The Nigeria Police pension dilemma, By Adamu Rabiu

The government, through the Pension Commission (PenCom) has insisted that the police is too big, and excusing them from the CPS would affect Nigerian economy, and as such they must remain within the Scheme, even though the Nigerian Army, the National Intelligence Agency (NIA) and the Department of State (DSS) were exempted. And police have kicked against this, severally preferring to be migrated to the DBS.

Badge of Independence

In the landscape of Nigeria’s public service, the Nigeria Police Force (NPF) has a rich history that dates back to the colonial era and stands as a pillar of law enforcement and civil order. However, beneath the badges and uniforms lies a growing discontentment among the rank and file for a quest for pension reform that resonates with the Force’s desire for autonomy, fairness in post-service benefits, and in alignment with its constitutional duties and the risks faced during the performance of these duties.

According to Wikipedia, the NPF dates back to 1879 through the formation of the 1,200-member Hausa Constabulary and the establishment of the Lagos Police in 1896.

In the early 1900s, the Northern Nigeria Police and Southern Nigeria Police were created from parts of the Royal Niger Company Constabulary and the Niger Coast Constabulary, respectively. And in 1930, the Northern and Southern Nigeria Police Forces were merged to form the first national police force.

After Nigeria gained independence in 1960, the Force was renamed the Nigeria Police Force (NPF) with jurisdiction over the whole of the country. It is worthy of note that the Nigeria Police Force (Establishment) Act, 2020 (‘the new Act’), which came into force, repealed the Police Act of 2004.

Getting out of the Contributory Pension Scheme (CPS) into the Defined Benefit Scheme (DBS)!

Police Pension Revolt

Media organisations carried the story of retired police officers under the CP Scheme, who besieged the National Assembly to protest over several months of unpaid pensions on 21 May, and demanded to be removed from the CPS. The retirees were from various state chapters and they expressed the severe hardships they were experiencing due to the failure of the National Pension Commission to pay their entitlements.

It is gathered that the agitation has moved with the introduction of bills seeking to establish a dedicated Nigeria Police Pension Board, passed by the ninth Assembly Senate in June 2023, as stated on their X-handle, and to exempt the Police Force from the PenCom Act 2014, which came up on the floor of the tenth National Assembly in November, 2023, as the harmonisation process is pending.

What is the CPS All About?

The Pension Reform Act 2004, modelled after the Chilean Pension Scheme which exempts the Army and Police, enacted a new pension scheme called the CPS, that is not only contributory and fully funded but also privately managed, with funds and assets based on individual accounts under third party custody. This was to ensure, unlike in the Defined Benefit Scheme (DBS), that everyone who has worked receives retirement benefits when due.

The government, through the Pension Commission (PenCom) has insisted that the police is too big, and excusing them from the CPS would affect Nigerian economy, and as such they must remain within the Scheme, even though the Nigerian Army, the National Intelligence Agency (NIA) and the Department of State (DSS) were exempted. And police have kicked against this, severally preferring to be migrated to the DBS.

At a February public hearing on the amendment of the PenCom Act, the sponsor based his request on the claim that a Deputy Superintendent of Police under the CPS pension scheme dances home with about N2 million, while an Assistant Superintendent of Police walks home with about N1 million, their equivalent under the DBS, like a Captain in the Nigerian Army and a DSS official haul home about N12 million and N10 million respectively.

Police, is the above assertions, correct?

Breaking Down the Pension Chains

The NPF continues to be the Principal Law Enforcement Agency in Nigeria, with a mandate to prevent and detect crime, enforce laws, and protect lives and property, etc.

The following security agencies were excised from the NPF over the years:

1. Nigerian Federal Fire Services (NFFS): Originally known as the Police Brigade, it was founded in 1901 as a division named the Lagos Police Fire Brigade, which was later formalised by an Act of Parliament in 1963.
2. Nigeria Immigration Service (NIS): Founded in 1958, the NIS which is responsible for immigration control and border security, was formalised in 1963.

The Principal Security Agency in Nigeria is the Nigerian Army (NA), whose history dates back to 1863 when Lt. Glover of the Royal Navy selected 18 indigenes from the Northern part of the country to form a local force known as the “Glover Hausas” to protect the Royal Niger Company from constant military incursions by the neighbouring Ashanti Empire. Later on there was the formation of the Royal West African Frontier Force in 1900. Officially founded in 1956 and formalised in 1960, the NA’s other arms are:

1. The Nigerian Air Force (NAF): Officially established in 1964 to support the NA’s participation in peace-keeping operations in Congo and Tanganyika (now Tanzania).
2. The Nigerian Navy (NN): It originates from the Marine Department of the Royal Navy established in 1887. A quasi-military organisation that combined the duties of the present-day Nigerian Ports Authority, the Nigerian Inland Waterways Authority, and the Nigerian Navy, it was formalised in 1956.

