People & Money

Killing Them Slowly: Nigerian Pensioners and Decades-Old Arrears  

“Apart from this, the state also owes monthly pension payment that totals more than 70 Billion Naira according to the Benue State Chapter of the Nigeria Union of Pensioners (NUP). A monthly pension payment is what pensioners are supposed to live on but the Benue government owes more than 74 months of this crucial payment. How are Benue pensioners supposed to survive? “

“For example, in Ogun State, the government owes 68 Billion Naira in gratuity arrears…and at his current rate of repayment, it would take Ogun State 26 years to clear the backlog”.

A popular prayer in Yoruba is, “may our children care for us in our old age.” Unfortunately for many aged Nigerians who worked in the civil service, their “children” in the service and in government have not only refused to care for them but also denied them their entitlements. Across the length and breadth of this country, retirees are struggling to access their gratuity and monthly pension payments. Across Nigeria, hundreds of billions of naira are owed to people who are in the twilight of their lives. 

For example, in Ogun State, the government owes 68 Billion Naira in gratuity arrears. The incumbent governor, Dapo Abiodun blames past governments in the state for the debt but three years after becoming the governor, he is yet to make any significant dent in the debt. Instead, the governor has paid only N2.5B out of the arrears, and at his current rate of repayment, it would take Ogun State 26 years to clear the backlog. By 2048, one can expect that most, if not all, of these retirees, would be long dead, killed by sickness or old age and the betrayal of their state. With more than 100 Billion Naira in internally generated revenue (IGR), Ogun can clear this backlog within three years by dedicating just 25% of its IGR to this. 

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In Benue, the state government owes more than 22 Billion Naira in gratuity arrears, and 80% of this has been owed for more than eight years. Gratuity is supposed to be paid to an employee on retirement. It is not meant to be delayed at all. Benue, like many other states, is now used to delaying its payment indefinitely. Apart from this, the state also owes monthly pension payment that totals more than 70 Billion Naira according to the Benue State Chapter of the Nigeria Union of Pensioners (NUP). A monthly pension payment is what pensioners are supposed to live on but the Benue government owes more than 74 months of this crucial payment. How are Benue pensioners supposed to survive? 

To be clear, gratuity and pension are not handouts. The government is not doing its ex-workers a favour by paying them their entitlement. These are monies that workers already earned with their decades of service to the state. It is a matter of legal contracts that should never be handled lightly. However, governments at all levels have treated the need to pay pensions as optional.

There is rarely any preparation for the retirement of workers. The obligation to pay pensions is very certain but governments treat the need to pay retirees as an unforeseeable tragedy to their finances. 

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This attitude was what led to the contributory pension system that was introduced by the administration of President Olusegun Obasanjo. Through the Pension Reform Act 2004, the government attempted to end the era of the “unfunded Defined Benefits Scheme” that had caused an atrocious accumulation of billions of naira in unpaid pensions and gratuities. The reform however could not save people who had already retired by 2004 and those who had served most of their time in service by then. It would have been great if employers had been required by the law to dedicate a certain percentage of their federal allocation to clearing pre-2004 gratuities and transferring the remaining pension liability to newly established privately run pension managers. Instead of workers having to deal with governments that are impossible to hold accountable, they would be dealing with private pension companies that have so far proven themselves more reliable than governments. 

Another issue with the pension reform and how it is implemented is the loophole that allows state governments to refuse to remit pension contributions to their employees’ pension managers. While private and public employers are now required, since 2004, to remit monthly pension deductions (minimum of 10% of salary paid by the employer, 8% of salary paid by employees), there is no way to hold government employers to this responsibility.  There are many states including Osun that not only refuse to remit their own 10% but also fail to remit their employees’ 8% contribution which they keep deducting. Deduction without remittance is just pure evil, but nothing is beyond employers who even steal their employees’ cooperative and union levies!

It’s high time we all came together to do something about this issue. Governments, especially state governments, are getting away with cold-blooded murder. There has to be a way to hold them accountable for their decision to deny gratuity and pension to their retirees. 

Sodiq Alabi

Sodiq Alabi is a communications practitioner and analyst who has experience in leading and supporting communication processes. He has expertise in organising media events, preparing reports, creating content, and managing websites and social media platforms.

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