The New Euphoria over Pension Reform

0 0
Read Time:4 Minute, 29 Second

The endorsement of a new pension law for the country is a big decision, but effective implementation of the law is what will make the difference. Vincent Obia writes

When on June 25, 2004 former President Olusegun Obasanjo signed into law the Pension Reform Bill 2004, the move was generally lauded as a significant new lease of life for workers. It was a major change from the notoriously unreliable and largely unfunded “Defined Benefits Scheme,” which was infamous for the ignominious scenes of retirees sweating and dying on queues while waiting to collect their retirement benefits. Under the Act, the National Pension Commission (PenCom) was constituted as a regulatory authority to oversee and check the activities of 25 registered Pension Fund Administrators.

The advertised hope was that the stage had been set for a big moment for Nigerian workers. But the optimism soon gave way to despair, as the promised benefits of the 2004 reform were increasingly choked off through ineffective implementation by the obviously unenthusiastic government agencies. A pension scheme professed to be a strategy to ensure that every worker got their retirement benefits as and when due, assist workers to save for their old age, and establish a uniform set of rules, regulations and standards for the administration and payment of retirement benefits soon became a cesspit of corruption. The discovery of a N273 billion pension fund fraud in 2012 by a senate inquest was just one of the mind-bending statistics Nigerian workers have had to swallow about their contributory pension scheme.

That was yesterday.

But on Tuesday, President Goodluck Jonathan raised new hopes in workers when he signed into law the Pension Reform Bill 2014 to replace the Pension Reform Act 2004. The new law stipulates stiffer penalties for pension fund fraud, gives PenCom more powers to manage the fund and punish defaulters, and places greater responsibility on employers in terms of contributions to the pension fund.

Specifically, the new pension law prescribes a 10-year jail term for anyone convicted for embezzling pension fund and empowers PenCom to seal off premises of organisations not complying with the provisions of the law and also institute criminal proceedings against employers who fail to deduct or remit pension contributions of their staff within a stipulated time. The law upped the minimum rate of pension contribution from 15 per cent (minimum of 7.5 per cent of the worker’s monthly basic salary apiece by the employer and the employee) to 18 per cent, comprising minimums of 10 by employer and 8 per cent by employee.

The new pension law also reduces the waiting period for accessing benefits in the event of loss of job by employees from six to four months.

The latest reform has been  described as an amalgam of previous alterations to the Pension Reform Act 2004, including the Third Alteration Act, which amended the 1999 Constitution by vesting jurisdiction on pension matters in the National Industrial Court; the Pension Reform (Amendment) Act 2011, which exempts the personnel of the military and the security agencies from the Contributory Pension Scheme; and the Universities (Miscellaneous) Provisions Act 2012, which revised the retirement age and benefits of university professors.

In reality, the coming of the Pension Reform Act 2014 owes much to the dexterity and courage of the acting director general of PenCom, Mrs. Chinelo Anohu-Amazu, the support of the president, and the understanding of the National Assembly.

But the government and the relevant agencies still have an awful lot to do to guarantee the full benefits of the pension law to the country’s workers. The implementing agencies in the country must obey the spirit, not just the letter, of the law. The unlikelihood of getting anywhere near intended goals, despite well-conceived laws, has frequently been underscored by the tendency to focus on the narrow meanings and technicalities of the laws. This is why the judiciary must also be a cooperative and willing ally in the efforts to make the pension reform work.

The role of the judiciary is thrown into sharp relief by the unsavoury outcomes of the recent pension fund prosecutions, especially the police pension fund fraud conviction saga. The Economic and Financial Crimes Commission, the prosecuting agency, was blamed by analysts for a ridiculously light sentence handed down on former Police Pension Office director John Yusuf on January 28 last year for his role in the embezzlement of nearly N32 billion from the Nigeria Police pension fund.

Justice Abubakar Thalba of the Abuja High Court had sentenced Yusuf to two years imprisonment or an option of N750, 000 fine, in a verdict that elicited national and international outrage. But experts said the judge merely pronounced the maximum sentence under the Penal Code, which EFCC had relied on to prosecute the accused. EFCC was criticised for failing to use other equivalent provisions under its Act that contain severer sanctions. The commission was also blamed for adopting a plea-bargaining system that was basically oral, informal, and open to the discretion of the judge.

Certainly, the kind of discretion exercised by Thalba in the police pension fund case is not such that can guarantee and safeguard the objectives of the new pension law.

The Pension Reform Act 2014 is a big idea. But its success will depend on the political will of the government.

Happy
0 0 %
Sad
0 0 %
Excited
0 0 %
Sleepy
0 0 %
Angry
0 0 %
Surprise
0 0 %

Average Rating

5 Star
0%
4 Star
0%
3 Star
0%
2 Star
0%
1 Star
0%

Leave a ReplyCancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.