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 (self-employed 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.