Nigeria needs 20 years plan to offset pension liabilities – El-Rufai

By Gbenga Ogundare

Kaduna State Governor, Nasir El-Rufai has said that Nigeria needs a 20-year plan within which it can offset pension liabilities incurred from moribund national institutions like Nigeria Airways, Nigeria Telecommunication (NITEL), among others.

El-Rufai, who stated this on Wednesday in Kaduna at a stakeholders’ sensitization conference for North-west on pension reform Act 2014 organised by the National Pension Commission said Nigeria Airways had a huge pension arrears, adding that the only way to pay such arrears was to privatise and sell the national carrier.

This is even as the Director-General, National Pension Commission, Chinelo Anohu-Amazu said that effective and sustainable pension systems remained a challenge in the country as well as in most African countries.

According to her; “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 provides novel solutions to what appeared then, as intractable challenges of the old defined benefit scheme”. She said.

However, El-Rufai, who was the Director General of the Bureau for Public Enterprises (BPE), said even with the sale of the national carrier, it was difficult to settle the pension arrears, owing to the huge pension arrears owed by Nigeria Airways, adding that government has concluded to sell its liabilities to pay the pension arrears”.

El-Rufai also said that by 2001, a step was taken to sell NITEL, which was valued at 500 million dollars adding however that NITEL’s pension liability was N43 billion.

He further said; “It was a lot 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”.

On the state of pension systems in Kaduna State, El-Rufai said, his administration is firmly convinced that the contributory pension scheme is the way to go.

According to him; “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”.