Press Statement: Pension Policy in Osun State: No to Compulsory Retirement


The Campaign for Democratic and Workers’ Rights (CDWR), Osun State
hereby condemns in strong terms, the ridiculous, illegal and clearly
unjustified compulsory contributory pension policy being imposed on
workers by Osun State government. We call for immediate reversal of
this obviously obnoxious policy. We also call on the labour unions’ leadership to convene immediately a congress of workers to reject any
attempt to force a voluntary pension system on them.

The Osun State government under the impostor and bankrupt regime of Oyinlola/PDP in 2009 made a policy that compulsorily compelled workers
in the state employ to subscribe to the exploitative Contributory
Pension Scheme. Workers who still had, as at 2009, more than three (3)
active years in the Public Service were directed to either enroll in
the Contributory Pension Scheme or compulsorily retire latest by
December, 2012. By this act, the government aimed to force workers to
retire or join the private pension scheme, with a view to reducing the
government’s financial commitment to workers.

Based on this policy, many workers, especially those who have fewer
years left in service, retired forcefully when they realized the
exploitative nature of the contributory pension scheme. Several
others, out of fear of being forced out of service, immediately
enrolled in the contributory pension, even when they knew very little
about it. Worse still, the leadership of various workers’ unions,
including the central labour unions – NLC and TUC – not only
maintained questionable silence but also encouraged workers to accept
the policy – join the contributory pension or resign. This policy is
clearly illegal and anti-worker. The state and local government
employees are not covered in the Pension Reform Act 2004 (and amended
in 2011); while there is no known law in Osun State that compels
workers to join the contributory pension scheme. Inasmuch as the
government (public)-guaranteed pension scheme has not been abolished
by the law; it is illegal for the state government to force the
Contributory Pension Scheme on workers. Furthermore, joining a private
pension system was never a condition for employment; therefore, it
could not have been a condition to retire workers compulsorily as this
is tantamount to retrenchment. Ironically, the Aregbesola/ACN
government that has been in power for close to two years has not
deemed it fit to stop this illegal and clearly backward policy. On the
contrary, it has pushed on with the policy, even when many workers are
beginning to question the rationale behind forcing them to join an
exploitative pension scheme. This is a government, which campaigned
for vote with the mantra of change from the rot of the Oyinlola

Contributory Pension: Profits for the investors, Bleak future for workers

This policy is like asking workers to choose between death and body
paralysis. This is because the Contributory Pension Scheme has been
revealed as sheer fraud. It is an attempt by the government to shirk
its responsibility of providing living and adequate pension to retired
workers, who have committed their active and productive lives to the
society. This policy, on the other hand, gives big financial
capitalists easy opportunity to profit from the miseries of workers,
who are being frustrated daily with the mismanagement of the
government-guaranteed pension scheme. Various Nigerian political
classes in various political shades and at all levels, having looted
and misappropriated the pension allocations of hapless retirees is now
pushing them into the hands of private profiteers. If politicians and
big bureaucrats at the federal level could officially loot N34 billion
($212.5 million), one could hazard a guess on what will be operating
at the state level. It will therefore not be surprising hearing that
various politicians are investors and shareholders in various private
Pension Fund companies.

According to the Contributory Pension Scheme, workers and employers
are to pay 7.5 percent of workers’ salaries each, into the pool
managed by the private Pension Fund Administrators (PFAs). When
workers retire, the contributions and the gratuity of workers are
handed over to the PFAs, who then pay workers on pro rata basis.
However, the PFAs, are given free access to gamble and make profits on
workers’ pension savings even when workers do not know where their
pension fund is being invested. If the businesses the PFAs invested in
go bankrupt, and the PFAs subsequently go insolvent, who will pay
retirees their life savings? Currently, more than 70 percent of the
over N2 trillion pension contributions have been invested in
governments’ bonds and debt issuances. What of situation in which
governments default in redeeming the bonds or the debt issues; as
already governments across the country owe over N16 trillion in
domestic debts – debts that are clearly unsustainable. What of the
situation when governments’ revenues collapse as witnessed between
2007 and 2009 at the peak of the global economic meltdown when crude
oil price fell to its all time low? What if governments refuse to pay
up workers’ gratuity to the PFAs? Already many private employers are
defaulting in paying their contributions to the PFAs while many state
governments are not even committed to paying any gratuity. These
scenarios will throw workers back to the same old problem – unpaid
pension and gratuity – albeit with more complications of who is
responsible for what.

