Read the first part of the investigation HERE
The lost battle against Cancer
Late Gomenti Regina lost her battle with Cancer at 63.
She joined the public service in 1982 and retired in October 2017 at Emuobigo Primary School. She later died on November 25, 2021, four years after retirement.
In summary, most of the affected retirees have suffered great neglect, financially and healthwise, while others paid the ultimate price due to the delayed payment of their pension benefits.
Indications further show that the aggrieved aged persons have struggled as a lone voice. They are neither members of the Nigerian Union of Teachers (NUT) nor the National Union of Pensioners (NUP) because they are retired and are yet to start receiving pensions.
Understanding the pension scheme
As of June 2022, only 25 states nationwide have enacted the contributory pension scheme. They are Lagos, Osun, Kaduna, FCT, Ekiti, Ondo, Edo, Benue, Kebbi, Niger, Rivers, Ogun, Bayelsa, Kogi, Anambra, Abia, Taraba, Imo, Sokoto, Adamawa, Ebonyi, Nasarawa, Enugu, Oyo and Delta.
Delta amended the Act in 2011.
It is a system where both the employers and employees contribute monthly to the employees’ accounts to give workers the desirable pension benefits at old age.
In this case, Delta established two pension Bureaus – one for the state and the other for the local government, headed by a chairman appointed by the state governor.
The local government bureau of pensioners pays for the local government retirees and primary school teachers. In contrast, the state bureau takes care of other retired state workers.
The Bureaus receive the money from the state and remit it to the Pension Fund Administrators (PFA), which then pay the retirees via their Retirement Savings Account (RSA) already opened at the PFAs.
What makes the new scheme much better is that it is fully funded. It is also preferred by most retirees and states, except for the initial challenge of settling the accrued pensions. Ordinarily, employers are expected to make 10 per cent deductions, while the employees remit about 7.5 per cent.
Delta, for instance, remits 10.5 per cent from its coffer while the workers save 7.5 per cent from their salaries.
The deductions amount to 18 per cent monthly remittances into the employees’ ‘pension account’, otherwise known as the RSA. The PFA manages it.
Part IV, Section 11 of the Pension Act, empowers employees to own an RSA at a PFA of choice.
This is similar to an individual choosing a bank of choice for savings. An instance of a PFA is ARM Pensions, Oak Pensions, Trustfund Pensions etc. But field findings reveal the state government forced the retirees to Oak Pensions and Crusader Pensions depending on the LGA.
“The employee shall notify his employer of the pension fund administrator chosen and the identity of the retirement savings account opened….” Section 11 (2) reads.
The law permits retirees to access their retirement savings once they reach 50. They could also access the fund before the set age but on special conditions such as health reasons.
FAAC allocations to Delta under Okowa hit over N931 billion in about six years
Delta ranks top among the 36 states with the highest FAAC allocations. A look at the allocations from 2015, when Okowa assumed office, showed a steady rise.
In 2015, the state was the second highest, with N120.12 billion received from FAAC.
The ICIR could not access data for the releases in 2016, but while it ranked third nationwide in 2017 with N111.2 billion, it got the highest sum in 2018, 2020 and 2021, respectively.
Its 2018 FAAC allocation was N213.6 billion. In 2019, it dropped to N47.6 billion.
However, in 2020, Delta raked over N186 billion from the N2.29 trillion shared among the 36 governors. That was the Covid-19 year. It hit N171.5 billion in 2021.
As of the second quarter of 2022, Delta still maintained its position as the highest beneficiary of federal allocation, with N137.2 billion. This implies Okowa has to a large extent, received a huge sum during his term in office compared with his colleagues across the country. The more reason the retirees insisted they should have been attended to.
The ICIR called the commissioner for information Aniagwu’s attention to the huge revenues and federal allocations, but he shelved it, saying the state has huge employees, yet, unemployment stands at 31.14 per cent.
Delta Government reacts
All top officials from the LG pension bureau failed to speak. Efforts to reach Dennis Ogu, Director of Pension Planning and Records, were unsuccessful. The Director of Contributory Pension at the Bureau was unyielding. “Speak to the commissioner for information,” he says without disclosing his identity.
It was a similar experience with the Secretary of the Bureau, Frank Atube. “I am not in the best position to talk to the press. It is now a state issue,” says Atube. But he advised this reporter to meet with the Secretary to the State Government (SSG) or the Commissioner for Information.
The SSG was unavailable when The ICIR visited his office. Eventually, it took 24 hours to meet with the commissioner for information, Aniagwu, who insisted the state could only help the retirees as their welfare was not the state’s responsibility.
But a top source at the Governor’s Office told The ICIR that the state was responsible for remitting the accrued pension before further disbursement to the retired teachers through their PFAs.
“There are issues of non-payment of arrears,” says the highly placed source at Okowa’s office. “Some of them are sick, and some of them are late due to the non-payments.”
“The reason for the delay is that the money being remitted by the state government for the payment of pension is not as adequate as expected to pay the large number of people retiring daily or a large number of persons on the line waiting for payment.”
“They bring money for us monthly. It was a particular sum before now, but we had to write to the governor to beg for an increment, which was also approved, and we have started using that. The increment will mean more people will enter the list for payments.”
In other words, the affected retirees are not entitled to receive any benefit until the state government pays the accrued pension, which the governor pegged at N100 billion. But the source gave a caveat – only the next of kin of the deceased retirees can be paid the deductions contributed to the new pension scheme – CPS, while waiting for the accrued pension to be paid.
“That accrued sum is their retirement money in the old scheme (old pension). After much writeup and agitation, PenCom eventually approved that the deceased’s next of kin could access the contribution in the new scheme. So, it is only for those who are late, whose next of kin have financial challenges,” it was further gathered.
