Labour, others fault new pension law
From Prisca Egede and Segun Ayeoyenikan, Abuja
AFTER a review of the nation's new pension law yesterday, the verdict of the Nigeria Labour Congress (NLC) and some other stakeholders was that it was in dire need of improvement in several areas.
Labour's grouse with the new Pension Act is that it excludes certain pensioners like those of the Nigerian Railway Corporation and primary schools.
At a one-day workshop for labour leaders on the new Act in Abuja, the NLC President, Adams Oshiomhole said: "The large number of pensioners of primary schools across the country, those other pensioners whose benefits were due for payment even before the cut-off date when the new Act was signed into law by President Olusegun Obasanjo and also retired soldiers who had continued to throng the cities and live under bridges, were not taken into consideration by the Contributory Pension Act."
The Labour leaders, including leaders of the Trade Union Congress (TUC), the Confederation of Free Trade Unions (CFTU) and the NLC expressed reservations about several provisions of the new Pension Act, which they claimed "to a large extent put pensioners at a disadvantage and many of them at the risk of losing their savings to failed fund administrators."
The Labour leaders queried the measures put in place by the National Pension Commission (NPC) to guarantee life savings of the pensioners in case of default or insolvency by the Pension Fund Administrator (PFA) who would be licensed by the government.
Oshiomhole said: "We did not want to react immediately to the new pension regime signed into law by government because we felt we should, altogether, appraise and assess the content and the implications of the Act to the workers."
He said that Labour "disagreed with the provisions regarding the contribution ratio between the employer and the employee in both the private and public sectors."
The Pensions Act prescribes seven and half per cent of total emoluments to be paid by workers and the employers.
But Oshiomhole said that the harmonised position of Labour submitted to the National Assembly was for 121/2 per cent contribution from the employers and five and half per cent from workers.
An explanation by the Acting Director General National Pension Commission (NPC), Malam Kabiru Mohammed that the Federal Government intended to pay-off the pending bill of pensioners excluded from the new Pension Act through special budgetary allocations could not convince the Labour unions.
Oshiomhole stated: "Budgetary allocations in the past had never and could never have taken care of the payment of pensioners in Nigeria Railway Corporation and teachers in the primary schools. So the new effort by government was in the wrong direction regarding such cases."
Prof. Oluwole Akanle of the Centre For Law and Development Studies (CLDS), Lagos who delivered the lead paper, stated that what the government had done in the new Pension Act was to decentralise pension administration in the country.
His words: "Government's concern primarily was to correct the challenges prevalent in the administration of pension funds in the public sector, which was fraught with conflicts of interest, collusion, squandering of pension funds, outright corruption and ghost pensioners."
According to him, if properly managed, the contributory pension scheme will ensure that every worker receives his or her benefits upon retirement and would establish uniform rules for both the public and private sectors.
But he noted that there was no statement in the Act that answered the question of whether current contributions by workers to the Fund were meant for Contributory Pension Scheme (CPS).
Akanle said that the provisions of the fund had changed about 10 times since plans to formulate the new Act got underway.
"There is still the question of who owns the NSITF and who are the shareholders. Until this is answered the question as to its establishment lingers on," he said.
He, however, suggested that the Fund must establish a Pension Fund Administrator (PFA) to manage the aspect of pension while the Fund itself should manage the aspect of social insurance for its contributors.
Pointing out some grey areas in the Act, Akanle said the law had not made any distinction between pensionable staff, pensioners, deceased pensioners and their next of kin. The professor noted that problems could arise as regard the stipulation of the law that mandated every employee to maintain a retirement savings account with a PFA of his/her choice.
"In the case of mismanagement or bankruptcy on the part of the PFA, would the government pay the entitlement of the affected staff" Akanle asked.
He noted that existing Occupational Pension Schemes (OPS) of the private sector might continue provided they were fully funded and the funds and assets properly separated from that of employer.
According to him, its funds and assets should be held by a custodian and every employee operating the OPS should be free to opt for the CPS.
But according to Akanle, the application of the Act should be limited to the public sector in order to allow the private sector to appraise its implementation before adoption.
