BENUE PENSION ARREARS: CLEARING THE AUGEAN STABLE

By James Uloko

That the issue of unpaid pensions and gratuity in Benue state is a mighty problem for all concerned is not debatable. 

The argument, however, is whether the state government is doing enough and what progress the administration is making in sorting out the problem.

While some stakeholders insist the administration of Governor Samuel Ortom has done virtually nothing about it, others say what the government has done is too little to have any meaning for pensioners.

The fact, however, is that, considering the multifarious demands on the states available lean resources as well as the magnitude of the pension problem, the administration’s efforts in the payment of arrears of pensions and gratuity is significant. 

What do the available figures tell us?

The annual budget of Benue state for 2020 is N108 billion. This is meant to cover all activities of government, including current salaries, all outstanding obligations, education, roads, electrification, health services, agriculture, sports, science and technology, etc., for all ministries, departments and agencies for the whole year. 

For ease of analysis and understanding, let’s assume that this amount is shared equally among the 15 ministries in the state (excluding departments and agencies), each will get N7.2 billion.

On the other hand, the total size of the pensions and gratuity payable by the state government between 2015 and October 2020, (including the N17.141 billion inherited by this administration), stand at N68.195.

This is 63% of the 2020 budget. Out of this, the government has paid N25.465 billion as at October this year, leaving a balance of N42.273 billion, made of N14.522 billion in pension arrears and N28.208 billion in gratuity arrears.  

This year alone, government has paid N3.283 billion or about 50% of the assumed average ministry’s budgetary allocation for the year.

The above figures do not include the pension and gratuity arrears of the 23 Local Government areas in the state. For this category, the cost of pension, gratuity, death benefits and cumulative pension arrears between 2015 and now (October 2020) is N72.456 billion. Out of this, government has offset N10.630 billion, leaving an outstanding of N61.825 billion.

What this means is that government will require N104 billion (remember: this year’s total budget is N108 billion) to clear all the arrears due to both state and local government pensioners. This is practically almost impossible. It is like an Augean stable. Yet, the arrears must be paid somehow, some day and – possibly – gradually, so that government can also attend to its other obligations. Yet, serving civil servants will continue to retire and add to the existing pension bill of government. 

Aware of the magnitude of the existing and potential challenge posed by the growing pensions and gratuity bill, Governor Ortom is adopting a multi-pronged approach to take the bull by the horns. The administration has taken steps to provide immediate, short and long term solutions to the pension problem, through the establishment of the Benue State Pension Commission (BEPCOM). 

Modeled after Federal Government's National Pension Commission (PENCOM), its mandate is to solve the notorious suffering of retired civil servants in the state due to the delay or non-payment of their pension and gratuity. It is to ensure that every person who has worked in the public service of the state or local government receives his retirement benefit as and when due; assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age; and to implement a uniform set of rules, regulations and standards for the administration and payment of retirement benefits in the public sector of the state.  

Those to benefit from BEPCOM are in three categories. The first constitutes civil servants who have more than five years to serve in the public service. 

Each employee in this category is to contribute eight percent of his monthly salary while his employer is to contribute 10 percent of the worker's salary (total, 18 percent) to be remitted to his Retirement Savings Account (RSA). 

This contribution continues until the worker retires. The fund so accumulated in the RSA will now become accessible to him upon retirement or attainment of the age of 50 years, whichever comes later. This way, the usual problems of stressful, costly and unending screening of pensioners, delays in payment or lack of funds to pay, leading to the death of pensioners, are eliminated.

The second category consists of civil servants who have less than five years left in service. This category has been exempted from the contributory pension scheme but government, through BEPCOM, is to provide funds for investment from which they will be paid their pension based on the old arrangement whenever they retire. The last category is that of those that have already retired, that is, those who are being owed now. Government is expected to, also through BEPCOM, source funds from pension funds to pay them off. 

The BEPCOM Board has already made inputs into the state's 2020 budget on the handling of these schemes and is talking to relevant stakeholders through advocacy programmes. It is expected that, in the long term, the last two categories will be fully paid off, leaving only the first category to continue to participate in the contributory scheme. Once their pension benefits are computed, all they will be expecting every month is an alert from their RSA.

Millions of Federal and private sector pensioners in Nigeria have been benefitting from this kind of arrangement through PENCOM. However, because it is novel to workers in Benue state who have not tasted its goodness, they would naturally be wary of it. 

The current resistance or skepticism towards this innovation should, therefore, be expected. It is, thus, incumbent on the Board, management and staff of BEPCOM to sensitize the relevant stakeholders in order to earn their trust, confidence and buy-in. They must be transparent and ensure that contributors get value for their money. 

On their part, the contributors should understand that BEPCOM is the product of years of dissatisfaction with the status quo and should be shown understanding and given time to start up, grow and mature. 

It is only when every stakeholder plays his role appropriately that the state government can clear the Augean stable called the pension problem in Benue state.

Hon James Uloko is the Special Adviser to Governor Samuel Ortom on Information and Orientation.