In recent months, there has been a growing wave of debate within the Nigerian Police Force regarding the perceived inadequacies of the Contributory Pension Scheme (CPS) especially with regards to their pension payment. These discussions, often driven by frustration and anxiety about retirement security, have sparked calls from some quarters within the force to exit the CPS entirely. While the concerns expressed are real and deeply felt, it is important to examine the broader picture and distinguish between perception and reality. Only with data-driven insights and a thorough understanding of the system can we craft solutions that truly serve the long-term welfare of our police officers.
One of the most common criticisms levelled against the CPS is that it provides pension payouts that are too low to sustain a dignified life in retirement. This has led to widespread dissatisfaction and the belief that the CPS is inherently flawed or disadvantageous to officers. However, this conclusion does not fully reflect the structure or purpose of the CPS. Rather, it reveals deeper systemic issues, specifically around the career progression, salary structure, and financial planning culture within the police force.
To understand this, consider the case of an Inspector II in the Nigeria Police Force. Their total remuneration which is at approximately N160,000 per month. However, pension contributions under the CPS are not calculated on the gross remuneration but rather on the “pensionable” portion, typically comprising the basic salary and select allowances. For many officers, this pensionable amount falls within the range of N50,000 to N60,000 monthly.
Under the CPS, the officer contributes 8 percent of this pensionable salary, while the Federal Government, their employer contributes 10 percent. Using N60,000 as a benchmark, this results in a monthly contribution of N4,800 from the officer and N6,000 from the government totalling N10,800, that goes into the officer’s Retirement Savings Account (RSA) every month. Over a 10-year period, even with stellar investment returns, the accumulated value in the RSA will reflect the relatively low starting base of contributions.
The fundamental challenge here is not the CPS itself, but rather the systemic issues that limit the growth of officers’ pensionable earnings. Many officers remain on the same rank for several years, with limited promotions and stagnant salaries. This stagnation means their pension contributions and by extension, their retirement benefits, remain modest under the CPS regardless of how long they serve. It is crucial to understand that pension outcomes are a direct function of contributions, and contributions depend on salary progression.
Calls to abandon the CPS in favour of returning to the old Defined Benefit Scheme (DBS) may appear attractive on the surface, but they come with serious fiscal consequences. If the Nigeria Police Force were to exit the CPS, the federal government would immediately face an estimated liability of over N3.5 trillion to cover accrued pension obligations under the previous DBS. Such a financial burden would exert significant pressure on public finances and does not guarantee better pension outcomes for police retirees.
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Under the DBS, pension payments are tied to government budgetary allocations. This means retirees are at the mercy of annual budgets and potential payment delays, a problem that was historically common and one of the key reasons the CPS was adopted in the first place. In contrast, the CPS offers transparency, predictability, and the potential for investment growth. Contributions are actively managed by licensed Pension Fund Administrators (PFAs), which gives room for the assets to grow over time, improving the eventual payouts to retirees.
More importantly, the CPS is structurally sustainable, unlike the DBS, which struggled with non-payment of pensions and was eventually deemed unaffordable. In addition, the CPS is fully funded and has proven its resilience over the years. With total pension assets now exceeding N24 trillion and continuing to grow, the scheme provides a model that is both fiscally responsible and scalable. In terms of adequacy, the CPS has performed reasonably well, especially for officers in better-paying sectors or those with faster career progression. For the police, the solution lies not in leaving the CPS, but in strengthening their work conditions and improving key payouts, namely, salaries and promotions.
The conversation around police pensions must therefore shift from simply questioning the CPS to examining the underlying root causes of dissatisfaction. If we are serious about securing better retirement outcomes for our police officers, then we must address the following:
Improving Salary Structure: A comprehensive review of police remuneration is overdue. Higher salaries would naturally lead to higher pension contributions and better retirement benefits under the CPS.
Accelerating Career Progression: Reforming the promotion system within the force would ensure that officers move up the ranks faster, leading to increased earnings over the course of their careers.
Enhancing Financial Literacy: Officers need to understand how the pension system works, the benefits of compounding, and how personal savings and voluntary contributions can complement their mandatory CPS savings.
Introducing Incentives and Additional Benefits: The government and police force can explore structured additional benefit schemes as is done by other self-funding agencies to reduce the contribution burden for the police force while increasing their pay out in retirement.
Finally, it is important to remember that any pension system must rest on three pillars: Adequacy, Affordability, and Sustainability. The Defined Benefit Scheme failed on all three fronts, we have experienced their failure before and seen its consequences. Pensions went unpaid, the system became unaffordable, and it ultimately collapsed under its own weight. The CPS, while not perfect, stands tall on these three pillars. It is sustainable, transparent, and provides room for adequacy if supported with the right policies.
The desire for a secure and dignified retirement for members of the Nigerian Police Force is valid and urgent. However, the way forward is not to abandon a working system but to improve the factors that determine its success. Policymakers must engage with facts, fiscal realities, and the lived experiences of officers not just sentiment. In doing so, Nigeria can strengthen the retirement experience for its workers and provide its police officers with the dignity they deserve both in service and in retirement.
