National Issues
Re-proposed Rejiging Of Pension Reform Act Of 2014 (As Amended) -By Eugene Imounu Uduigwome
When I read about the plan of National Pension Commission of Nigeria (PENCOM) to further amend the pension reform act of 2014 (as amended), the question that readily came to my mind was, what impact will the amendment make on the lives of workers and retires in Nigeria. The repealed pension act of 2004 did not and the current pension act of 2014 has not improved the economic wellbeing of workers and retirees in Nigeria, instead it has only improved the fortunes of those that are trading with and managing the contributions of Nigeria workers.
At the risk of being guilty of self-plagiarism because I had earlier written an article where I highlighted the flaws in the pension reform act of 2014, I ask again will the proposed amendment be holistic? Will the gap between the pensions of contributory retires and that of their colleagues in the defined benefit scheme (DBS) be addressed?
Sustainability of the privatized pension system should not be used as an excuse to punish public contributory pensioners. When PENCOM sought for increase in the retirement benefits for all staff in PENCOM, the Federal Government approved considerable increase in the retirement benefits for only the management staff of PENCOM. Viewed objectively staff of PENCOM who superintend over huge pension funds ought to be well remunerated when in active service and on retirement.
Pensioners
However When PENCOM sought for increase in the retirement benefit of its staff, sustainability was jettisoned for adequacy. Though pension adequacy is a key factor in determining a good pension system, I do not think that contributory retirees have been agitating for adequate pensions, and will not do so now that the Federal Government is facing financial crises. I don’t have the authority to speak on behalf of contributory retirees in Nigeria, but it is obvious that amongst other issues, the justice contributory retires have been seeking for is PARITY.
If the intent of the pension reform act of 2014 (as amended) is not to punish, pauperize or impoverish contributory retirees in Nigeria, then CPS retires who retired with higher terminal salaries coupled with retirement savings accounts, should not be allowed to live with the harrowing experience of seeing their colleagues in the DBS who retired with lower terminal salaries and who do not have retirement saving accounts end up receiving higher pensions.
The fact that DBS and CPS retirees, retired under two separate pension laws does not justify why the huge gap in the monthly pensions between the DBS and CPS retires should be allowed to remain the way it is. The pension reform act of 2014 (asamended) that has thrown up brazing pension inequality cannot be said to be a good law, therefore the pension inequality ought be redressed.
For equity and fairness, the monthly pension of DBS and CPS retires who retire on the same grade level ought to be at PAR.
A mistake was clearly made in the repealed pension reform act of 2004 and in the pension reform act of 2014 (as amended).
If the Federal Government had exempted all workers who started working before 2004 form the privatized pension scheme, like Chile did when all workers in Chile who were in service before 1982 were exempted from the privatized scheme, the pension disparity between DBS and CPS retirees would not have occurred, and the federal government would not be grappling with the payment of accrued pension rights, a situation that has led to contributory retirees having to wait for upto fifteen months or more before they can get their retirement benefits.
Many contributory retirees have unfortunately died while waiting to access their retirement benefits because they could not afford to buy medicaments for their ailments even when some of them had Millions of Naira in their retirement saving accounts, which they could not access due to the obnoxious pension reform act of 2014, that do not permit contributory pensioners to touch a dime in their RSA until the federal government pays their accrued pension rights. The vague and ambiguous phrase “as and when due” should be replaced with a definite date or time limit that workers would be paid their pension entitlement; when they retire.
“An injury to one is an injury to all” is the motto of labour unions all our the world, however despite the psychological injuries that have been inflicted on contributory pensioners in Nigeria since 2007 the leadership of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC)have been indifferent to the plight of contributory retirees.
The labour friendly government of President Muhammadu Buhari magnanimously approved two labour unions for contributory pensioners, Contributory Pensioners Union of Nigeria (CPUN)and Federal Parastatals and Private Sector Pensioners Association of Nigeria (FEPPPAN). However I watched with dismay how an unpopular group of contributory retirees tied to the apron strings of an affiliate to the Nigeria Labour Congress, took the federal government to court for approving two new unions for contributory retirees. I had expected the NLC to have called for the stoppage of the court case, by asking for its withdrawal with a view to resolving the contending issues in house. The case was allowed to go on in court and eventually the National Industrial Court resolved the case in favour of the federal government.
I was not surprised when the two newly registered unions, got affiliated to the then unregistered Former United Labour Congress of Nigeria led by Comrade Joe Ajaero, one of the few Central Labour Leaders in Nigeria today who truly deserves the appellation- labour leader. Gladly the ULC & NLC have resolved heir differences and have merged.
The proposed rejiging of the pension reform act of 2014 (as amended) presents another opportunity for the now reinvigorated NLC to heal the wounds of contributory retirees by ensuring that any pension system that eventually emergesis in favour of workers and retirees.
In 2018 the international labour organization released a well researched book titled “Reversing Pension Privatization Rebuilding Public Pension System in Eastern Europe and Latin America”.
