Pension operators have warned that exempting the Nigeria Police Force from the Contributory Pension Scheme could cost the Federal Government N3.5tn annually.
They disclosed this at a one-day public hearing on the proposed “Police Pension Board Bill 2024” at the National Assembly in Abuja on Tuesday.
This estimate comes amidst concerns about the financial sustainability of the police pension system if the police are removed from the CPS.
Chief Executive Officer of the Pension Fund Operators Association of Nigeria, Oguche Agudah explained that such a move would create unsustainable financial burdens on the country’s budget.
“If the police are going to leave this scheme, they will need at least 3.5tn today, invested every year, at least 10 per cent a year for them to be able to pay pensions for about 400,000 police personnel,” Agudah stated.
He emphasised that this would not only strain the national budget but also undermine Nigeria’s pension assets, which are currently invested in infrastructure and bonds, contributing to the economy.
Agudah’s position was echoed by other stakeholders, including representatives from the National Pension Commission, who cautioned that the move could lead to severe fiscal challenges and destabilise the pension system, which currently manages over N21tn in assets.
The pension operators also highlighted that while the police’s concerns over pension adequacy are valid, removing them from the CPS is not the solution.
The scheme’s existing framework allows for increases in contributions and benefits, offering a more sustainable and transparent way to address these concerns.
In contrast, a Deputy Inspector General of Police, Bala Ciroma, who represented the Inspector General of Police, argued strongly for the removal of the police from the CPS.
“We ask for the removal of the Nigeria Police Fund from the CPS,” he said.
The sponsor of the bill, Senator Binos Dauda, representing Adamawa South, while reading a message he received from an unnamed retired Commissioner of Police, highlighted the significant disparity between the pensions of retired police officers and those of their counterparts in other security agencies, noting that retired commissioners currently receive a paltry N70,000 per month.
“The issue is broader than the pension scheme. If you don’t increase the salary of police officers, even removing them from the CPS will not solve the pension problem,” he read.
A Civil Society Organisation, Contributory Pension and Happy Retirement Advocacy in a document at the hearing, warned that the proposed bill to create a separate police pension fund could set a dangerous precedent.
The CSO cautioned that if the police were removed from the CPS, other public sector groups might demand similar exemptions, further eroding the integrity of the pension reform.
Agudah reiterated the need to address police welfare issues within the CPS, suggesting that enhanced contributions and benefits could better serve the police while maintaining the financial stability of Nigeria’s pension system.
The proposed bill, they argued, could set the country on a dangerous fiscal trajectory if enacted in its current form.
