The Lagos State Pension Commission (LASPEC) was established by the Lagos State Contributory Pension Scheme law 2007 as a corporate entity to regulate, supervise and ensure the effective administration of pension matters in the Lagos State Public Service in accordance with the provisions of the Pension Reform Act 2004.
Hitherto, the Federal and State Governments, under the old dispensation, operated the Defined Benefits (DB) Pension Scheme, popularly referred to as the ‘Pay as You Go’(PAYG) scheme. Under this scheme, pension benefits were defined using the vesting scale which relied on the length of service and final emoluments of an employee. The benefits were thus easily calculated by employees. Employees who had spent five to nine years in service were entitled to a lump sum payment referred to as gratuity, whilst those who had spent ten years and more were entitled to both the gratuity and monthly pension payment.
As with the Federal scheme, the State schemes were also fraught with problems such as lack of adequate funding, irregular pension payments and the rigorous exercise of verification of pensioners. In line with modern global changes, the Federal Government on 27th June 2004 changed from the Defined Benefit scheme to the Contributory Pension Scheme with the signing into law of the Pension Reform Act 2004 which set up the National Pension Commission (Pencom) to regulate and supervise the scheme and register the operators of the scheme.
The Lagos State government, against the background of challenges with the Defined Benefit scheme, also adopted the new Contributory Pension scheme and became the first State in Nigeria to commence the new scheme with the signing into law on19th March 2007 of the Lagos State Pension Reform Law 2007 and eventual commencement in July 2009.
The main objectives of the Lagos State Pension Reform Law are :
- To assist all persons in the employment of the State Government to save towards their retirement.
- To ensure that persons who leave or retire from the Public Service of the State receive their terminal or retirement benefits as and when due.
- To establish a set of rules and regulations for the administration and payment of retirement benefits in the Public Service of the State.
The law also established the group life policy for death benefits of employees, whilst in service, as well as the Retirement Bond for employees with past service benefits and the Redemption Fund from which the liability of the bond payment would be made.