……….Lauds Lagos as Model State for Pension Reform
By Sam Otuonye
The National Pension Commission (PenCom) has called on Lagos State Governor Babajide Sanwo-Olu to extend periodic pension increases—currently enjoyed by retirees under the Defined Benefit Scheme (DBS)—to retirees under the Contributory Pension Scheme (CPS), in a bid to improve their monthly payouts.
PenCom Director General, Ms. Omolola Oloworaran, made the appeal during a courtesy visit to the Governor at the Lagos State Government House. The visit also served to present the findings of PenCom’s 2024 routine inspection of the Lagos State Pension Commission (LASPEC) and to express gratitude for the Governor’s confirmation as Special Guest at the upcoming Pension Industry Leadership Retreat scheduled for 8 May 2025.
Ms. Oloworaran noted that only DBS retirees currently benefit from pension increases in the state, leaving out their CPS counterparts. She emphasized the need to prioritise CPS retirees, given the contributory nature of the scheme.
Commending Lagos State as a national model for effective CPS implementation, the DG highlighted key milestones such as the consistent deduction and remittance of employees’ contributions to Retirement Savings Accounts (RSAs), the clearance of all accrued pension backlogs, the existence of a valid Group Life Insurance policy for most public servants, and the adoption of advanced ICT tools in pension administration.
Despite these successes, the PenCom boss proposed further collaboration with the state. She urged Lagos to adopt the federal practice of requiring a Pension Clearance Certificate (PCC) from companies seeking government contracts or services.
She also recommended transferring unremitted pension contributions, currently held in escrow accounts in commercial banks, to Transitional Contribution Fund (TCF) accounts managed by Pension Fund Administrators (PFAs) to optimise investment returns.
In addition, Ms. Oloworaran advised the state to implement an Irrevocable Standing Payment Order (ISPO) to ensure automatic deduction and remittance of pension contributions from Federation Account Allocation Committee (FAAC) allocations, shielding pensions from administrative delays.
While applauding the state’s recent N600 million bailout for outstanding accrued rights of Lagos State University of Education (LASUED) retirees, she appealed for additional intervention to clear pension arrears for 2023 and 2024.
The DG also urged Lagos to implement the Minimum Pension Guarantee (MPG), mirroring the federal government’s recent inclusion of MPG contributions in its N758 billion bond initiative to settle outstanding pension liabilities.
In response, Governor Sanwo-Olu reaffirmed his administration’s commitment to pension reform and praised the strong working relationship with PenCom. He voiced support for extending pension increases to CPS retirees, reiterating his administration’s focus on workers’ welfare.
However, the Governor expressed reservations about adopting an ISPO at this stage, citing confidence in the sustainability of ongoing reforms beyond his tenure.
He also encouraged PenCom to back Lagos State’s infrastructure and development efforts by facilitating pension fund investments in government-issued bonds.