CONTRIBUTORY PENSION SCHEME (CPS) - DARE TO STRUGGLE, DARE TO WIN

*CONTRIBUTORY PENSION SCHEME (CPS) - DARE TO STRUGGLE, DARE TO WIN*

By: Comrade Akeem Lasisi  

TUC Chairman,  

Ogun State Council

It is no longer news that the organised labour in Ogun State, comprising the Nigeria Labour Congress (NLC), Trade Union Congress (TUC), and Joint Negotiating Council (JNC), has declared a trade dispute to draw the government's attention to the plight of workers.

The intention behind this strike action is not to cripple or paralyse the economy and stability of the state, but rather to inform the government about the challenges faced by various categories of workers, including the Active, Retired, Withdrawn, and Deceased.

Retirement should be a time for workers to feel happy and comfortable, allowing them to enjoy the fruits of their labour. Workers have significantly contributed to the unprecedented peace, sustainable development, and economic growth of the state.

Currently, the CPS does not offer any comfort to workers post-retirement. It has failed from its inception, with over 14 years of funds deducted from salaries but not remitted into individual Retirement Savings Accounts (RSA) with chosen Pension Fund Administrators (PFA). The Pension Law has been grossly violated, resulting in the scheme failing to achieve its objectives.

According to the Ogun State Pension Reform Law (OGPRL), 2006, Section 14, subsection 5, employers must remit the funds deducted from employees' salaries within seven (7) working days after salaries are paid. 

Failure to do so incurs a penalty of not less than 2% of the total arrears of unpaid contributions, as stated in OGPRL Section 14, subsection 7.

As of July 1, 2025 (the date the scheme was set to commence), workers were anxious, agitated, restless, and frustrated due to the government's silence on this issue.

Our leadership faces overwhelming criticism, questioning, and attacks regarding the way forward. We are accused of colluding with the government to undermine workers’ lives after retirement.

Today, workers, who entrusted us with the responsibility to constitutionally protect their interests, see our leadership as the enemy, believing that we seek to diminish their expectations after retirement.

The Contributory Pension Scheme (CPS) was introduced by the Federal Government in 2004 through the Pension Reform Act. Under this scheme, employees contribute 7.5% of their monthly emoluments, while employers also contribute 7.5%. This results in a combined total of 15% that is remitted into each employee's individual Retirement Savings Account (RSA). Contributions are expected to be made throughout the employee's working life until retirement, at which point the entire balance in the RSA will serve as their retirement benefits.

The CPS is designed as a system where employers and employees contribute to the pension funds paid out at retirement. Funds are channelled into an employee's RSA, which is managed by a Pension Fund Administrator (PFA) of their choice. This account receives pension contributions and any returns on investments, with retirement and death benefits also paid from it.

The primary goal of the CPS is to ensure that every worker receives their retirement benefits smoothly, thus eliminating the previous issues of unpaid pensions and gratuity for retirees.

Given the state's unique circumstances, the Pension Reform Act, 2004, was modified to suit the financial conditions specific to Ogun State. Consequently, the Ogun State Pension Reform Act, 2006, was enacted, leading to the implementation of the CPS in January 2008. The state government began deducting 7.5% from employees' salaries and the employer's counterpart contribution of 7.5%, totalling 15%, which was then remitted to individual RSAs.

Before the CPS was implemented in January 2008, Ogun State operated the Transitional Pension Scheme (TPS), where retirees received monthly pensions and lump-sum gratuities. The Ogun State Pension Reform Law (amendment 2013) classified employees into two groups: those in the TPS and those in the CPS. 

TPS includes individuals who either retired since the scheme's inception or those still in active service but will retire statutorily on or before July 1, 2025. The CPS pertains to public servants retiring after this date (July 1, 2025).

As the CPS is set to become fully operational on July 1, 2025, public servants are anticipating all necessary actions, guided by law, to be taken:

1. The government should implement the recommendations made by various committees in the past regarding the CPS, which have been submitted to the government. Notable committees include the 2017 Agbaje-led committee set up as a result of the intervention of the National Leadership of Organised Labour and the 2022 Hassan Adekunle and Olufunmilayo Dada-led committees, which were set up following a Memorandum of Action signed with labour unions.

2. In accordance with the amended Ogun State Pension Reform Law of 2013, the government should immediately resume full remittance of monthly pension contributions for all employees into individual RSAs.

3. The non-remittance of funds for over 14 years into an individual's RSA should also be given due attention.

4. The unresolved issues regarding the Personal Identification Number (PIN), including shared and duplicate PINs that hinder access to RSAs, must be addressed.

5. The amended Ogun State Pension Reform Law (OGSPRL) of 2006 mandates that the valuation of past services, known as Accrued Pension Rights, must be considered (Section 8, subsection 4). These accrued pension rights pertain to employees who worked under the Transitional Pension Scheme (TPS) before the CPS deductions commenced. As of December 2007, the actuarial valuation of retirement benefits for all Ogun Public Servants (totalling 50,798) was estimated at ₦80 billion.

6. The State Redemption Fund, which is used to redeem accrued pension rights (past services) managed by the investment, should be given due consideration as outlined in Section 14, subsection 1 of the State Pension Reform Law of 2006. 

According to Section 17, subsection 1, the employer must set aside an amount equal to 5% of the monthly wage bill. However, Section 17, subsection 2 of the same Reform Law, amended in 2013, stipulated a reduction to 2.5%.

7. The group life insurance policy established within the scheme should be initiated to prevent the double loss of benefits and life for beneficiaries. This policy should provide coverage equivalent to a minimum of three times the total annual emoluments of the employees, in accordance with Section 12, subsection 2 of the amended Ogun State Pension Reform Law of 2006. This coverage is designed to protect all employees under the Contributory Pension Scheme (CPS).

In conclusion, various past committees have recommended *suspending the Contributory Pension Scheme* and the *stoppage of Pension Deductions* until a proper Contributory Pension Fund Committee and State Pension Commission are established. They have also urged the immediate resumption of full remittance of pension contributions from all public servants covered by the scheme and called for all outstanding contributions to be addressed through actuarial valuations. If both the state and local governments can no longer sustain the financial burden of months of unremitted contributions, procuring bonds has been suggested as a solution. So why is there a rush to implement the scheme?

Other grievances leading to the declaration of the trade dispute include:

i) Consequential adjustments to the minimum pension, which prompted the establishment of the Olufunmilayo Dada-led committee.  

ii) Consequential adjustments on the minimum wage, as Ogun State has the lowest basic salary in the Southwest.  

iii) Immediate financial benefits for public servants who are eligible for promotion in 2023 and 2024, as promotions serve as a motivation to enhance productivity.  

iv) Payment of eight years of leave allowance to deserving officers. Leave allowance is not a bonus but a provision of law. Many beneficiaries are now retired, deceased, or have left public service.

Distinguished Ogun State Public Servants, the fight against corruption in public service may be difficult to win if public servants have no sense of security for their future. We demand that the government demonstrate an exceptional commitment to the welfare of workers in the state. It seems that our multiple appeals have gone unheard, and ironically, the government has benefited from our understanding the most. Our patience has run out. We cannot allow our suffering to be dismissed with excuses.

Let us continue to fight and strive for victory. Success in our struggle is achievable when leaders and members are sincere. We can only succeed if we speak with one voice. You have placed considerable trust in us, and we will never betray your mandate for trivial gains. We request your support and cooperation in this struggle.

The strike continues!

Solidarity!

Comrade Akeem Lasisi  

TUC Chairman,  

Ogun State Council

16/7/2025