Monday, 27 July 2015

REFORMS: Here are the CHANGES and ACTIONS in Pension Funds in Nigeria.

Pension Reforms

Problem: The public service operated an unsustainable unfunded pension system that
meant that outstanding pension liabilities, as at 2003 stood at ₦2 trillion.

Reform Actions:
Introduction of a contributory pension scheme
- Pension Reform Act 2004
Establishment of National Pension Commission (PENCOM)
- Establishment of PTAD
- Pension Reform Act 2014

  • Main Achievements: Pension funds in Nigeria have grown from ₦43 billion deficit in 2004 to ₦4 trillion credit in 2014. The contributory pension scheme has drastically reduced pension costs to government. More people are now enrolled in the pension scheme, and the payment of actual pension benefits is now guaranteed. Pension reforms have reduced bureaucracy and ‘red-tape’ and the quality of pension administration has also improved. The establishment of the Pension Transitional Arrangement Department (PTAD) is a positive step as there is now a proper management framework for administering the old scheme. Reforms by PTAD has weeded out 15,000 ‘ghost pensioners’ and saved government N2 billion.

    Key Challenges: (a) On-going pension fraud cases, although there have been no new reports of pension fraud since the establishment of PTAD; (b) there is no comprehensive database of pensioners, (c) there is no home-grown mortality table, (d) there is weak regulation of Pension Fund Administrators (PFAs), (e) refusal of some labour unions to migrate to the contributory Pension Scheme and (f) pensioners are not getting their entitlements in a timely manner, as there is an appreciable delay between when a pensioner is cleared by the National Pension Commission (PENCOM) and when the PFA starts to pay the entitlements. 

  • Reference:  Public Service Reforms in Nigeria (1999-2014) - A Comprehensive Review

    Click to view Compendium 

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