The chief executive officer of Pension Fund Operators Association of Nigeria, PenOp, Oguche Agudah, has voiced concerns about the potential disruption of fiscal policy and the creation of an unstable financial system if the police pension were to exit the Contributory Pension Scheme, CPS.
In an interview with the News Agency of Nigeria (NAN) on Sunday in Abuja, Agudah highlighted the adverse effects of unwinding investments. “It distabilises the financial system, diminishes assets and jeopardises the retirees,” he warned.
Agudah argued that the removal of the police from the CPS would burden the government with unsustainable pension obligations. He stressed that the government had already made provisions for the pension obligations through a private sector-managed scheme.
The PenOp CEO also expressed concern that reverting to the Defined Benefit Scheme (DBS) would lead to the dismantling of institutions and processes that the government had established to effectively manage pension. He emphasized that the CPS, with its transparency and clear visibility into retirement benefits disbursed by all Pension Fund Administrators (PFAs), was a significant improvement compared to previous pension schemes that operated outside this framework.
Agudah noted, “The police are pushing to go back to this non-transparent system,” referring to the older pension management system. He emphasized the importance of the pooling effect and how it benefited all members within the CPS. Advocating for a stand-alone pension management system for the police, he argued, would not provide the same pooling effect.
The PenOp CEO’s statements shed light on the potential consequences of the police pension’s exit from the CPS. The disruption of fiscal policy and the destabilization of the financial system are not issues to be taken lightly. As the debate over this matter continues, it is essential for all stakeholders to consider the long-term implications to ensure the sustainability and effectiveness of Nigeria’s pension system.
