Nigeria Needs 20 Year Plan To Offset Pension Liabilities – El-Rufai

Nasir El-RufaiGovernor Nasir El-Rufai of Kaduna State has said that Nigeria needs a 20-year plan to be able to offset pension liabilities incurred from moribund national institutions like Nigeria Airways, Nigeria Telecommunication (NITEL), among others.

The governor, who made this disclosure at a stakeholders’ sensitization conference for North –West on pension reform Act 2014 organised by the National Pension Commission on Wednesday, stated that at least 2,484 ghost pensioners was discovered in Kaduna State, saving N1.3 billion annually for the state.

The former Director General of the Bureau for Public Enterprises (BPE), pointed out that Nigeria Airways had a huge pension arrears, adding that the only way to pay such arrears was to privatize and sell the national carrier.

He said even at the sales of the national carrier, it was difficult to settle the pension arrears, “because Nigeria Airways had huge pension arrears, and we concluded to sell its liabilities to pay the pension arrears”.

He also said that by 2001, a step was taken to sell NITEL, which according to him was valued at $500 million.

“But NITEL’s pension liability was N43 billion, it was alot of money then in 2001, and N700 billion was the total pension liability of the Nigeria Airways.

“So there was a big problem, but there is no problem in this world that is new, somebody must have faced it before you.

“We suggested that the Federal Government should pay one percent of the pension liabilities from the federation account, but the then Attorney General of the federation, late Chief Bola Ige kicked against it, saying that it was totally unconstitutional.

“Our plan was that in about 20 years, Nigeria would have been done with pension liabilities.

“We briefed the then President of the country, Olusegun Obasanjo (OBJ), and he said it was a national problem which needed to be solved.

“BPE was only trying to find the solution to the pension arrears, so we pleaded for time to study the pension problem.

“So we set up a committee headed by Kola Abiola, the committee worked for many months, and it was an excellent report, a 3-volume report.

“We submitted the report, and the federal government was happy with the report. OBJ said there was no need for another committee, and that government just have to adopt the template. So OBJ accepted the report”.

Coming back home to Kaduna State, El-Rufai said, “In Kaduna State, we are firmly convinced that the contributory pension scheme is the way to go.

“That is the rationale and logical thing to do for a government that has inherited arrears of gratuity and pension amounting to N14.3 billion, our State Executive Council recently approved a new pension bill based on the contributory model.

“When passed by the Kaduna State House of Assembly, our state pension law will ensure that future retirees from the public service never suffer the pain of unpaid pensions. It will also allow us settle the pension arrears through a Retirement Redemption Fund.

“As we try to tackle the pension mess that we inherited, we have had to verify pensioners. We have since confirmed 2,484 ghost pensioners and we have deleted them from the pension payroll. This will save the government N1.3 billion every year.

“As you all know, ghost pensioners are impossible under a fully contributory pension scheme. Prudence demands that we reject a system that is expensive for the government, often harrowing for the pensioner and prone to so much abuse”.

Earlier, in her welcome address, the Director-General, National Pension Commission (PENCOM), Chinelo Anohu-Amazu, noted that effective and sustainable pension systems remained a challenge in the country as well as in most African countries.

“However, the federal government of Nigeria took a remarkable step in changing the pension landscape through the enactment of the Pension Reform Act (PRA) in 2014. The Act provided novel solutions to what appeared then, as intractable challenges of the old defined benefit scheme”, she said.