments pension schemes is guided by the provisions of the enabling laws in the States.

Umar-Dahir said Section 23(h) of the PRA 2014 clearly emphasised that the Commission’s role with regards to the application of the CPS at the states and local governments levels shall be to promote and offer technical assistance to States in line with the objectives of the scheme.

She said it would therefore be contrary to constitutional provisions for the commission to enforce the provisions of the PRA 2014 on the states without recourse to the extant laws and prevailing economic limitations of the states at every material point in time.

“There is a positive correlation between performance of states under the Defined Benefits Scheme and the adoption of the CPS by states. Most states that were doing well in the payment of retirement benefits under the Defined Benefits Scheme were more favourably disposed to adopting the CPS and are doing better in its implementation than those who were not,” the PenCom boss said.

 

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