.As NISTF cautions workers against sharp practices on salary, pledges prompt payment of compensation
UFOMBA UZUEBU and AKOR SYLVESTER-Abuja
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.
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.So far, many states are yet to implement the CPS.
For a state to implement the CPS in full, the state 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.
PenCom in a statement commended the following states for their exemplary implementation of the CPS as at 31 December 2024: Lagos, Federal Capital Territory (FCT), Osun, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, and Jigawa. These states have set the benchmark for sustainable pension administration by ensuring that retirees receive their entitlements promptly.
They are consistently remitting both employer and employee pension contributions under the CPS. Meanwhile, Jigawa State remits contributions under the Contributory Defined Benefits Scheme (CDBS).Several states have enacted laws to adopt the CPS but have not yet made significant strides towards implementation.
These states include Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba, and Zamfara.
PenCom urged these states to accelerate their efforts toward full implementation of the CPS. This includes the timely remittance of both employer and employee pension contributions.
By taking decisive action, these states can align with the pacesetters in ensuring a secure and sustainable retirement scheme for their workforce.
However, PenCom observed that the following states have yet to commence implementation of the CPS: Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe.
“PenCom strongly encourages these states to expedite the enactment of their CPS laws and take immediate steps toward full implementation to ensure a secure and sustainable pension system for their workforce.
“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.
” Even states that have not transitioned will ultimately need to adopt the CPS. The scheme is designed to ensure that all retirees receive their benefits in a timely manner, providing a sustainable and secure retirement for all public sector employees.
“The CPS offers a long-term solution to the pension liabilities that many states currently face. By failing to address pension arrears, states are inadvertently creating a financial burden for future generations, as these liabilities will continue to grow”, the statement added.
Adopting the CPS now will help states avoid these escalating costs and provide a more secure financial future for both retirees and taxpayers.
Moreover, the CPS 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 remains steadfast in its commitment to driving nationwide compliance with the CPS.
The Commission assured that it would continue to engage with non-compliant states, providing necessary guidance, advisory support, and technical expertise to facilitate their transition.
A pension-secure Nigeria is not just a vision but an achievable reality. However, this can only be realised when all states demonstrate commitment by fully embracing the CPS. PenCom remains fully committed to the effective regulation and supervision of the pension industry.
As NISTF cautions workers against sharp practices on salary, pledges prompt payment of compensation
However, the Nigeria Social Insurance Trust Fund NSITF) has advised workers against joining force with employers to tamper with the salaries or staff numbers they already declared, cautioning them to desist from such practices as it ultimately shortchanges them in the long run.
This is as the fund said compensation to workplace accident victims, will no longer be delayed but be paid promptly.
Managing Director of NSITF, Oluwaseun Faleye who dropped the hint at the launch of the Mass Advocacy and Sensitisation Campaign in Abuja, stressed that compensation paid by NSITF under the Employee Compensation Scheme (ECS) in the event of an accident is based strictly on the declared earnings of an employee and not the manipulated ones.
The NSITF boss expressed worry that a major challenge to enrolling more workers and organizations in the ECS is the lack of awareness and understanding, as well as limited enforcement powers.
According to him: “Every time we’ve had the opportunity to explain what NSITF stands for and what it does, we’ve seen a swift change in perception and attitude. So, I believe the greatest challenge is the lack of understanding and awareness about NSITF’s role. This is why we are committed to deepening engagement with stakeholders,”.
He stated that enforcing compliance remains a major hurdle, saying some employers obstruct NSITF officials during inspections of workplaces, preventing them from assessing health and safety compliance or reviewing records.
Delete said: “We face challenges when our staff go on inspections. They are sometimes prevented from accessing workplaces to check compliance with safety regulations or even verify records.
“We need stronger enforcement powers to ensure organizations comply with the law, including the ability to enter or shut down premises that endanger employees’ lives,”.
He emphasised that beyond enforcement, workers themselves must stop enabling their own exploitation.
“Another major issue is that employees sometimes collude with employers to under report salaries or reduce the declared number of staff, thinking they are doing their bosses a favor. In reality, they are only shortchanging themselves.
“We have seen cases where employees advise their employers to reduce their declared earnings to lower contributions to NSITF. But when accidents happen and we pray they don’t, compensation is calculated based on the reported salary.
“So, if you undervalue your earnings, the NSITF will only compensate you based on what was declared, meaning you receive far less than you should. Employees, especially accountants, finance directors, and payroll officers, should desist from these practices because they will ultimately be the ones to suffer,” Faleye cautioned.
Restating NSITF’s commitment to expanding enrollment and compliance, Faleye disclosed that the fund is targeting informal sector workers, who make up 70% of Nigeria’s workforce, under the ECS’s social security protection.
He said “We are developing a social safety net within the ECS that caters to Nigeria’s dynamic and diverse economy. Soon, we will roll out initiatives specifically for small and medium businesses, road transport workers, and other informal sector participants, ensuring they also benefit from employee compensation protection,”.
He further called on employers of labour to key into the Employee Compensation Scheme which provides compensation for work-related injuries, diseases, disabilities, and death sustained at the workplace.
The Managing Director said the fund was established to provide compensation for serving employees whenever they suffer injuries or accidents in the course of carrying out their duties
He added that the fund would embark on massive awareness creation in collaboration with key stakeholders including the Media.
Among other things he said the fund would do is to hold a quarterly media interactive session to intimate the public on the progress made by the Fund, leverage the traditional and social media platforms to convey messages to its expanding subscriptions, continue to promote prudence and accountability in its affairs, promote operational efficiency and streamline system for productivity and fast service delivery and to unveil empowerment scheme for employees to enhance and expand welfare package for the enrollees.
The Managing Director explained that enrolment into the fund by employers of labour enables NSITF to render assistance to affected workers.
Faleye maintained that the Fund would intensify operational efficiency, enforcement of occupational safety and health standards in the workplace.
He said the fund has compensated over One hundred and three persons who suffered from work related injuries.
On the Launch of the Comprehensive Enlightenment and Enrolment campaign, A consultant with the NSITF, Terfa Tilley-Gyalo said the fund was targeting One million enrollees annually.
According to Tilley-Gyalo, the media remained a key stakeholder in promoting the laudable initiative, as the fourth estate of the realm.
