Pension Fund Operators Association of Nigeria(PenOp) has described the Bill to create a Police Pension Board that was recently passed by the National Assembly as retrogressive and unsustainable.
In a statement that was issued by head of the association, the pension operators said the lawmakers were insensitive of the dangers posed by the new bill to the reformed pension sector. It also said the Contributory Pension Scheme (CPS) which is in operation currently is very transparent, saying it should serve as a modality for best way to regulate the sector.
Chief executive officer of PenOp Oguche Agudah who signed the statement said
“there is clear visibility into the amount of retirement benefits disbursed by all the PFAs. In contrast, other pension schemes operated in the past, outside of this framework, lack such transparency. The police are pushing to back to this non transparent system.”
The PenOp boss explained that the withdrawal of the police from the CPS would entail a shift back to the defined benefits scheme, leading to the dismantling of the institutions, systems, and processes that the government has established to manage pensions effectively and the reversal is highly counterproductive and undermines the progress made thus far
Agudah said: “This would only add more financial burden on the government through unsustainable pension obligations that it has already made provision for through a private sector managed pension scheme.
“Unwinding investments destabilises the financial system, diminishes assets, and jeopardises the retirees themselves. Moreover, it disrupts fiscal policy and creates an unstable financial system.
“The beauty of the CPS is that the benefit that accrues to one member within the scheme can be enjoyed by all the members. A standalone pension management system as the police is advocating will not benefit from this pooling effect.”
The Police Force had insisted on their right to exit the unified pension sector, citing the “good” experience and benefits of some security agencies including the military who were exempted from begining of the Nigeria sector reform Act of 2004.
