NPF Pension: PenCom to exempt police from Contributory Pension Scheme

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The National Pension Commission says, the Contributory Pension Scheme (CPS) has provisions which can address the challenges being faced by personnel of the Nigeria Police and other Federal Government Agencies on the administration of their retirement benefits.

The Director General of PenCom, Aisha Dahir-Umar, made this known in Abuja during a public hearing on two pension-related Bills by the House Committee on Pension. They are a Bill for an Act to exempt the Nigeria Police Force from the CPS and a Bill for an Act to further amend the Pension Reform Act 2014 to, among other things, provide for a retiree to withdraw a lump sum of at least 75% from the Retirement Savings Account (RSA) and to criminalize undue delay in the payment of pension and for related matters.

“The solution to the pension challenges of the personnel of the Nigeria Police does not reside in their exemption from Contributory Pension Scheme and reversion to the Defined Benefits Scheme, which is clearly unsustainable,” Dahir-Umar told the Committee. She says the absence of other social security benefits in Nigeria is partly responsible for the clamour by the retirees for exemption or to access substantial amounts as lump sum from their RSA balance. The Director General added to that, the exemption of the NPF from the CPS would result in the dismantling of the institutions, systems and processes that Government had put in place in the last few years towards the implementation of the pension reform programme.

“Exemption of the personnel of the NPF would imply additional financial burden on the Federal Government by way of unsustainable pension obligations. For instance, as at September 2021, there were 304,963 Police personnel based on IPPIS data. An actuarial valuation revealed that the retirement benefits (pension and gratuity) liability of these personnel under the defunct Defined Benefits Scheme would amount to about N1.84 trillion,” she said. On the other hand, she said that the liability under the CPS for the same NPF personnel is made up of N213.4 billion as accrued pension rights and monthly employer pension contributions of about N2.2 billion.

The Director General said to address the concerns of Police Personnel on pension, the employer can review upwards its current contribution rate of 10%. In addition, she said the PRA 2014 further provides that notwithstanding the pension contributions made by employer and employee into the employee’s RSA, the employer may agree on the payment of additional benefits to the employee upon retirement.

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