'Why Pension Schemes Fail in Nigeria'
From Kunle Aderinokun and Iyefu Adoba in Abuja, This Day Online
May 18, 2004
The failures of pension schemes in the country have been attributed to poor pension fund administration, outright corruption and embezzlement of pension fund as well as inadequate build-up of funds and poor supervision.
Pointing these out yesterday in his keynote address at the 2nd Biennial Pension Schemes Seminar in Abuja, Commissioner of Insurance, Dr. Oladipo Bailey also cautioned that a mass purge of the public sector would only serve to aggravate the situation.
Highlighting crucial areas affecting pension schemes in the country, Bailey said even though present public service pensions are paid from the consolidated revenue fund of the federation, the Federal Government finds it difficult to grapple with the enormous amount involved.
He said, "A scenario has been painted where, in the absence of reforms, the annual pension bill may in the long run, equal or exceed the annual wage bill of the active work force."
As a solution, the NICON boss, however, said there "seems to be a consensus in favour of a shift from a non-contributory to a contributory pension scheme in the public service.
"It is believed that this would eliminate the perennial problem of shortage of funds for pension payments, and even enable government to borrow from the accumulated fund or contributions," he explained.
Consequently, Bailey re-iterated that the executive has initiated a bill now before the National Assembly aimed at introducing a contributory and fully funded pension scheme in the public service.
Also, as a way out of the predicament, Bailey said there was a need to engage the services of qualified actuaries, who could professionally calculate and estimate the cost implications on year-to-year basis, with projections into the future.
According to him, "this would facilitate planning purposes, as opposed to the present situation where the government sits back until it suddenly receives scary financial figures as pension bills due for settlement."