Stakeholders in the Contributory Pension Scheme are reacting to issues emanating from different sectors on the need to use the pension funds which stood at N10.2tn as palliatives as a result of the effects of COVID-19 effect on the country.

According to the pension operators, the Pension Reform Act which introduced the CPS into the country had stipulated guidelines on how the funds should be administered.

The President, Nigeria Labour Congress, Ayuba Wabba, had opposed the use of the pension funds as palliatives for workers as a result of COVID-19.

While answering questions during the Presidential Task Force on COVID-19 in Abuja, he said there was a need to protect the money and the owners of the contributory pension.

According to him, such money should not be used as palliatives.

The Director, Centre for Pension Right Advocacy, Ivor Takor, said it was impossible for the government to take pension fund for any purpose outside the law establishing the fund.

He said,

In the first place, almost 70 per cent of the funds had been invested in government treasury bonds. The money is not cash.

Assuming without conceding that it can be used for COVID-19 palliatives, then the government will have to first provide the cash to buy back the bonds.

He said, the federal and state governments workers’ accounted for less than 50 per cent of the value of the over N10tn contributory pension fund.

He said the balance was owned by private sector workers.

According to him, the composition of the fund was the contributions of public sector workers, private sector workers and the return on investments.

Takor said the fund was being used for the payment of current pensioners under the Contributory Pension Scheme and future pension for current workers (contributors) in both the public and private sectors.

The fund is in the respective Retirement Savings Accounts of the pensioners and workers,

he said.

According to him, part of the funds, had been used to purchase annuity with life insurance providers, for retirees who opted for annuity as against programmed withdrawals housed by Pension Funds Custodians and managed by the Pension Funds Administrators.

He said,

We conclude by siding with the NLC President’s position that the contributory pension fund cannot be used for COVID-19 palliatives now or in the future.

Rather the fund should be protected for the achievement of objectives for which it was established.

We also want to remind all that the Federal Government lacks jurisdiction over the management of the fund; the mandate of the government is to provide the enabling law and the regulation of the fund.

The spokesperson for the National Pension Commission, Mr. Peter Aghahowa, said only workers who lost their jobs during the coronavirus pandemic would be able to get a quarter of the savings in their Retirement Savings Accounts to cushion their hardship after four months of job loss.

He said that it had been observed that there might be likely increase in job loss due to the effect of the pandemic.

According to him, the palliatives the sector would give to those who had been contributing into the scheme would be to allow them to access a quarter of the balance in their funds if they failed to get another job after four months.

He said,

The contributory pension is designed with in-built palliatives, which is being able to access 25 per cent of your Retirement Savings balance in a situation whereby you lose your job.

So if you lose your job, after four months you can access 25 per cent of your RSA contribution.

The Chief Executive Officer, Pension Fund Operators Association of Nigeria, Oguche Agudah, while speaking on the operators activities during the COVID-19 lockdown, said,

For pension operators, during this period, we have all been open for business via our e channels – we have thus been paying benefits to retirees and those who have filed for job losses in line with the pension act.

Very importantly, all our investment teams are also working to actively manage investments during this period to ensure they make the best decisions for the long term value of all contributors.

Furthermore, all individual pension operators have increased their CSR activities including supporting health workers, hospitals in need and vulnerable groups during this period.

Justin Nwosu

Justin Nwosu is the founder and publisher of Flavision. His core interest is in writing unbiased news about Nigeria in particular and Africa in general. He’s a strong adherent of investigative journalism, with a bent on exposing corruption, abuse of power and societal ills.