PenCom calls on States to tap to numerous benefits of the Contributory Pension Scheme and key into it.

By Afolabi Oyekunle.

The National Pension Commission (PenCom) has called on all states and local governments to implement the Contributory Pension Scheme (CPS) for a pension-secure Nigeria. 

In a release PenCom commended some states for their exemplary implementation of the CPS as at 31 December 2024: Lagos, Federal Capital Territory (FCT), Osun, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, and Jigawa. 

According to the Commission, these states have set the benchmark for sustainable pension administration by ensuring that retirees receive their entitlements promptly.

According to PenCom the states are consistently remitting both employer and employee pension contributions under the CPS. 

The Commission said several states have enacted laws to adopt the CPS but have not yet made significant strides towards implementation. These states include Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba, and Zamfara. PenCom urges these states to accelerate their efforts toward full implementation of the CPS. 

 For a state to implement the CPS in full, the state is required to enact a law on CPS, establish a Pension Bureau, register its employees with Pension Fund Administrators (PFAs) and commence remittance of pension contributions. 

The state is also required to carry out Actuarial Valuation, commence funding of Accrued Pension Rights, procure Group Life Insurance for its employees, and open and fund a Retirement Benefits Bond Redemption Fund Account with the Central Bank of Nigeria (CBN) or PFA

"The Pension Reform Act (PRA) 2014, in Section 2(1), stipulates that the CPS applies to all public sector employees across the Federation, including the Federal Capital Territory, states, and local governments, as well as the private sector.

 However, in line with the 1999 Constitution of the Federal Republic of Nigeria (as amended), state governments have the constitutional right to legislate on pension matters within their jurisdictions."

            PenCom DG Omolola Oloworaran 

 As such, state governments are required to domesticate the CPS by enacting appropriate pension laws within their states.In August 2006, the National Council of States adopted the CPS for all states and local governments.

 To support this adoption, PenCom has  developed a Model State Pension Law, enabling state governments to modify it according to their unique needs. PenCom reviews draft state pension laws and guides states throughout the implementation process.

This includes the timely remittance of both employer and employee pension contributions. By taking decisive action, these states can align with the pacesetters in ensuring a secure and sustainable retirement scheme for their workforce.

However, PenCom observes that the following states have yet to commence implementation of the CPS: Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe. 

PenCom strongly encourages these states to expedite the enactment of their CPS laws and take immediate steps toward full implementation to ensure a secure and sustainable pension system for their workforce

.The Commission said transition from the Defined Benefits Scheme (DBS) to the CPS at the state and local government levels is both a significant and inevitable step. Even states that have not transitioned will ultimately need to adopt the CPS. 

"The scheme is designed to ensure that all retirees receive their benefits in a timely manner, providing a sustainable and secure retirement for all public sector employees.

The CPS offers a long-term solution to the pension liabilities that many states currently face. By failing to address pension arrears, states are inadvertently creating a financial burden for future generations, as these liabilities will continue to grow. "

It  said adopting the CPS now will help states avoid these escalating costs and provide a more secure financial future for both retirees and taxpayers.

Moreover, the CPS ensures fiscal discipline by accurately determining and systematically settling pension obligations while also making funds available at the point of retirement for the prompt payment of benefits.

 This prevents the accumulation of pension arrears, contributing to the financial stability of the public sector.PenCom remains steadfast in its commitment to driving nationwide compliance with the CPS.

 The Commission assured that it will continue to engage with non-compliant states, providing necessary guidance, advisory support, and technical expertise to facilitate their transition.

 "A pension-secure Nigeria is not just a vision but an achievable reality. However, this can only be realised when all states demonstrate commitment by fully embracing the CPS. PenCom remains fully committed to the effective regulation and supervision of the pension industry. "