BusinessDay 25 Oct 2017

Wednesday 25 October 2017
In Association with
BUSINESS DAY
25
C002D5556
PensionToday
E-mail: insurancetoday@businessdayonline.com
Advocacy group pick holes in Devolution of Powers
Bill, pension in constitutional amendment
Centre for Pension Right
Advocacy, a non-government
organization
led by Ivor Takor, a pension
consultant and
technocrat has faulted the ongoing
Devolution of Powers Bill No.3 and
pension matter in the Constitutional
Amendment at the National
Assembly. In this position paper,
the advocacy groups enlightens
on the challenges with the new
ideology.
The constitutional definition of
‘public service of the federation’ as
captured in Section 318 of the 1999
Constitution, appears to include
every employee of the Federal
Government of Nigeria, regardless
of whether he or she works in the
civil service, national assembly
service, judicial service, military
service, intelligence services, police
service, paramilitary service, and
indeed employment in any of the
Federal Government Parastatals,
Extra-ministerial Departments and
Agencies.
Therefore, to segregate persons
in the military service, the police
force and other paramilitary and
security agencies in the federation
(paragraph (1)(iii) from federal
employees, persons in the public
service of the federation… Etc
(1)(i) under pension in Bill No. 3,
without altering the Constitutional
definition of public service of the
federation in section 318 of the
Constitution to exclude persons in
military service, police force and
other paramilitary and security
agencies in the federation, caries
an element of mischief.
The only rational explanation of
the obvious legislative drafting mischief,
is that the National Assembly
intends to give constitutional backing
to its ongoing attempt, aimed
at killing the Contributory Pension
Scheme introduced by the Pension
Reform Act 2014 by attempting to
exclude certain categories of officers
and employees of the Public
Service of the Federation, including
persons in military service, police
force and other paramilitary and
security agencies in the federation
from the Contributory Pension
Scheme, vie the private member
Bills that has already gone through
second readings.
It is important to state here
that the Federal Government as
represented by the Office of the
Secretary to the Government of the
Federation, including stakeholders
in the pension industry, such as
Employers’Associations, the Nigeria
Union of Pensioners, the Nigeria
Labor Congress (NLC), the Trade
Union Congress (TUC), operators
in the industry, Civil SocietiesOrganizations
and the Nigerian Police
at a Public Hearing Organized by
the House of Representatives Committee
on Pension, to deliberate
the Private Member Bill, held on
Thursday 28 September 2017 at
the House of Representatives New
Auditorium , Room034 National
Assembly, Abuja, roundly condemned
the Bill and asked that it
be withdrawn or be thrown out the
House of Representatives.
The main objective of the pension
reform, which introduced
the Contributory Pension Scheme
(CPS) is to ensure that every person
that worked in either the public or
private sector in Nigeria receives his
or her retirement benefits as and
when due. This is made possible
through monthly contributions
by both employers and employees.
The contributions, which are
paid into individual Retirement
Savings Accounts of employees
are invested. The contributions,
the returned-on investment and
accrued pension rights for service
prior to the takeoff of the CPS, create
a ready pool of funds for the
payment of retirement benefits.
Another objective of the Contributory
Pension Scheme is to
assist improvident individuals by
ensuring that they save in order
to cater for their livelihood during
old age.
Any Constitutional amendment,
aimed at taking personnel
of the Police force and other paramilitary
out of the CPS is putting in
jeopardy, the welfare of these personnel
after they have retired. This
is because there won’t be a ready
pool of fund to pay their retirement
benefits, thereby leaving the payment
of their benefits at the mercy
of annual budgetary provisions
and monthly allocations, based on
resources available to government.
Secondly, one of the reasons
for the provision of Retirement
Savings Account and making them
personal to employees, is to protect
pension benefits already earned by
an employee from being tampered
with by an employer under any
guise.
The second most important
issue in the Devolution of Power
Bill No. 3, under pension is the
attempt by the National Assembly
to bring a dichotomy among workers
in the private sector and how
their pension will be legislated. In
the proposed amendment, under
pension, in paragraph (1)(i) the
Bill seeks to limit the powers of the
National Assembly to make laws on
pension for employees of incorporated
companies regulated by federal
enactment, while in paragraph
(2), it seeks to givepowers to make
laws on pension for employees
of business enterprises resident
within the state and subject to
state regulations to Houses of Assemblies
of States.
This dichotomy is not necessary
asemployees in the Private
Sector are already covered under
Section 2 of the Pension Reform
Act 2014 enacted by the National
Assembly. Secondly, if the amendment
is being done only for the
sake of devolution of power from
the Central government to the
States, then this devolution is
not in the overall interest of the
concern employees.
State governments have not
shown any commitment in the
welfare of their workers and pensioners.
How then is it expected
that they will be interested in the
welfare of workers of private enterprises
or self-employed persons in
the informal sector. It is on record
that about 20 states out of 36 states
of the federation owe their workers
and pensioners about N200 billion.
28 are still struggling to put in place
pension laws for their states and
local government employees, 13
years after the repeal of Pension
Act 1990, which was of universal
application in the public services
all over the country. Even those that
have enacted pension laws for their
workers, only Lagos State and few
others are implementing the laws
enacted by their Assemblies.
States that are not paying pension
to their workers, lack the right
or are morally bankrupt to compel
employers of business enterprises
within their states to contribute
for or pay pension to their workers
neither can theycompel/persuade
workers in the informal sector (selfemployed
individuals) to make
contributions for their pension.
Pension reform was necessitated
by many problems bedeviling
the public and private sectors’
pension schemes in Nigeria. Many
private sector organizations did not
have any pension arrangement
for their employees and where it
existed, it was characterized by
lack of supervision and regulation.
The Federal Government therefore
decided to take measures aimed at
developing a system that is sustainable
and has the capacity to achieve
the ultimate goal of providing a
stable, predictable and adequate
source of retirement income for
employees in both the public and
private sector. This culminated in
the enactment of the Pension Reform
Act 2004, which introduced
the mandatory Contributory Pension
Scheme. The Pension Reform
Act 2004 was repealed and replaced
in 2014 with Pension Reform Act
2014.
The total pension fund assets as
at July 2017 was N6.5 trillion, with
7.6 million contributors. To date,
about 200,000 private sector employers
of labor are implementing
the CPS and have contributed 60%
of the total pension fund assets.
In order to consolidate the gains
so far recorded in the organized
private sector, the National Pension
Commission has with inputs from
stakeholders, put in place guidelines
for the introduction of micro
pension, targeting the informal
sector (self-employed) to secure a
better life for these categories of
citizens in their old age.
Consequently, there is a dire
need to consolidate the gains of
the CPS and avoid any legislative
amendment of the Constitution
and the Pension Reform Act 2014,
that will bring confusion in the
pension industry or may not be
beneficial to employees and the
self-employed.
The proposed Constitution
amendment Bill No. 3 on Devolution
of powers regarding pension
and the ongoingprocess of
amendment of the Pension Reform
Act 2014 are unnecessary
as they will bring unintended
negative consequences on employees,
the self-employed and
the economy.
RC634453
Diamond Pension Fund Custodian Limited
1A, Tiamiyu Savage Street, Victoria Island, Lagos State.
Tel: 01-4613753, 2713680, 2713954
Fax: 01-2713955
Email: info@diamondpfc.com
Website: www.diamondpfc.com
This section is
created to increase
awareness and deepen
knowledge about
the contributory
pension scheme.
If you have enquiries
or contributions,
send to this e-mail:
diamondpfcbusday@yahoo.com