The Contributory Pension Scheme in Delta State: Understanding The Failures of Government and The Challenges of the Pension Administrators (Published)
The study examined the contributory pension scheme in Delta State, with a focus on understanding the failure of government and the challenges of the Pension Administrators. The study adopted the historical methods involving a critical analysis of secondary data. The findings revealed amongst other things that compliance with the provisions of the law has been more in breach than in practice for the MDAs in Delta State. This breach is however not limited to Delta State alone but to other states in the country including the Federal government. In particular, it was discovered that only twelve (12) states had migrated to the contributory pension scheme. This represents 33.3% of the population. This record is abysmal given the huge mess the pension system had been enmeshed before the emergence of the contributory pension. It was also observed that most most MDA’s in Delta state and private sector tiers did not procure life insurance covers for workers in accordance with provisions of the law. For other states of the federation, It was revealed that only four (4) states, from among those that have passed the pension law, secured life insurance policies for its workers. It could be argued that part of the reasons for poor compliance records in Delta State and at the Federal and State tiers of the pension market could not be unconnected with the recession that hit the nation, beginning in 2016. This arguably affected the revenue profile of both the national and sub-national governments, given its dependence on oil revenue. As revenue dwindled, salaries were not paid and so contributions to RSAs were not made. Based on these findings, it is recommended that in order to reverse the current dismal compliance record, actions are required at three levels, namely, individual, labour and regulatory. Individual worker should monitor the state of his RSA by demanding and receiving monthly statement of accounts as provided for by the law. This will help him identify early failure signals to remit contributions. Second, leadership of workers union should engage employers on the need for regular remittance of contributions and procurement of appropriate insurance covers. This is with a view to ensuring that the future financial security of its members is guaranteed. Since insurance cover is an annual contract, it is proper for labour leadership to monitor the renewal status of insurance policies for its members. Finally, the pension regulator should not only closely monitor compliance but must push for a review of the penalty for default in remittance. A penalty provision that will make compliance more compelling is here recommended.
Keywords: Delta State, Pension, contributory pension scheme, retirement savings account (RSA)