The ILO publication reveal that “from 1981 to 2014 thirty counties privatized fully or partially their social security public mandatory pensions”.
“Despite pressures from the international financial organizations and the pension fund industry only thirty countries privatized all or parts of their pension systems: that is the majority of countries in the world have opted not to privatize”
“As of 2018 eighteen countries have re-reformed, reversing pension privatization”. The ILO publication also revealed that only Nigeria and Ghana privatized their pension systems in Africa.
Based on the ILO publication the Public Services International (PSI) also published an article titled “ILO Study Reveals Bankruptcy of Pension Privatization” here are some excerpts from the article. “The lessons that PSI draws from this experience are consistent with the experiences of privatization in other sectors.
The primary beneficiaries of privatization are elites within societies.
Privatization frequently facilitates and increase corruption.
Government and corporate promises of universal benefit of privatization are inflated and under delivered”.
If Nigeria decides to reverse its privatized pension system there will be fierce opposition from those who are benefiting from the scheme, however since pension privatization have been reversed in many countries, it can also be done in Nigeria if the Federal government will stop listening to the subjective views of those that are benefiting from pension privatization.
Havens will not fall if Nigeria reverses its privatized pension system back to public management, on the contrary there will be great jubilation amongst public servant sand retirees, loyalty from active public servants to government will be rekindled, productivity will increase, rest will truly be sweet after labour for retirees and I repeat government will no longer have problems paying unending accrued rights.
Pension funds should no longer be left solely in the hands of private managers who surreptitiously use pension funds for their own gains, leading to a situation where owners of pension fund companies end up getting richer and richer, while workers and retirees who are the owners of pension funds end up getting poorer and poorer.
The model of contributory person scheme managed by private companies was recommended to Nigeria government by some financial actors in the private sector, with the sole aim of making their own enormous profit from the contributions of workers.
Those who manage the affairs in Pension Transitional and Arrangement Directorate (PTAD) are not from the private sector, they are all public servants who are doing commendable great jobs.
Since President Muhammadu Buhari assumed office, pensioners under the purview of PTAD are being paid their monthly pension seamlessly and promptly every month.
PTAD has also paid all pension increases of 15 % and 33% to almost all DBS pensioners, whereas contributory retirees under the purview of PENCOM have been denied their right as contained in section 173 (3) of the 1999 constitution (as amended) since 2016.
Why the double standard in the same country? Why are contributory retirees being treated like second class pensioners, while owners of pension fund companies are daily smiling to the bank.
Recently PTAD had a technical problem with its payment system that led to the under payment of some pensioners, while some were overpaid in November, 2020. PTAD swiftly informed DBS pensioners about the “technical glitch” and assured them that the anomaly will soon be rectified. Within forty eight hours, pensioners who were underpaid were paid their actual monthly pension, while necessary steps were taken to recover monies from pensioners who were overpaid.
The excellent service delivery from PTAD, clearly indicates, that unlike in the past contributory retirees from the public sector, can also be paid by a public managed pension office where contributory pensioners will no longer pay various known and unknown fees, hidden charges etc to pension fund companies which end up in private pockets.
Contributory retirees may even prefer to pay tax to the federal and state governments because the tax retirees would pay may end up being used to provide social services and infrastructural facilities for public use.
If the leadership of organized labour in Nigeria had opposed the introduction of privatized pension, like their counterparts did in many countries, contributory retirees would have been saved from the pains they now go through under privatized pension system. It is not too late for Nigeria labour leaders to act if only they would espouse the wise counsel of PS1 based on ILO findings “when government announce privatization, unions must prepare to fight.
Accumulated evidence shows that most privatizations can and should be defeated.
Privatizations can be reversed”.
The UNCP and FEPPPAN not too long ago requested for the scraping of privatized pension system, now that PENCOM has taken the commendable step to rejig the pension reform act of 2014, will the views of contributory retirees matter? Or will the views of private financial sector actors be imposed again on public servants and retirees?.
Will Nigeria adopt the steps that ILO has clearly recommended for countries wishing to reverse their pension systems?
The monstrous face of the pension reform act of 2014 ought to be replaced with that of a good human face that would translate to a pension law which will cater for the welfare of workers and retirees in Nigeria.
For everything there is a season, a time for every activity under heaven – a time to embrace and a time to turn away (Ecclesiastes 3: 1 and 5).
When privatized pension system was touted to be a good pension model, many countries including Nigeria embraced it, but when the flaws in privatized pension system became apparent, many countries who embraced the system and truly care for the welfare of their workers, retirees and indeed all their citizens, have since turned away from privatized pension system, Nigeria should also turn away from privatized pension system, otherwise Nigeria may soon end up with the unenviable position of the last nation with privatized pension system.
If Nigeria fails to learn from the happenings in Chile the persistent protests against privatization especially against pension privatization that has been going on in Chile may one day get to our shores.
EUGENE UDUIGWOME
Federal Contributory Retiree
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