Featured, Special Report
The hope of millions of Nigerian pensioners to live a peaceful life with their entitlements after retirement, seems misplaced following reports of mindless frauds and mismanagement of pension scheme funds
| By Augustine Adah | Apr. 1, 2013 @ 01:00 GMT
THE desire of every worker is to receive his or her entitlements after attaining the retirement age. But that is not the case in Nigeria where retirees have to wait for a long time before receiving their entitlements. Some could not even live to collect the money as they lost their lives in the course of undergoing the rigorous procedures of verification before payment.
James Okon was retired from the armed forces on medical grounds in 1980. But he had to wait for more than 25 years before collecting his pension in 2007. Before his entitlements were paid that year, Okon and his colleagues spent more than 11 months sleeping under bridges like refugees in Abuja. Some of them were going to churches to beg for food while many of them resorted to selling fire wood to be able feed. While Okon was away in Lagos trying to survive the hardship, his wife who was suffering from high blood pressure, HBP, died of complications because there was nobody around to take care of her. “I was lucky to have survived the horrible ordeal. We went through for almost one year in Abuja because every week we were burying almost two corpses of our members who died of starvation and diseases,” Today, even though the military pension administrator has started paying his monthly pension, arrears from 1980-2007 are still outstanding.
Like Okon, Ali Ganiyu, former administrative officer, Nigeria Postal Services, NIPOST, Apapa, Lagos is also suffering for the past eight years. When he was retiring from the service after spending 35 years in 2005, his thinking was that with monthly pension, he would be able to settle down and fend for his family. Unfortunately, the past eight years has been very traumatic for Ganiyu to the extent that he has to depend on friends and relatives to cater for the family needs. All these happened to Ganiyu because of many months of un-paid pension arrears.
“Since I retired in 2005, life has been very difficult for me, neighbours and friends were the ones assisting me because the payment of my monthly pension has not been regular. Okon and Ganiyu symbolise the fate of pensioners in Nigeria who are going through pains to collect their entitlements years after retirement.
Mukaila Ogunbote, spokesperson for NIPOST pensioners revealed that between 2005 and 2012, more than 120 NIPOST pensioners lost their lives while waiting to collect their pensions. Many of them died as a result of their inability to get good medical care of whenever they fell ill. Apart from irregularity in payment of pensioners, many of them receive paltry sums every month as pension. Joseph Ogunyankin, national chairman, Nigeria Union of Pensioners, NUP, NIPOST branch, regretted that the NIPOST pensioners are the most neglected in the country, because apart from the irregularity in the monthly payment, some of the them receive as low as N2,000 per month. The situation, he said, has made lives unbearable for many members. The introduction of biometric data capturing has also succeeded in worsening the suffering of pensioners. Many of them who could not withstand the rigours of waiting in queues for a long time collapsed and died.
That was why in December last year, the NUP, NIPOST branch, engaged in a peaceful protest across the country. The development paralysed activities in almost all NIOST offices through- out the country, because the pensioners succeeded in locking all doors and gates to NIPOST offices. Apart from NIPOST, other Nigerian pensioners are also suffering from several irregularities that have not been properly addressed by the government and pension administrators. For example, in Bayelsa State, pensioners’ monthly payment has not been regular since 2005. As at December 2012, the state government’s indebtedness to pensioners was about N3.5 billion.
Renner Hobobo, chairman, Bayelsa State branch of the NUP, lamented the state government’s poor attitude to the plight of workers who were retired after serving the state for about 35 years. Hobobo could not understand why the administration of Governor Seriake Dickson, which made a promise to address the problem of pensioners in the state has failed to do anything to that effect. “Enough of promises, we are senior citizens who had served our fatherland devotedly and must not be treated this way. All we want is our entitlements,” Hobobo said.
Moses Atakpa, Kogi State head of service, was booed by pensioners in the state when he represented Idris Wada, the governor at the 2012 pensioner day in Lokoja. The pensioners who were angry over the manner the government handled the harmonisation and the inconsistency in paying the monthly pension, started shouting at him when it was his turn to address the retirees.
Onu Abdullahi, state chairman of NUP, blamed the state government for appointing politicians into pension office in the past. He alleged that the politicians in the pension office tempered with fund meant for the payment of pensioners’ entitlements. It was gathered that the state government recently released N50 million as part payment of N5 billion it owed the pensioners. Members of the NUP described the amount as grossly inadequate and threatened a showdown if the government failed to show more commitment to their plight.
One of the greatest problems bedeviling pension administration in Nigeria is mindless fraud. Take the case of the fraud in the Police Pension Fund. Many Nigerians and pensioners in particular were surprised why Abdulrasheed Maina, acting director, Customs, Immigration and Prison Pension Office, CIPPO, and head, Pension Reform Task Team, PRTT, who had stolen several billions of Naira of pension fund was allowed to move around as a free man until his recent escape to Singapore. Maina who was alleged to have embezzled pensioners’ funds refused several invitations by the Senate Joint Committee investigating the management of pension fund in the country to appear before it and defend himself over accusations of embezzlement. After dishonouring several invitations, the National Assembly, urged President Goodluck Jonathan, to stop shielding Maina and dismiss him from the civil service.
The National Assembly’s decision came as a result of several efforts to compel Mohammed Abubakar, inspector general of police, to effect Senate warrant of arrest on Maina failed. But President Jonathan, through Reuben Abati, special adviser on media, explained that it was not possible for Jonathan to sack the embattled pension boss from the civil service because such sacking must go through the civil service procedures.
