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.
PenCom in a statement observed that many states are yet to implement the CPS, adding that for a state to implement the CPS in full, it 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.
According to the publication, Lagos state, the Federal Capital Territory (FCT), Osun state, Kaduna state, Ekiti state, Edo state, Ondo state, Delta state, Benue state, Anambra and Jigawa states showed exemplary implementation of the CPS as at 31 December 2024. These states, PenCom say have set the benchmark for sustainable pension administration by ensuring that retirees receive their entitlements promptly and are consistently remitting both employer and employee pension contributions under the CPS. Meanwhile, Jigawa State remits contributions under the Contributory Defined Benefits Scheme (CDBS).
The states that have enacted laws to adopt the CPS but are yet to make significant strides towards implementation include Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba, and Zamfara states.
The commission therefor urged the states to accelerate efforts toward full implementation of the scheme.
However, PenCom listed out states that have yet to commence implementation of the CPS to include: Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe. The commission encouraged them to expedite action toward full implementation to ensure a secure and sustainable pension system for their workforce.
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. 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 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.
The transition from the Defined Benefits Scheme (DBS) to the CPS at the state and local government levels is both a significant and inevitable step, the statement added.
A cardinal benefit of the CPS according to PenCom 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 stated it remains steadfast in its commitment to driving nationwide compliance with the CPS and will continue to engage with non-compliant states, providing necessary guidance, advisory support, and technical expertise to facilitate their transition.
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