The federal government’s debt of N314,517,628,569 billion owed to retirees under the Contributory Pension Scheme (CPS) is set to increase as the National Salaries, Income and Wage Commission has exempted them from the implementation of the new pension rates for pensioners.
Finding by this newspaper showed that the amount owed is arrears of pension increments for the benefit of retirees under the CPS from the 15 per cent increment in 2007; 33 per cent increment in 2010; consequential adjustment in 2019 following the increment in minimum wage and 20 per cent to 28 per cent increment in 2014.
This was revealed by the National Pension Commission (Pencom), in a letter to the Minister of Finance and Coordinating Minister of the Economy, signed by its director-general, Aisha Dahir-Umar, dated May 3, 2014.
In the letter, PenCom drew the minister’s attention to the consistent exclusion of retirees under the CPS in pension rate increases, whereas their counterparts in the Direct Benefits Scheme (DBS) have been enjoying same.
Noting that it amounts to a fundamental breach of their Constitutional rights as enshrined in Section 173 (3) of the 1999 Constitution, the Pencom DG pointed out that while the federal government’s gesture of implementing the constitutional requirement for pension increase was commendable, the commission was concerned about the exclusion of the CPS retirees.
She recalled previous correspondences to the federal government calling its attention to the issue, including a letter dated February 21, 2024 to the tripartite committee of the National Salaries, Income and Wage Commission on the national minimum wage, another letter dated March 11, 2021 to the office of the Secretary to the Government of the Federation, and a letter dated March 4, 2024 to the House of Representatives committee on pensions, technical sub-committee on investigation.
Dahir-Umar said: “Without prejudice to the above, the honourable minister is invited to recall that the federal government hd, pursuant to Section 173 (3) of the Constitution approved pension increases of 15% in 2007 and 33% in 2010 respectively, following salary reviews in the Public Service. There was also a subsequent consequential adjustment in the pension benefits of FGN retirees, following the federal government’s approval of N30,000.00 minimum wage in 2019.
“Accordingly, the commission had, in line with Section 39 (3) of the PRA 2014, submitted to the Budget Office of the Federation on an annual basis, the financial implications for the implementation of the pension increases for retirees under the CPS.”
Continuing, she added that: “It is, however, worthy of note that the necessary appropriation and release of funds for the implementation of the pension increases and the consequential adjustment is yet to be effected. Consequently, while the pension increases of 2007 and 2010 and the consequential adjustment of 2019 have been implemented for retirees under the Direct Benefits Scheme, the same are yet to be extended to retirees under the CPS…
“It would, therefore, appear that the present circular issued by the National Salaries, Income and Wage Commission is a continuation of this non-implementation of the constitutional and legal right of retirees under the CPS.”
The commission said the continuous exemption of the CPS has the potential to undermine the federal government’s pension reforms.
It, therefore, called on the federal government to look into the issue as doing so would enhance the quantum of retirement benefits of retirees under the CPS, thereby addressing the pension adequacy concerns advanced in support of the agitations for exemption from the CPS
