The National Pension Commission has said that it will direct Pension Fund Administrators not to invest in bonds issued by state governments that have failed to comply with its Contributary Pensions Scheme.
The Commission said the decision is part of efforts to ensure compliance from state government across the country.
PenCom’s Head Contribution and Bond Redemption Department, Abdulrahman Saleem disclosed this on Tuesday at a conference held in Lagos.
Saleem said, “MDA’s are not responsible for remitting, government is responsible for remitting. Right now at the office of the Accountant General we have IPPIS, they are responsible for the payment of salaries to all treasury funded agencies and they deduct the pensions from those employees and remit to the PFAs.
“However, there are self-funded agencies that remit directly for their own employees. Nigerian Deposit Insurance Corporation is remitting, Central Bank of Nigeria is remitting. All these are self-funded agencies; the Securities and Exchange Commission and PenCom. As they are paying salaries, they are remitting. We have a lot of them.
“The issue of states is different as they are at liberty to write their own laws. It is very clear that it is when they write their own laws that they can be able to remit. Those that haven’t done the law are not able to implement the CPS.
“We don’t have the power to sanction these states. So, the only thing we can do is to restrict them from the contribution proceeds. There are benefits from the contributor pension scheme and we will deprive those states that have not complied.
“For example, they cannot enjoy PFAs bonds. If they float their own, we will ask PFAs not to invest in those bonds. There are some concessions that we are giving some states which we will not give those states.”
The CPS was enacted 17 years ago under the Pension Reform Act 2004.
Based on the scheme, employers (states) and the employees were mandated to contribute a total of 17.5 per cent of the amount in credit to the Retirement Savings Accounts (RSAs) of the individual workers, maintained with the Pension Funds Administrators (PFAs).
PenCom had disclosed that in the first quarter 2021, 25 states of the federation had enacted pension laws on the CPS, while seven states were at the bill stage.
But only five states among those that have commenced the implementation of the scheme have retirees earning pensions under the scheme.
The States include Lagos, the Federal Capital Territory, Osun, Kaduna and Delta.
Carol Alex-Uzomah, Assistant General Manager Corporate Communication in her remark reiterated that only five states have so far complied with the CPS which is affecting the target of the commission to deliver its mandate.