Other para-military outfits that surfaced in the law enforcement landscape include:

1. Nigeria Correctional Service (NCS): Formerly known as the Nigerian Prisons Service (NPS), it traces its origins back to 1861 when Western-type prisons were first established in Nigeria. The name change came in 2019.
2. Nigeria Customs Service (NCS): It was established in 1891.
3. Code of Conduct Bureau (CCB): It was created in 1989.
4. State Security Service (SSS) or Department of State Services (DSS): It was established in 1986 following the dismantling of the infamous Nigeria Security Organisation (NSO).
5. National Intelligence Agency (NIA): It was established in 1986 (part of the NSO).
6. Defence Intelligence Agency (DIA): It was created in 1986 (as part of the former NSO).
7. Federal Road Safety Corps (FRSC): It was established in 1988.
8. National Drug Law Enforcement Agency (NDLEA): It was created in 1989.
9. Independent Corrupt Practices and Other Related Offences Commission (ICPC): It was established in 2000.
10. Economic and Financial Crimes Commission (EFCC): It was set up in 2003.
11. Nigeria Security and Civil Defence Corps (NSCDC): It was introduced in 1967 during the Nigerian Civil War within the then Federal Capital Territory of Lagos and statutorily established with an expanded mandate thereafter.

It looks like the first 1999 Constitution was definitely copied, may be word for word from somewhere, if not how come the NPF found itself in this pension dilemma?

For context, lets visit history. The Udoji Public Service Review Commission was set up in 1972 by the General Gowon administration to propose Civil Service Reforms. Far-reaching recommendations were made, in which all the laws on regular pensions, war pensions, disability benefits and gratuities were consolidated. These altered the remunerations and benefits of public servants and culminated in Decree No 102 of 1979 for the civilian employees and Decree 103 for military pensions and gratuities.

Note: The Armed Forces Pension Act came in 1979, while the Police and Other Government Agencies’ Pension Scheme was enacted under Pension Decree No 75 of 1987.

What the laws did was to provide for a public service scheme that was mostly unfunded and non-contributory. They were based on a defined benefit Pay-As-You-Go (PAYG) scheme, which relied solely on budgetary provisions and releases.

Then entered Section 219 of the 1999 Constitution and Section 5(1) of the Pension Reform Act 2014, which mandated the establishment of a body to ensure the welfare and pension of members of the armed forces, defined the subsequent exemption of some security agencies and part of the categories of those exempted from the Contributory Pension Scheme (CPS) respectively.

Liberating the Pension Funds

The CPS introduced in 2004 was designed to ensure all public servants have a secure retirement. However, the one-size-fits-all approach looks inadequate.

The multifaceted concerns and reasons are:

1. The Police have a specialised need.
2. Ditching the CPS by the Police will create a significant financial liability on the government.
3. PenCom and the Nigerian Labour Congress (NLC) are suggesting enhancements within the current CPS scheme.
4. There would be dire consequences not only for pension reform but also for other reform initiatives.
5. There is a White Paper from the report of the Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies which forbids any government body, apart from the military and intelligence services, from exiting the CPS.

Financial implication according to PenCom are:

1. It would cost the government an additional N2 trillion in pension liabilities for over 300,000 police personnel based on a 2021 actuarial valuation exercise.
2. The total allocation approved by the National Assembly for settling pension liabilities in the 2022 Appropriation Act was N125 billion out of a total pension liability of N3 billion, which is just 21.6 per cent of the total allocation proposed for pensions for the military, NIA, DIA and prospective retirees of Federal Government treasury-funded MDAs. While the break down sum for those exempted are: Military – N263.3 billion; NIA – N9.2 billion; and DSS – N12.1 billion respectively.
3. Professors are allowed to retire with full benefits if they served for at least 20 years. When their RSA savings are not enough to cover the full benefits, government will cover the shortfall.
4. Under the CPS for the police personnel, there is a liability made up of N4 billion as accrued pension rights and about N2.2 billion monthly employer pension contributions.
5. About 63 per cent of the total pension assets will be affected through the bond, the securities and the mortgage markets etc., which runs into trillions of naira.
6. The Federal Government was already overburdened with the payment of pensions under the Defined Benefit Scheme that will expire in 2039.

Carve Out or Cave In

In conclusion

• For the Police, it has a case but this has not been put together properly.
• Do pension fund administrators and pension fund custodians may have a cause to be jittery? may be!
• For PenCom, a way out is possible but not the route it has taken.

Adamu Rabiu writes from Kaduna