The low level of workers’ enrolment in the mandatory National Pension Scheme has, once again, been brought into bold relief by disturbing statistics recently released by the National Pension Commission (Pencom). According to the figures, only 7.24 million employees, representing a dismal 7.7 per cent of the country’s workforce, were contributing to the compulsory National Pension Scheme as at September last year.
A further breakdown of the PenCom figures shows that only four per cent of the country’s total population has been accounted for in the scheme. It is no surprise, therefore, that 70 per cent of the working population, mostly in the informal sector, has not been captured in the scheme, while 92.3 per cent of workers in the country have no form of insurance whatsoever to cater for them after their retirement and in their old age.
It is a very scary scenario. It is bad enough that the Pension Reform Act (PRA) came into effect only in 2004, but much worse that it is being largely ignored and not complied with by the majority of workers and employers of labour in the country. Sadly, it is the different levels of government and their agencies that are most guilty of this failure to enrol their workers in the scheme. In this situation of widespread default by governmental organisations, what can be expected of the private sector? The Pencom scheme provides for a contributory pension scheme, which allows employers to deduct whatever is due from their workers’ salaries and remit it to their Retirement Savings Accounts (RSAs) with their Pension Funds Administrators (PFAs) until they retire, and are able to access the funds.
But, what do we find? It is either these deductions are made and not remitted at all, or at best, remitted haphazardly and made nonsense of in the end. Some employees retire only to discover that they have been shortchanged. This leaves them and their families stranded, and the country with a number of avoidable problems. First, the retirees cannot access funds that they are supposed to have contributed to their RSAs. This creates an army of helpless retirees living in poverty. Non-enrollment in the scheme and employers’ failure to regularly remit workers’ contributions leave the country with too many citizens who cannot take care of themselves and are in need of social welfare in their old age.
This is why the country must now work very hard to reverse some of these dismal statistics which give us away as an underdeveloped country. Enrolment in pension schemes is the best form of defence against the uncertainties of retirement and old age. In advanced countries, the compliance level of citizens and both governmental and non-governmental organizations with their pension laws is reflective of their understanding of this point.
The four per cent compliance level of the total national population which the scheme has achieved is too low. Serious efforts should be made to bring more people into the pension coverage net. This will involve proper enlightenment programmes and the strict enforcement of the Pension Reform Act. Unfortunately, it is the same government that should take the lead in compliance and enforcement that is in greatest default.
Government must be reminded of how some of its failures in the past have promoted systemic corruption. When a worker who has given his all suddenly discovers upon retirement that there is very little or nothing to fall back on in his old and vulnerable years, what signal are we inadvertently sending to those left in service? Have our governments and employers given adequate thought to the time-tested aphorism that a society is known by the way it treats its old and vulnerable citizens? More than pensions and gratuities, insurance schemes, when well funded and adequately managed, ensure a life of dignity and fulfillment for workers during their retirement and old age.
It has become necessary to call on operators of the pension scheme to ensure a better projection of the scheme and its benefits. The challenges of the scheme, such as low enrolment, delayed remittances into workers’ Retirement Savings Accounts and the ridiculously low pensions that cannot really guarantee basic decent living for participants in their old age, should be addressed. When Nigerian workers actually see the gains of the pension scheme in the lives of their retired colleagues, they will be more receptive to advice to enrol in the National Pension Scheme.