Connect with us

Economy

FG, States Fail to Fund Workers’ Retirement Accounts

Published

on

civil-servants
  • FG, States Fail to Fund Workers’ Retirement Accounts

Many workers who are retiring under the Contributory Pension Scheme are either unable to get their pensions or earning ridiculously low stipends because the government has been inconsistent with the remittance of its deductions into their Retirement Savings Accounts, NIKE POPOOLA writes

Four years after the Pension Reform Act was amended and employers mandated to raise their contributions into the Retirement Savings Accounts of workers under the Contributory Pension Scheme, the Federal Government has yet to effect the change.

Since the Pension Reform Act was amended in 2014, compliance with regard to remittances of pension contributions from the public sector at both the federal and state levels have been patchy at best.

Findings revealed that direct employees of ministries, who are not under the parastals but being paid by the National Pension Commission with the funds released by the Central Bank of Nigeria, were the most affected.

Latest PenCom figures revealed that only 10 out of the 26 states that had enacted their pension reform laws had commenced remittance of funds into the RSAs of their employees.

While only a few of them have been consistent with remittances, some states have outstanding remittances dating back to two years.

Figures from the commission, however, showed that private sector remittances had been more consistent than that of the public sector.

The PRA was enacted and signed into law in 2004 to provide a contributory scheme for the payment of retirement benefits of employees in both the public and private sectors.

The Act mandated employees to open the RSAs in their names with Pension Fund Administrators of their choice and notify their employers.

In mid-2014, Section 4(1) of the PRA increased the pension contribution from a minimum of 15 per cent to a minimum of 18 per cent of the employees’ monthly emolument.

The Accountant General of the Federation was mandated under Section 12(3) of the Act to effect the deductions of the pension contributions based on the 18 per cent rate and remit same to the RSAs of the Federal Government’s employees.

While many employers in the private sector have complied, the Federal Government has failed to implement its own law.

The low pensions paid under the CPS is a reason why many groups have been agitating for a significant upward increase in pensions, or a total pull-out from the scheme.

Industry experts have said that the default by the Federal Government in implementing the 18 per cent minimum contribution has denied the workers the extra interest that should have been added to their RSAs from the investment of pension funds over the years.

The Chairman, NTA Association of Contributory Pensioners, Alhaji Gbadebo Olatokunbo, observed that the PRA 2014 sought to take care of some of the shortcomings in the 2004 version of the law.

He noted that the PRA 2014 enriched the powers and privileges of PenCom in the affairs of pensioners under the CPS, but expressed worry that the commission was not proactive in solving the plight of the pensioners.

Speaking on the issue of short-changing pensioners in the payment of entitlements, Olatokunbo said, “While some ministries, agencies and departments had discovered wrong presentations to PenCom and acknowledged the mistakes and made corrections themselves, which were later represented, PenCom refused to act on such corrections, while the contributory pensioners continue to lament the wrong entitlement payments.”

The Executive Director, Centre for Pension Right Advocacy, Ivor Takor, stated that the Federal Government had not been adequately funding accrued rights of its employees, who were in service before the commencement of the CPS, thereby causing such workers not to be paid their retirement benefits when they retired from service.

“The government has also not commenced the implementation of the increase in the rates of contribution by employers and employees as provided for in the Pension Reform Act, 2014. This increase took effect from 2014 and meant to enhance the balances in the employees’ Retirement Savings Accounts,” he said.

Takor expressed concern that under the post-reform era, federal public servants were almost back to the pre-pension reform era, where under the Defined Benefit Scheme (Pay-As-You-Go), retired federal public servants were not sure when their retirement benefits would be paid.

“Federal public servants who retired as far back as October 2015 were not paid their retirement benefits under the Contributory Pension Scheme until early 2017. The same for the next of kin of deceased federal public servants within the period. To date, federal public servants who retired in January 2017 are yet to be paid their benefits,” he added.

According to Takor, private sector employees, who are under the same scheme being regulated and supervised by PenCom, using the same Pension Fund Administrators and Custodians, are not facing the same challenge like the federal public servants.

While noting that federal public service retirees and retirees from the states, with a few exceptions, are languishing in abject poverty, he added that the government lacked the political will to do the right thing.

