The Pension Fund Operators Association of Nigeria (PenOp) has raised objections to the recently passed Police Pension Bill by the National Assembly, stating that it is retrogressive and unsustainable.

In a statement issued by the head of the association, PenOp criticized the lawmakers for their lack of sensitivity to the potential dangers posed by the new bill to the reformed pension sector. It emphasized that the current Contributory Pension Scheme (CPS) is highly transparent and should serve as the benchmark for regulating the sector effectively.

Oguche Agudah, the Chief Executive Officer of PenOp, who signed the statement, highlighted the transparency of the retirement benefits disbursed by all the Pension Fund Administrators (PFAs) under the CPS. In contrast, he pointed out that pension schemes operated outside of this framework lack such transparency, and the police’s push to revert to such a non-transparent system is a concern.

Agudah further explained that the withdrawal of the police from the CPS would lead to a return to the defined benefits scheme, which would dismantle the institutions, systems, and processes that the government has established to manage pensions effectively. He stressed that such a reversal is highly counterproductive and undermines the progress made thus far.

He added, “Unwinding investments destabilizes the financial system, diminishes assets, and jeopardizes the retirees themselves. Moreover, it disrupts fiscal policy and creates an unstable financial system.”

The CPS, according to Agudah, has the advantage of pooling the benefits accrued by members, ensuring equitable distribution. However, a standalone pension management system, as advocated by the police, would not benefit from this pooling effect.

The Police Force has asserted its right to exit the unified pension sector, citing the positive experiences and benefits enjoyed by certain security agencies, including the military, who were exempted from the Nigeria Pension Reform Act of 2004.

PenOp’s concerns reflect the potential risks associated with deviating from the established CPS framework and highlight the importance of maintaining transparency and sustainability in the pension sector.

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