Barely three months in power, Ngozi Okonjo-Iweala, supervising minister of finance engaged the services of KPMG, an audit firm, to assist the government with an examination and review of the civil service pension scheme, with particular reference to the operations of the police pension scheme. It’s main assignment was to identify the constraints in completing the mandate of Maina’s team; advise on a roadmap to ensure adequate completion of the reforms in the sector to ensure adequate accountability by all the active players in the reform process; examine the bank account into which police pension funds were deposited to ensure the strictest accountability and integrity of the accounts and advise the minister of finance on policy reform and the governance structure of the operation of the bank accounts associated with the police pension scheme.
When the audit firm turned in its report, Maina was found to have dipped his hands into the police pension funds dishing out largesse to top government functionaries under the guise of traveling abroad for biometric capture of 20 police pensioners. The report noted that Maina mismanaged hundreds of millions of Naira and illegally moved billions of naira among banks in Lagos and Abuja. Since the audit report was submitted to the minister in addition to other petitions made against Maina, all efforts to compel him to appear before the National Assembly to defend himself had failed.
In May last year, Aloysius Etok, chairman, Senate Committee on Establishment and Public Service and States and Local Government Affairs, ordered the inspector general of police, to issue warrants of arrest on Remi Olowude, managing director of Industrial and General Insurance Company, IGI, and members of the company’s management over alleged pension fraud. According to Etok, IGI is an underwriter insurance company dealing with many government agencies including the NIPOST retirees.
Apart from corruption, other problem militating against the administration of pension is lack of proper harmonisation. Many of them are yet to enjoy any increment of their monthly pensions many years after they left the service of their organisations. For example, a retired assistant superintendent of police, who pleaded anonymity stated that since he retired in 2009, a kobo has not been added to his monthly pension. He stated that between 2009 to date, salaries of Nigeria Police Force, NPF, has been increased twice without any corresponding increase in their monthly pension.
The new practice was contrary to what obtained when the National Social Insurance Trust Fund, NSITF was in operation. At that time, every increment of salaries for workers still in the employment, would also be extended to pensioners. The police retiree further explained that what he received every month from his pension administrator was just like a stipend every month. Many retirees also complained that the attitude of many pension administrators has made things difficult for them. It is easier to make contribution to the pension scheme but it is more challenging when it is time for a retiree to access the pension account managed by a pension administrator. Several pensioners allege that the Pension Fund Administrators subject them to unnecessary procedures before accessing their fund. “When I started making the contribution some years ago we were told that under the new policy, if you want to access your money after retirement it is easier, but for more than three months, I had tried to access my money without success,” Suileman Ajayi said.
Ajayi could not access his retirement account because he was subjected to a lot of documentation. This and other problems have made some government organisations to pull out of the PFA. For example, the army and the police have announced their intention to pull out of the new pension administration because of the inherent lapses in the new system. But the decision does not go down well with some labour leaders.
Peter Esele, president, Trade Union Congress, TUC. Esele wants the Army and the Nigeria Police Force, NPF, to rescind their decision because the junior officers in the forces may suffer if they pull out. “Why it may be easier for senior officers to collect their entitlement after retirement, it may be difficult for the junior ones,” Esele said.
But Demola Sogunle, chief executive officer, CEO, Stanbic IBTC Pension Managers, insists that some of allegations against PFA’s are not true because at IBTC, about 26,000 retirees collect their benefits every month. Sogunle disclosed that IBTC, which has more than one million Nigerians subscribing to the pension scheme, has always been prompt in responding to the needs of retirees. For those who are yet to attain the mandatory age of 50, and are out of job for six months or more, he said a particular clause in the 2004 pension act allows such persons to collect 25 percent of the benefits. But that would happen after such persons have undergone proper documentations, then their requests for payment would be sent to PenCom.
Former President Olusegun Obasanjo signed the Pension Reform Bill into law on June 25, 2004. The main aim of the law was to ensure that employees save towards their retirement and that every public and private sector employee received his/her retirement benefits as and when due. The law established a mandatory funded contributory Pension scheme based on individual retirement accounts for all federal and private sector employees. It covers all private sector organizations with five or more employees to make a minimum contribution of 15 percent of the emoluments (annual basic salary, transport and housing allowance) to the RSA’s of each staff. Such contributions are to be paid into the account of the Pension Fund Administrator(s), PFAs, selected by the individual staff with the Pension Fund Custodian(s) nominated by the PFA. Employees are further compelled to retain the fund (comprising of contributions and net income therein until they reach the age of 50 or retirement).
The new Act nullified the Pension Act of 1990, the Police and Other Agencies Pensions Offices Establishment, etc Act, 1993 and the Police Pension Rights of Inspector General of Police Act 1993. The Armed Forces Pension Act 1990 and the National Social Insurance Trust Fund Act 1993 were amended and brought up with date to conform to the provisions of the new Act.
The intent of the Act is to dispense with the un-funded, defined-benefit pension scheme prevalent in the public sector and establish a fully defined contribution scheme for all employees in the public and private sectors. The Act established the National Pension Commission, (PenCom) as the apex regulatory body for pension matters and two main service providers: Pension Fund Administrator, PFA, and Pension Fund Custodian PFC. The reform has created new opportunities in these two service areas from pensions of both public sector [Federal] and the private sector employees as well as of various state governments, who though not mandated under the law, have since initiated the process of enabling similar laws.
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