He said, “The irony of the whole issue is that more than 50 per cent of the pension funds generated under the Contributor Pension Scheme are invested in the Federal Government securities and the money is mostly used by the government for recurrent expenditure.

“It is used for the payment of salaries of active staff and other overhead costs. The question then is why is part of that money not being used to fund the Retirement Redemption Bond Account from where the accrued rights of those who contributed to it are redeemed?”

The Acting Director-General, National Pension Commission, Aisha Dahir-Umar, in a memorandum submitted by the commission to the Senate Committee on Establishment and Public Service at the public hearing on pension, said that it was important to address the issue of delay in the payment of pensions to retirees under the CPS.

She attributed the major cause to inadequate funding of the pension accounts by the Federal Government.

The commission sought the implementation of its recommendations presented to the committee on how to address the lingering hardships faced by Nigerian pensioners.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Lagos Loses N1 Trillion to #EndSARS Protest, a Year Budget – Gov

Published

on

Lagos Needs N1 Trillion to Fix Vandalised Infrastructure, a Year Budget – Gov

The Governor of Lagos State, Babajide Sanwo-Olu, has puts the total economic cost of past week destruction and vandalism in the state at about N1 trillion.

Sanwo-olu, who spoke with the speaker of the House of Representatives, Hon. Femi Gbajabiamila, that was on a fact-finding visit to Lagos on Sunday, said the state may spend up to N1 trillion to fix damages done to infrastructure.

Speaking on the situation, Femi Gbajabiamila, said “The House of Representatives will do all it can to compensate all those who suffered brutality including policemen that lost their lives in the process.

“Also whatever the house can do in rebuilding Lagos and other states it will do. We are now in a state of reconstruction. What must be done will be done.

“I learnt from the governor of Lagos State that it will take N1.0 trillion to rebuild what had been lost and I asked him what is the budget size of the state he said about N1.0 trillion. You can see we are moving backward.

Rotimi Akeredolu, Chairman of the South West Governors, who was part of the visit, stated, “We are indeed surprised at the extent of damage to lives and properties in Lagos. We will be right to say Lagos was turned into a war zone.

“We are deeply concerned with the ease with which public buildings, utilities, police stations and investments of our people have been burnt despite the proximity of security agencies to those areas. However, while responding to the total number of government’s buildings burnt among others,” Lagos State Commissioner for Information and Strategy, Mr Gbenga Omotoso, stated.

We are still counting. The state is still taking inventories of all that happened and not until all that is concluded we can’t not ascertained for now the total number of burnt structures. But I can tell you it’s very huge.

Continue Reading

Economy

Experts Recount Nigeria Losses Ahead Possible Rebuilding, Recovery

Published

on

Made in Nigeria Textile

Economic Experts Recount Losses Incurred from the #EndSARS Protest Ahead Possible Rebuilding, Recovery

Economic experts have started releasing reports on the size of the damage done to the nation’s economy following the #EndSARS protest that was hijacked by hoodlums and criminals.

The most affected state, Lagos State, will need about $1 trillion, an equivalent to its annual budget, to recoup the economic value of what was lost to the destruction and looting perpetrated by thieves masquerading as protesters.

A Senior Economist/Head, Research & Strategy, Greenwich Merchant Bank, Ayodeji Ebu, said the unrest and the 24 hours curfew that was later imposed by Lagos State to restore order could cost the state at least N54 billion per day.

He explained that the protest would hurt the nation’s foreign direct investment in the remaining part of the year and as well as the first quarter of 2021.

His words: “While it may be difficult to estimate the exact loss so far, based on the significant contribution of Lagos State (approximately 30%) to Nigeria’s total Gross Domestic Product (GDP) and as over 50 percent of Nigeria’s non-oil industrial capacity is located in Lagos, the impact of the crisis will be enormous.

“This was further compounded with the 24hours curfew that lasted for about four days. Estimating using the Q2’2020 GDP data and assuming there was a total shut down, each day will cost Lagos alone about N54 billon.

Speaking further, Ebu said: “With Lagos the centre of the civil unrest, which account for 70 percent or $1.1 billion of total capital importation in Q2’2020, we expect this to further impact on direct investment in Q4’2020 and Q1’2021.

He expects that insurance claims to also rise in line with the damages done on lives and properties.