Contributory Pension is Sheer Exploitation of Workers

Clearly, the Contributory Pension Scheme cannot be a better
alternative to bureaucratically run and poorly managed
government-guaranteed pension scheme. Indeed, it is more of sheer
exploitation of workers. As unorganized and mismanaged as the
government-guaranteed pension scheme is, workers’ pension is
guaranteed for life. Under the contributory pension, PFA collapse will
mean total doom for retirees. Meanwhile, the PFA bosses and fat cats
would have made easy profits and collected huge salaries and
allowances from workers’ pensions. Aside this is the fact that, what
retirees are paid as pension under the contributory pension scheme is
mere pittance compared to what is paid directly by governments to
retirees. While governments, without any deduction from workers’
salaries, pay at least 60 percent of retirees’ last salaries as
pension with gratuity also fully paid, contributory pensioners will
collect around one third of the same amount as pension especially for
workers having less than ten years in the service. Indeed,
contributory pensioners only collect half of their gratuity, while the
remaining half is added to the 15 percent contributions, and paid on
pro rata basis as pension. The implication of this for instance in
Osun State, is that while workers having less than ten years in the
civil service will collect between N15, 000 and N35, 000 as monthly
pensions, their colleagues under the government-guaranteed pension
scheme will collect more than double of this amount. Yet, the
government (and unfortunately, the labour leaders) wants to compel
workers to subscribe to the fraudulent contributory pension.

Clearly, the aim of the government is to reduce its contribution to
retired workers’ welfare and consequently reduce their living
standard. It also aims to make big business profiteers gain from
workers’ miseries. It is ridiculous that the same government that
cannot ensure prompt payment of pensions and gratuities to retirees,
is devoting enormous resources and energy in ensuring the
implementation of the Contributory Pension Scheme, even if workers
will have to be bullied and threatened. The argument of government
that public pension scheme is ineffectual is mere hypocrisy. In
reality, the same set of politicians and their big bureaucrats
colleagues who are looting workers’ pensions are the ones using the
excuse of their failure to hand workers over to capitalist buccaneers.
This is the same way public education and other social services are
ruined by capitalist politicians, who then encourage the poor people
to patronize the private sector, where they have invested the looted
public funds meant for these services in the first place.

Workers Must Act now!!

Workers must demand an immediate end to this fraudulent contributory
pension scheme. They must demand for a fully guaranteed living pension
tied to the cost of living and rate of inflation, by all employers –
both private and public. As against the fraudulent and bureaucratic
manner of running the government pension scheme, workers must demand
that governments at all levels, pay monthly allocation of retired and
active workers to a fund to be run and managed by elected
representatives of workers and retirees, at all levels. Such fund will
ensure that there is proper planning for all workers on a long-term
basis. This will also ensure that government is not burdened with
pension arrears, as regular payments to the fund will prevent this.
However, rank-and-file workers and retirees must have open access to
scrutinize the fund’s account. In addition, workers and pensioners
must have the right to democratically elect and recall representatives
to manage the fund at all levels.

This is what the leadership of the labour movement should defend, and
not to be partners of governments and big business in the exploitation
of their members. It is clearly unjustified the membership of trade
union movement in the National Pension Commission (PENCOM), which
coordinates this exploitative pension scheme, while the labour
leadership closes their eyes to the plight of thousands of retired
workers dying of unpaid pensions and gratuities by government. It is
more disturbing that the labour centres are themselves investors in
the private pension scheme e.g. NLC owns a PFA.

We call for immediate reversal of the clearly bizarre attempt of the
Osun State government to force the contributory pension on workers. We
call on workers in Osun State to demand for a congress to reject this
clearly anti-worker and illegal policy.

Conclusively, that Nigerian political class cannot guarantee a living
pension for its workers reflects that bankruptcy of the neo-colonial
capitalist arrangement in the country. it also underscores the need
for working people to build their own political alternative to the
rotten politics of the capitalist politicians and their big business

Kola Ibrahim
State Coordinating Secretary



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