Police Pension Board will increase financial burden on Govt – Association
Elizabeth Christopher
The proposed bill to establish a Police Pension Board will increase financial burden of the federal government of Nigeria and destabilise the financial system.
The bill seeks to exclude the Nigeria Police Force (NPF) from the Contributory Pension Scheme (CPS) and returns the force to the old Defined Benefit Scheme (DBS).
With over 300,000 personnel in the police force, stakeholders believe the bill will add trillions to the government liabilities as government will be made to take full responsibility under a defined benefit scheme unlike in the current Contributory Pension Scheme in which employees and employers contribute towards pension.
Speaking on the development, the Chief Executive Officer, Pension Fund Operators Association of Nigeria, Oguche Agudah said the move undermines the progress made in pension reform in recent years.
“The withdrawal of the police from the CPS would entail a shift back to the defined benefits scheme, leading to the dismantling of the institutions, systems, and processes that the government had established to manage pensions effectively. This reversal is highly counterproductive and The Contributory Pension Scheme (CPS) which is in operation currently is very transparent.
“There is clear visibility into the amount of retirement benefits disbursed by all the Pension Fund Administrators PFAS. In contrast, other pension schemes operated in the past, outside of this framework, lack such transparency. The police are pushing to go back to this non-transparent system. “
Mr. Agudah insisted that implementing a separate Pension Board for the police was unsustainable.
“This would only add more financial burden on the government through unsustainable pension obligations that it has already made provision for through a private sector managed pension scheme. Distabilizes the Financial System Unwinding investments destabilizes the financial system, diminishes assets, and jeopardizes the retirees themselves. Moreover, it disrupts fiscal policy and creates an unstable financial system.
“The beauty of the CPS is that the benefit that accrues to one member within the scheme can be enjoyed by all the members. A standalone pension management system as the police is advocating will not benefit from this pooling effect.”
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