Similarly, analysts at Cordros Capital, a Lagos based investment banking firm, reacted to the negative impact of the unrest on the nation’s economy.

The analysts said the nation’s economy could contract by as much as 6.91 percent year-on-year in the final quarter of the year due to the unrest. Therefore, they projected a negative growth rate of 4.15 percent year-on-year for the 2020 fiscal year.

In their words, they said “The transportation, trade, and manufacturing sectors are expected to be the hardest hit.

“On transportation, we expect reduced domestic and international flight operations pending when normalcy is restored.

“Similarly, we expect compliance with curfew directives to hinder the free movement of people and goods across the country, further compounding the woes of the transport sector, which is yet to recover from the COVID-19 induced decline.

“While the manufacturing sector is currently being hampered by FX related issues and an unfriendly business environment, the imposition of curfews will further exacerbate the challenges of the sector.

“For the trade sector, the decline in household consumption brought about by higher food prices and shrinking consumers’ income will cascade into weak wholesale and retail trade in conjunction with the pre-existing supply chain constraints.”

Analysts at Fidelity Securities Limited also added their voices and said the protest may cost the nation more than the N700 billion estimation previously estimated by the Lagos Chamber of Commerce.

They said “The EndSARs protest and eventual escalation of the protest would cost the Nigerian economy way more than N700 billion initially estimated by the Lagos Chamber of Commerce. With the current level of destructions, it may take a while for business to run at full capacity as the government as well as the private sector will first have to channel funding into the destroyed infrastructure in a bid to restore things back to the way it was, before even thinking of further improving on the infrastructure.

“Given the level of destruction, more businesses have been affected, more jobs would be lost, and more families would further fall below the poverty line as a result of the looting and burning of business. This is expected to further worsen the economic situation of the country which was already suffering from the impact of Covid-19. The government at this point would need to think out of the box, if it aims to revitalise the economy in the shortest time, else our GDP growth rate may remain negative even into the new year.

Accordingly, the Electricity Distribution Companies of Nigeria (DISCOs), on Sunday said the destruction of equipment it uses to deliver power and service operations will hurt its revenue generation and service delivery in October and the rest of the fourth quarter.

The DISCOs said “I tell you, assets are been destroyed, which is a significant impact on the industry. The DISCOs are expected to give power and how will it be achieved when our facilities including cables, poles, buildings are destroyed.

“That, however, transcends to money because the DISCOs cannot collect money for bills due to the unrest. Who would want to pay when everybody is angry.

“This means the remittance will be low to the Government on power we have collected. The protest has empowered Nigerians to fight back and the threat to lynch officials collecting bill are high. The properties and cables would have to be fixed on whose account?

“Seriously we are at a crossroad but we have signed an agreement to deliver power and that we would do.”

Continue Reading

Economy

Nigeria Mulls Selling Electricity to Republic of Chad

Published

on

power

Nigeria Considers Selling Electricity to the Republic of Chad

The Federal Government is presently considering selling electricity to the Republic of Chad after a request was made by the neigbouring nation.

The federal government-owned Transmission Company of Nigeria disclosed this on Sunday, adding that a meeting was held last week to discuss the possibilities of plugging the Republic of Chad to the nation’s grid.

Nigeria presently exports electricity to three neighbouring nations, Benin, Togo and the Republic of Niger despite struggling with power supply at home and failed to up its power generation more than the current level of 3,000 -4,500 megawatts in recent years.

On Sunday, the total power generated declined to 3,474.5MW as of 6am, down from 3,776.5MW on Saturday, according to the latest data from the Nigerian Electricity System Operator.

The total number of idle plants rose from 8 on Saturday to 11 on Sunday. These idle plants were Geregu II, Sapele II, Alaoji, Olorunsogo II, Omotosho II, Ihovbor, Gbarain, Ibom Power, AES, ASCO and Trans-Amadi.

A total of twenty-seven plants were presently connected to the national grid, which is being managed by the TCN.

Meeting between Ministry of Power, TCN, and the Chadian Minister of Energy, Mrs Ramatou Mahamat Houtouin, to discuss the possibilities of connecting the Republic of Chad to the Nigerian national grid [was held] on Wednesday, October 21, 2020,” the TCN said on its Twitter handle on Sunday, alongside pictures of the meeting.

Continue Reading

Trending