Another Look At Contributory Pension Act… (1)

The Pension Reform Act 2014, that midwifed the Contributory Pension Scheme is one legislation in Nigeria that poses great concern and apprehensions to Public Servants in particular. Though the Contributory Pension Scheme was designed to remedy or mitigate the alleged deficiencies and inadequate funding of the Defined Benefit Scheme, (DBS) by pooling funds from employers and employees’ contributions to Pension Funds Custodians, retirees under the Scheme, have not fared better than those who retired under the Defined Benefit Scheme. Conversely, the implementation of the Contributory Pension Scheme, is a far cry from what its proponents lulled employees to believe.
Complaints ranging from under payment of retirees under the Contributory Pension Scheme, despite several years of service (Some of whom served 35 maximum years), corruption, non compliance of State governments and other Employers of Labour to provisions of the extant Reform Act, 2014, characterise implementation of the scheme, which Labour leaders in the country describe as anti-workers and retirees welfare.
So the Contributory Pension Scheme which purports welfare and blessedness to retired workers under the scheme, seems obnoxious, counter-productive, shrouded in uncertainty and a failed mission.
Dissatisfied with the scheme, the Association of Senior Civil Servants of Nigeria called on the Federal Government to scrap the scheme, describing it as a “huge fraud”. The group made the appeal in Port Harcourt during its Annual Delegates Seminar for South-South Zone.
“The Present Contributory Pension Policy of the Federal Government should be scrapped. We discovered lately that the Pension Policy is a fraud on workers”, posited Yusuf Emmanuel, Chairman-General, Ministry of Defence Unit 2, Lagos Outstations.
In the same vein, the River State Chairman of Nigeria’s Mother Labour Unions – Nigerian Civil Service Union has appealed to the Rivers State Governor, Sir Siminalayi Fubara to “outrightly repeal” the Contributory Pension Scheme in Rivers State, because “It is not in the interest of civil servants”.
Comrade Chuks Osummah, the Rivers State Chairman of the Nigeria Civil Service Union, who made the appeal at the event to mark the Union’s 111 years of existence in Nigeria, expressed worry over the fate of workers who will retire under the Contributory Pension Scheme.
“We are calling on the Executive Governor of Rivers State to abolish the Contributory Pension Act as it is not in the interest of Rivers State civil servants”, a worried Osummah said.
Meanwhile, the National Assembly workers have left the scheme. The exit of workers of the highest law making organ in Nigeria further lends credibility to the agitations that all is not well with the Contributory Pension Scheme.
Less than 24 hours to abdicating office, former President Muhammadu Buhari removed the National Assembly workers from the scheme by assenting to the National Assembly Service Pensions Board Bill. Former President Buhari’s decision to remove the National Assembly workers from the Contributory Pension Scheme no doubt, does not only smack proof of reality of workers displeasure over the scheme but is a window for State.
Governments or other sectors that the Scheme covers, to opt out. A major reason that the National Assembly workers advanced was that the monthly stipends paid is low and paltry. And that pensioners under the Contributory Pension Scheme are lacking in many other benefits. In the Scheme, retirees are only entitled to what they saved from their contributions into Retirement Savings Account with the Pension Fund Administrators.
The fears of public/civil servants are not unfounded because though over 25 States of the Federation have adopted the Contributory Pension Scheme in principle by enacting relevant legislation, only six states of the Federation and the Federal Capital Territory — Abuja, have fully complied with the provisions of the extant laws on the Pension Reform Act. Full compliance and implementation of the Scheme has remained an uphill task denting the integrity of the scheme and its purported benefits for workers in the public, private and informal sectors the scheme was designed to cover.
According to PenCom website, “Full compliance by State governments with the implementation parameters such as remittance of both employer and employee Pension Contributions, payment of accrued rights, institution of the Group Life, are still relatively low”. It is also evident that while some State governments deduct and remit workers’ contributions, the states have failed to contribute their counterpart fund to the scheme; This violates provision of Contributors’ right as enshrined in Section 4(1) of the Pension Reform Act 2014. The Section provides that as an employee’s right, the employer shall contribute a minimum of 10 percent of the employee’s monthly emolument to his/her Pension Fund Custodian.
Under Section 11(1) of the Pension Reform Act, employers are required to “not later than seven working days from the day the employee is paid his salary, remit an amount comprising the employee’s contribution and employer’s contribution to the Pension Fund Custodian specified by the Pension Fund Administrators of the employee. The failure of State governments to act according to the express and unambiguous dictates of such extant provisions poses a grave and bleak future for the employees on retirement.By the refusal of State governments and other employers to make their counterpart contributions, no doubt, the scheme can not guarantee security for the welfare of the workers on retirement. The fate of employees, especially those working before the enactment and implementation, seems to hang on the balance; an aura and premonition of uncertainty on the seamless disbursement of what is legitimately their entitlement remains a puzzle, since they are likely to lose financial benefits for all the years they have served before the implementation of the Act in the State. Another misgiving that workers have with the Pension Scheme is the effective date of the Act.
Some workers argue that since the Pension Reform Act was enacted in 2014, it should have excluded workers already employed in the Public Sector before 2014, when the law was enacted. They argue that the effective date is “Pre-emptive” and retrospective, adding that laws are not implemented in retrospect.
According to a unionist and a Port-Harcourt based lawyer, Tamunobarasua Omoni, the effective date of implementation can shortchange workers employed before the effective date.
“You know that there are people that have been working in the public sector before the Reform Act was enacted in 2014. And their employer started remitting their contribution in 2018, what happens to the several years they have worked without contributions?
“The crux of the matter is the inclusion of those who are already working before the effective date. Such pre-emptive legislation could deprive workers their entitlements because benefits accruing to workers are dependent on amount employers and employees contributed.”
Barrister Omoni is of the view that all employees before the enactment of the Reformed Pension Act 2014 should remain under the Defined Benefit Scheme while the Contributory Pension Scheme should function with those employed after 2014.
To be continued in our next edition.

By: Igbiki Benibo