CALABAR — THE Federal Government has said that its pension liability in the public sector has risen to about N1 trillion. In addition, the government said, "it is envisaged that in a few years to come, pension payments might exceed the salaries of active workers."
Making the disclosure in Calabar yesterday, Head of Civil Service of the Federation, Alhaji Mahmud Ahmed said the government was aware of the fears of workers about their gratuity when the new pension scheme comes into effect. Ahmed spoke at a South-South workshop on public enlightenment and sensitization on the contributory pension scheme by the civil service in collaboration with World Bank Economic Management Capacity Building Project, EMCAP.
Represented by the Permanent Secretary, Establishment and Pension, Alhaji Shehu Suleman, the Head of Service said that "while the pay-as-you-go system provides gratuity, the contributory scheme allows you to exercise your freedom to determine what you can take away as a lump sum." He said the take-away arrangement which will be in agreement with the employer’s pension fund administrator may even be greater than gratuity.
Justifying the reason for the scheme, he said "the decision to introduce the contributory scheme to be funded by both the employee and the employer to replace the pay-as-you go scheme which is wholly funded by the government, was informed by the success we have observed worldwide, and even here in certain private sector organizations. Therefore, this underscores the priority and commitment of President Obasanjo to provide enduring solution to the problem of pensions administration in the public sector. The Federal Government, however, recognizes the pains associated with the pension and other ongoing reform programmes, but the entire reform agenda is aimed at sustaining democracy and entrenching the principles and practice of good governance in the polity.
"The overall aim is to translate government actions into concrete deliverables to transform the quality of life of our people. Therefore, we have to make sacrifice and bear the pains now for the future generation of Nigeria to enjoy. Let me reiterate that the Obasanjo administration has the political will and determination to carry Nigeria along the path of development as experienced in other parts of the world.
It may interest you to know that more than three quarters of the world pension schemes are contributory and are working successfully. The consequences of not taking a cue from other nations may be adverse. At the moment, the pension liability of the public sector is about N1 trillion and it is on the increase by the day. It is also envisaged that in a few years to come, pension payments might exceed the salaries of active workers.
"I have learnt with pleasure, that some states notably Katsina, Jigawa, Lagos and Bauchi have been setting aside funds in preparation for the contributory pension scheme."
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