The Pension Fund Operators Association of Nigeria (PenOp) says a bill seeking to exempt the Nigerian Police Force (NPF) from the contributory pension scheme (CPS) would cost Nigeria about N3.5 trillion.
In 2021, the bill passed the second reading in the house of representatives.
The proposed legislation seeks to amend Section 5 (1) of the Pension Reform Act of 2014, to include officers of the NPF as part of the categories of persons exempted from the contributory pension.
The contributory pension scheme (CPS) applies to employees in the public service of the federation, the federal capital territory (FCT), states, local government councils, as well as workers in the private sector.
However, members of the armed forces, the intelligence and secret services are exempted from the scheme.
Speaking on Tuesday at a one-day public hearing on the proposed ‘Police Pension Board Bill 2024’, Oguche Agudah, the chief executive officer of PenOp, said implementing the bill would cost the federal government an additional N3.6 trillion.
“It is not really the CPS that is the problem of the police, it is welfare,” Agudah said.
“So what we’ve said is if your salary is small, your pensions will be small. We do understand why the police are agitating. For us, they need their pensions to be higher. But it’s not leaving the scheme that is going to solve the problem.
“Even the IG of police, sometime last year, actually mentioned that if the police are leaving, they are moving from hand to fire, where they are going back to the defined benefits scheme (DBS), whereby their pension is based on budgetary allocation. So leaving the scheme is not the solution because it’s not sustainable.
“If the police are going to leave this scheme, they will need at least 3.5 trillion Naira today, invested every year, at least 10% a year, for them to be able to pay the pensions for about 400,000 police.”
Agudah said the move would strain the national budget and undermine Nigeria’s pension assets, which are currently invested in infrastructure and bonds, contributing to the economy.
‘NPF WITHDRAWAL COULD SET A DANGEROUS PRECEDENT’
Sani Mustapha, executive director of the Contributory Pension and Happy Retirement Advocacy (COPEHRA), warned that the proposed bill to create a separate police pension fund could set a dangerous precedent.
Mustapha said if the police were removed from the CPS, other public sector groups might demand similar exemptions, further eroding the integrity of the pension reform.
Reading a message from an unnamed retired commissioner of Police, Binos Dauda, the bill’s sponsor and senator representing Adamawa south, stressed the significant disparity between the pensions of retired police officers and those of their counterparts in other security agencies.
Dauda said retired commissioners currently receive N70,000 per month as pension.
“The issue is broader than the pension scheme. If you don’t increase the salary of police officers, even removing them from the CPS will not solve the pension problem,” he said.
On his part, Sylva Nwaiwu, the national chairman of the Nigerian Union of Pensioners’ Contributory Pension Scheme Sector (NUCPS), said the reason the NPF is seeking to withdraw from the scheme is because of poor management.
“The problem of CPS is mismanagement. It’s been mishandled and poorly implemented in this country,” Nwaiwu said.
He also asked that all stakeholders (Nigerian workers) stick to the earlier agreement of staying under the CPS.
