National Pension Commission (PenCom) has pleaded with states in the federation that are yet to adopt the contributory pension scheme to do so for the benefit of their employees.

PenCom\'s Commissioner (Inspectorate), Dr. Musa Ibrahim, who made the call, stated that few state governments have adopted the contributory pension scheme. He urged those that are yet to adopt the system to do so as soon as possible for the benefit of employees.


It has been argued that the new pension scheme would only enjoy smooth sail if the various states in the federation align with the scheme.

He stressed that there isneed for state governments to embrace the pension scheme by first of all enacting the necessary statutory requirements and also stipulating the guidelines for the smooth operation of the scheme in their various domains.

According to him, the contributory system would ensure that every employee gets his or her retirement benefits as and when due. \"The contributory system establishes sustainable, simple and transparent pension system. It also establishes effective regulatory and supervisory framework,\" he said.

The regulatory authority in the industry, PenCom, drafted a pension law called the Pension Reform Law 2005 for state governments since the Pension Reform Act 2004 does not cover them.

Although other tiers of government are free to continue with whatever pension system that suits them, PenCom advised that it is better for them to follow the footsteps of the Federal Government by converting to contributory pension system.

The commission stressed that where states or local governments decide to change into the new system; it cannot establish a separate pension regulatory body to oversee pension practice and administration in its territory.

The state and local governments are not empowered to license fresh Pension Funds Administrators (PFAs), Pension Funds Custodians (PFCs) and Closed Pension Fund Administrators (CPFAs) to cater to the interest of workers within their respective areas of jurisdiction.

PenCom emphasised that states and local governments across the country desirous of changing to a contributory pension system can neither establish regional pension regulatory bodies nor license new pension fund operators.

The tiers of government involved can only rely on the regulatory prowess of the PenCom for the supervision of whatever system they adopt and make use of already licensed operators on the list of PenCom.

Director-General of PenCom, Muhammad Ahmad, had said that some states have commenced implementation of pension reforms, even though they are not compelled by the Pension Reform Act 2004 to adopt the contributory pension scheme.

The PenCom boss explained that the response by state governments was largely as a result of the decision of the Council of State meeting where governors of the respective states agreed to adopt the scheme, adding that since then, they have been reaching out to the commission.

\"In anticipation that states will enact their respective laws, the commission went ahead to prepare what we called a draft state pension law; it is actually on our website and many states have adopted that,\" Ahmad stressed.

He added that \"But the key issues I have always informed and advised the states are that they can establish a contributory pension scheme and decide how the scheme will look like. In terms of supervision and regulation, however, it rests with the National Pension Commission.