WE began an in-depth state-by-state discussion of the status of implementation of the Contributory Pension Scheme (CPS) in states on February 25, 2021 based on information sourced from the website of the National Pension Commission (PenCom), the regulator of pension in the country. We last discussed implementation in Delta State. Today we will be discussing Edo State.
Status of implementation by Edo State
Edo State is one of the states that has keyed into the CPS. We are therefore, going to look at the status of the implementation of the scheme in the state.
Enacted Law on Contributory Pension Scheme
The state enacted a law on CPS in 2010 and amended the law in 2017.
Establishment of Pension Bureaus
The state has established a Pension Bureau.
Registration of Employees with PFAs
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 had remitted pension contributions up to date, as at the time of the PenCom report, which is September 2020.
Conducted Actuarial Valuation
The state was still conducting actuarial valuation as at the time of PenCom’s report of the period under review. This is with a view to ascertaining its pension liability based on accrued rights of workers who were in the service of the state before the commencement of the CPS. After ascertaining the accrued rights of these workers, the state is expected to fund the accrued pension rights.
Retirement Benefits Bond Redemption Fund Account
The state is yet to open a Retirement Benefits Bond Redemption Fund Account, referred to as “Redemption Fund” with the Central Bank of Nigeria (CBN), which is expected to be funded by the state. The fund will then be invested and managed by the CBN and used for the payment of Accrued Pension Rights of employees who were in employment before the commencement of the CPS.
Without the funding of accrued rights of employees who were in service before the commencement of the CPS, it will be very difficult to pay pension to this category of staff on retirement. Moreover, it is this category of staff who are currently retiring statutorily, having attained either the mandatory retirement age or put in the mandatory length of service for retirement.
Group Life Insurance Policy
The state has taken valid Group Life Insurance Policy for her employees. The purpose of group life insurance policy is for the payment of death benefit for an employee who dies 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.”
Subsection (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 of PRA 2014 and domesticated it into their pension laws.
The non-funding of Accrued Rights component of pension scheme is a clog in the smooth implementation of the CPS in the state. Without funding of Accrued Rights, employees will not be able to receive their retirement benefits immediately they retire. This delay 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.