“Those alive are not approved to access funds from the new scheme from their PFAs until the backlog is paid.”
This implies this category of people (next of kin of the deceased) could be paid twice through the PFA. First, deductions contributed since the new pension scheme commenced in the state and, secondly, the accrued sum from the old scheme when finally remitted.
But, on a general note, until the accrued pension is paid into the RSA, retirees in the state cannot get their benefits.
The findings align with the submission of Pius Apere, the chief executive officer of Anchor Actuary Services Limited when he told The Punch on June 16 that “the delayed or inability of the FG and state governments to remit the accrued pension rights to the individual retirees’ RSAs on a timely basis had increased the plight of pensioners because the regulator insisted that the retirement benefits would not be paid from RSA without the accrued pension rights being added to it.”
But Aniagwu faulted these explanations saying the retirees are entitled to the CPS deductions while waiting for their accrued sum. He told The ICIR that contrary to the findings, especially at the Governor’s office, any retirees could access their contributions, not necessarily until the accrued fund is paid.
Besides, both Aniagwu and the source confirmed the N10 billion pledged by Okowa was yet to be approved for disbursement to the retirees. These imply more gloomy days for the aggrieved retired public servants.
Contributory Pension Scheme review – Experts react
The Customer Relationship Manager of Leadway Pensure in Osun State, Ademola Adio, shares a similar position as Apere, the chief executive officer of Anchor Actuary Services Limited.
Adio says it is mandatory that the accrued pension rights of the retirees should have been deposited and remitted into individual retirees’ retirement savings accounts before their pension benefits are paid. Otherwise, the current situation faced by primary school retirees might linger.
Usually, a year before retirement, he adds that retirees are expected to clear their names and sort anomalies that might affect their pensions at the pensions board.
Bayero Kasim, a Professor of Public Finance at the Faculty of Management Sciences, Usmanu Danfodiyo University, reacting to the story, says the state government cannot disassociate itself, especially when it still manages the LG pension board, promotions and the ministry of local government and chieftaincy affairs. He adds that as long as the local governments are not fully autonomous, the state should be responsible for paying the LG retirees.
Kasim, who is currently researching pension management, says the state governments manage the allocated funds through the LG and State government joint accounts.
The states, he adds, also determine the earmarked sum for the LG retirees, which according to him, are mostly deducted from the LG allocations, also controlled by the states.
This is contrary to having the LG solely manage the LG retirees’ appointments, promotions, retirements etc.. Hence, as long as LG it is not autonomous, state governments continue to handle the primary school retirees and payment of their retirement benefits, Kasim adds.
“If the LG retirees, either LG officials or school teachers receive their monies from the federation accounts, and the financial memoranda which are LG manual on financial management are very clear on that, they can provide money and key into the scheme. Possibly, in partnership with the state ministry of LG to ensure transparency and accountability in the process.
“But, as long as LGs are not autonomous, the state will continue to handle that responsibility.
“Across states, there are ministries of LGs, LG pension boards or commissions. These public bodies are state government creations and are handled by state government appointees. This means, in one way or the other, state governments continue to handle that issue.”
He applauded the new pension scheme as capable of reducing the cost of governance but advised the states to consider their peculiarities rather than full adoption of the scheme to reduce the challenges.
Olojede Iyabo, a Professor of Public Administration at the Faculty of Management Sciences, Lagos State University (LASU), described the scheme as a good initiative but identified the need to fix corruption and mismanagement of funds to ensure retirees are not denied their benefits.
She says the issue in Delta might be peculiar, but such is not the case in Lagos.
“Take corruption away, and everything will be fine,” she told The ICIR.
Bashir Jumare, a Professor of Public finance and Local Government Finance in the Faculty of Administration, Ahmadu Bello University (ABU), could not hold his displeasure with the policy when he revealed his wife, who retired in 2020, has been in the same dilemma. She has not received a dime as a pension benefit since her retirement.
He told The ICIR the situation is not peculiar to Delta but to other retirees in Kaduna State primary schools from where her wife retired.
“Just in Kaduna, for instance, many teachers had retired since 2016, and up till now, they have not received their retirement benefits. They are still going in circles. Even my wife retired two years back, but not a single kobo. They asked her to wait. The same thing with other teachers.”
He, however, asked for a review of the Act to give retirees timely access to their benefits. The university teacher further suggested a percentage of the contributed sum used as investment by the pension fund custodian or PFA should be remitted into the retirees’ account.
Retirees with N10, 000 monthly deductions can do lump sum withdrawal – PenCom
On Friday, August 19, The ICIR visited PenCom headquarters at 174 Adetokunbo Ademola Crescent, Maitama, Abuja. But the head of corporate communications, Abdulaqadir Dahir, was unavailable during the visit. Other officials at the department, rather, advised the reporter to submit an official letter for reactions.
On August 22, an official letter was sent to PenCom. But before the dispatch, the Commission had announced, Friday, on the day of the visit, a new policy where it disclosed that retirees who are entitled to receive N10, 000 as their monthly pension, that is, one-third of the N30,000 minimum wage, could access all their savings in their RSA account at once.
In other words, retirees with less than N550,000 in their RSA as of retirement could withdraw the lump sum instead of monthly withdrawals as a pension.
“If your monthly pension is not up to N10,000, which is a third of the N30,000 minimum wage, you can take all your savings,” says PenCom Head of Benefits and Insurance Department, Obiora Ibeziako.
On Friday, September 2, Dahiru further responded to the inquiry made to PenCom.
“The payment of pension benefits to retirees is facilitated by the state pension agencies in line with the provision of their respective laws. However, where the state pension law is silent on this, the provision of the Commission’s Revised Regulation on the Administration of Retirement and Terminal Benefits applies,” says, Dahiru on non-payment of pension benefits until the accrued pension is settled.