The Managing Director, IEI-Anchor Pensions, Mr Glory Etaduovie has explained reasons for the difference of pension earned by retirees and why years of contribution to the Contributory Pension Scheme matters.
“There appears to be a dislike by some civil servants for the Contributory Pension Scheme because it is thought that it pays lower than the defined benefits scheme. This leads to attempts by some implementers to frustrate it in many states. This is not true as the individual contributors’ funds would grow as the number of years a person is working increases and the investment returns are applied on a compound interest basis.
“They forget quickly that the government can no longer carry such weight directly as it did in the past. Presently, it is difficult for many state governments to meet up salary payments. This is the new reality.”
While noting that the fears of delayed retirement benefits payment also existed, he said this had been misunderstood to be a deficiency of the CPS, and attributed it to the effects of delay in funding of the past accrued pension liabilities into the contributory pension funds by the government.
He said that the delay would have been worse if the contributory pension scheme had not taken place because the CPS was reducing upfront the government’s liability.
The managing director said, “Quickly forgotten also was the tedious bureaucracy that bedevilled the pursuit of retirement benefits in the recent past. These are the same delays and uncertainties that CPS is bringing a stop to.”
According to Etaduovi, the PRA pension model stimulates individual and national saving culture and helps the people to not only take their destiny in their hands but be responsible for it.
He said the Pension Reform Act model of contributory pension scheme harmonised the public and private sectors in pension management and that the private sector pensions had become harnessed and structured.
“This was also designed to grow itself through investments and provide liquidity, provide capital for investment and develop the economy, critical infrastructure and long-term investments,” he said.