Introduction
SINCE we began the in-depth state-by-state discussion of the status of implementation of the Contributory Pension Scheme (CPS) in states on February 25, 2021, we have looked at Lagos, FCT and Kaduna States in an analysis that is based on information sourced from the website of the National Pension Commission (PenCom), the regulator of pension in the country. Today, we will be discussing Delta State.

Governor Okowa

Status of implementation by Delta State
Delta State is one of the states that have keyed into the CPS. We are, therefore, going to look at the status of the implementation of the scheme in the state as at September 2020.

Enacted Law on Contributory Pension Scheme
Delta State enacted the law on CPS in 2008 and amended it in 2011.

Establishment of Pension Bureaus
The state has established two Pension Bureaus, one for local governments and the other for state.

- Notice -

Registration of Employees with PFAs and Rates of Contribution
The state has gotten her employees registered with Pension Fund Administrators (PFAs), where they have opened Retirement Savings Accounts (RSAs). The rates of contribution are as follows:

(i) A minimum of ten percent (10%) by the employer; and
(ii) A minimum of seven and a half percent (7.5%) by the employee.

The state last remitted pension contributions for local governments employees in April 2020 while the last remittance for state employees was October 2020.

Conducted Actuarial Valuation
The state has carried out actuarial valuation of the scheme. This is with a view to ascertain its pension liability based on accrued rights of workers who were in the service of the state before the commencement of the CPS. Haven ascertained the accrued rights of these workers; the state is expected to fund the accrued pension rights.

Retirement Benefits Bond Redemption Fund Account
The state has opened a Retirement Benefits Bond Redemption Fund Account, referred to as “Redemption Fund”, with the Central Bank of Nigeria (CBN). The state is funding the account, which is being invested and managed by the CBN. The Fund is being used to pay accrued pension rights of employees who were in employment before the commencement of the CPS. The state has huge arrears of accrued rights.

Group Life Insurance Policy
Delta State has not taken group life insurance policy for her employees. The purpose of group life insurance policy is for the payment of death benefit for employees who die while still in service.

Section 4(5) of PRA 2014 provides that: “In addition to the rates specified in sub-section (1) of this section, every employer shall maintain a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee and premium shall be paid not later than the date of commencement of the cover.

Sub-section (6) further provides that: “Where the employer failed, refused or omitted to make payment as and when due, the employer shall make arrangement to effect the payment of claims arising from the death of any staff in its employment during such period.

Most states that have adopted the CPS have also adopted this provision in PRA 2014 and domesticated it into their pension laws. The question that needs to be answered by the Delta State government is where then lies the fate of employees who die within this period?

Conclusion
The huge arrears of accrued rights will become a clog in the smooth implementation of the CPS in the state. Without adequate funding of Accrued Rights, employees will not be able to receive their retirement benefits immediately they retire. These delays should be appropriately put at the door steps of the state government and not that of Pension Fund Administrators (PFAs).

The state should save her senior citizens, who have spent all their active lives in developing the state and ensuring her progress, from old age destitution by adequately funding accrued rights. The state should as a matter of urgency take group life insurance policy for the payment of death benefits.

 

- Notice -

LEAVE A REPLY

Please enter your comment!
Please enter your name here