Tough Retirement Awaits Workers

... As 31 States Fail To Provide Pension Coverage

Despite the requirement in the Pension Reform Act of 2014, thirty-one states of the federation have no insurance coverage in place for workers as of March 2021.

The figures acquired from PenCom’s ‘Status of implementation of the CPS in states as at March 2021’ indicated that just five states including the Federal Capital Territory had an insurance cover for its employees. The states in accordance with PenCom’s provisions with pension plans for their workers are Lagos, Osun, Ondo, and Edo.

Lagos passed a CPS law in 2007, revised several aspects of the main law in 2019, and established a Pension Bureau. Lagos has also registered its employees with PFAs and makes regular remittances of 10 per cent employer and 8 per cent employee pension contributions. An actuarial valuation was performed, as well as funding the employees’ accrued pension rights, however, there are arrears. Lagos recently established Retirement Benefits Bond Redemption Fund Account with two PFAs for state and local governments.

In the case  of Osun State, it passed a CPS law in 2008 and has a legitimate Group Life Insurance Policy. Accounts for Retirement Benefits Bond Redemption Funds have been opened with the established two Pension Bureaus (State & Local Governments). Osun has registered its employees with PFAs and is remitting 7.5 per cent employer and 7.5 per cent employee pension contribution for state personnel.

However, from May 2019 to July 2020, there is a backlog of pension contributions and Osun State has insufficient funding of Accrued Pension Rights. The state has a backlog of unremitted pension contributions as well as massive arrears of payments according to the report.

Ondo State for its part, enacted a CPS law in 2014. It has a legitimate Group Life Insurance Policy, and has formed a Pension Bureau. Ondo also registered its employees with PFAs and remitted 10 per cent employer and 8 per cent  employee pension contributions till January 2021. Employees covered by the CPS do not have Accrued Pension Rights in Ondo state, hence there is no Actuarial Valuation.

In 2010, the state of Edo passed a CPS law (amended the Law in 2017). It created a Pension Bureau and has registered state employees with PFAs and is remitting 10 per cent employer and 8 per cent employee pension payments and remittances on time. As of the reporting date, Edo Conduct of Actuarial Valuation was still in progress. Edo is covered by a valid group life insurance policy. The Accrued Pension Rights have yet to be funded and the CBN has yet to launch a Retirement Benefits Bond Redemption Fund Account.

The lack of insurance demonstrates that when the private sector ignores group life insurance, it is basically following in the footsteps of state governments. Normally, state governments would be expected to uphold laws, but their actions have demonstrated a disregard for the law and its workers.

Furthermore, insurance benefits are not just for the employees but also the management, that is, the government. It is to ensure that the families of those who work with them are safe regardless of what happens.

Speaking to NATIONAL ECONOMY, the director, Centre for Pension Right Advocacy (CPRA), Mr. Ivor Takor, charged the unions in the public sector to rise up to the plight of the state workers by compelling state governments to insure the lives of their workers, adding that, while fighting for salary increment, he said, the pension and insurance packages of workers should also be utmost.

“It is now obvious to everybody that the state governors cannot do anything for the welfare of the workers unless they are compelled to do it. So, if the public sector unions don’t get up and ensure they implement these things, those states will not do anything,” he stated.

Earlier, the past executive secretary, Nigerian Council of Registered Insurance Brokers(NCRIB), Mr. Fatai Adegbenro, had said, the council has been approaching different state governments to see the need to procure life insurance for their workers, hoping for a new down soon, adding that, their body language is positive.

Speaking in an exclusive interview with NATIONAL ECONOMY recently, the managing director/CEO, FBNInsurance Limited, Mr. Val Ojumah, attributed the apathy of States on insurance of their workers to lack of enforcement of insurance laws, adding that, the Act that establishes the group life insurance too did not prescribe any punishment for defaulters.

According to him, “I will attribute the apathy to lack of insurance enforcement because nobody or an entity has so far been punished for evading this insurance. Another reason is that PRA 2014 Act that mandates employers to procure group life policy for their employees did not specify any punishment for defaulters. Since there is no compulsion in the Act, the state governments have a choice to either Insure or not.”

Even though the law is made by the government, he said, government at the federal and state levels have consistently shunned insurance policies, which, he said, was responsible for low insurance adoption in the country.

“If the government as the maker of the law cannot lead by example, then, there is no justification for the private sector or an individual to purchase insurance policies. This has been the reason why Nigerians are not insuring. So, subscribing to insurance policy now becomes moral-suasion,” he pointed out.

While calling for an overhaul or a review of the existing insurance laws, he said, a new law that will arise from such review should prescribe heavy sanctions for defaulters, even as this must be enforced to the latter.

With such enforcement, he believes, federal, state and local governments, including the private sector players will sit up, hence, leading to rapid increase in insurance adoption and penetration in the country.

“We have compulsory insurance of which group life is one of them. But the question is; without enforcement, are they really compulsory?” he queried.

Meanwhile, organised labour are appealing to the defaulting state governments to, as a matter of urgency, procure group life insurance for their respective workers, a development, they said, would enhance workers’ dedication to work, knowing that, whatever happens to them, while in service, there is an insurance cover to take care of their families.

In an exclusive chat with NATIONAL ECONOMY earlier, the secretary general, Association of Senior Civil Servants of Nigerua (ASCSN), Comrade Lawal Basir, had said, defaulting state governments are just toying with lives of workers which is an indication that they don’t value human lives.

“Despite the dedication of workers, especially, under the precarious security challenges across most states of the federation, it is inhumane not to insure them. It shows lack of responsibility on the part of the states, who have not only refused to pay the N30,000 minimum wage, but are also running away from the responsibility of financing the group life insurance of their workers,” he pointed out.

He added that, “the political class are only interested in themselves and their immediate families, so, civil servants in such states are not secured. It is not so in advanced countries. We are just appealing to governments of those states to have honour and give value to human beings that are risking their lives for work on daily basis.”


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