Redeeming states and local govt workers from old age poverty

Nothing so far exposes the greed, avarice and self-centredness of our ruling political class as the pension rights of States and Local Government employees.  Some of the immediate past Governors who failed in eight years to enact laws to take care of pension of employees of States and Local Governments they superintended over, were able to within two days, through subversive generosities extended to the members of their ever “cooperative” Houses of Assemblies to protect for themselves, bloated “pension”, allowances, which include houses, bullet proof vehicles, domestic and security helpers and provisions for medical tourism, which they smuggled into the statute books of the states in the name of pension rights for political office holders or whatever names so called. Honestly, it is difficult to understand why a Governor who served a state for eight (8) years should believe that his services were more meritorious, deserving a better rest after labour than other employees of the same State and Local Governments, who have put in between twenty (20) to thirty five (35) years of services. Some of these Governors’ have turned Abuja the seat of the Federal Government, to their safe haven. They can be seen in the hallow chamber of the Senate of the National Assembly; superintending as Ministers in Federal Ministries; while some of them are already positioning themselves for Ambassadorial positions and chairmanship of “lucrative” Federal Parastatals and Agencies.

The adage that says “rest is sweet after labour” may after all not hold for employees of most States and Local Governments in the country. The adage holds sway only for employees who have got their rest planned for them by their employers during the period of their labour. Unfortunately for employees of most States and Local Governments, planning is alien in the management of States affairs.

The advent of paid employment, introduced planning for rest after labour through the introduction of pension schemes. This is institutionalised by International Conventions and Standards, particularly International Labour Organisation (ILO) Social Security (Minimum Standards) Convention 1952 (No.102), which established the right of all to Social Security and expressed the responsibility of National Government and international communities to guarantee that right in practice. Pension is the most visible pillar of any social security scheme of any country.

In Nigeria, the first public sector pension scheme was introduced through the Pension Ordinance of 1951 with retroactive effect from January 1, 1946, which protected the pension rights of colonial public officers. This was followed by Decrees 102 and 103 of 1979 enacted for the civil service and the military respectively, with retroactive effect from April n1974. The two decrees became Pension Act 1990 and remain in force with universal application in the Public Service of the Federation, Public Services of States and Local Governments until it was repealed by the Pension Reform Act 2004, in June 2004.

Nigeria in 2004 carried out a comprehensive reform of its pension schemes, with the promulgation of Pension Reform Act 2004, which became effective on 25^th June 2014. The Act established a Contributory Pension Scheme for employees’ in the Public Service of the Federation, Federal Capital Territory and the Private Sector. Employees of the Public Sector of States and Local Governments were excluded from the coverage of the Act.

The exclusion was not an oversight by the Fola Adeola Committee that carried out the pension reform and drafted the Bill that was enacted into Pension Reform Act 2004. Employees of States and Local Governments where covered in the draft bill. However, the Governors’ mobilised representatives of their states from both chambers of the National Assembly to remove employees of states and local governments from the bill before it was passed into law. Their excuse was that the country was under civil rule therefore; there must be the practice of true federalism, which does not allow the National Assembly to make laws for the States on an issue such as pension, which does not fall in the exclusive legislative list of the Constitution. Never mind that when they stand to benefit, such as the recent bail out from the federal government for financially bankrupt states to pay backlog of salaries areas to their employees, Governors’ will jettison the principle of true federalism.

Years into the implementation of the Pension Reform Act 2004, which repealed the Pension Act 1990 that was of universal application in the whole of the Public Sectors in the country and the introduction of the Contributory Pension Scheme no State Government enacted a law to protect the pension rights of its workers. Disturbed by this lacuna, the Board of the National Pension Commission (PenCom) approached the National Council of States and got the Council to agree to adopt the Contributory Pension Scheme for their employees. The Council decided that States Governments will enact their own pension laws in line with a draft bill that was prepared for them by PenCom.

As at the last count, only about ten States Governments have either enacted pension laws or are at various stages of enacting pension laws for their employees. More disturbing is the fact that even those that have enacted their own pension laws, thereby keying into the Contributory Pension Scheme, operate the Scheme in default of their own laws.

Nothing so far exposes the greed, avarice and self-centredness of our ruling political class like the pension rights of States and Local Government employees.  Some of the immediate past Governors who failed in eight years to enact laws to take care of pension of employees of States and Local Governments they superintended over, were able to within two days, through subversive generosities extended to the members of their ever “cooperative” Houses of Assemblies were able to protect for themselves, bloated “pension”, allowances, which include houses, bullet proof vehicles, domestic and security helpers and provisions for medical tourism, which they smuggled into the statute books of the states in the name of pension rights for political office holders or whatever names so called. It is honestly difficult to understand why a Governor who served a state for eight (8) years should believe that his services were more meritorious, deserving a better rest after labour than other employees of the same State and Local Governments, who have put in between twenty (20) to thirty five (35) years of services. Some of these Governors’ have turned Abuja the seat of the Federal Government, to their safe haven. They can be seen in the hallow chamber of the Senate of the National Assembly, superintending as Ministers in Federal Ministries, while some of them are already positioning themselves for Ambassadorial positions and chairmanship of “lucrative” Federal parastatals and Agencies.

Nothing highlights the urgency for the adoption of the Contributory Pension Scheme for employees of States and Local Governments now than the remarks of Mr President. Sahara Reporters on their online portal reported on March 25, 2016 that President Muhamadu Buhari remarked while speaking at the second National Executive Committee meeting of the APC held in Abuja on Thursday 24^th March 2016 that 27 States of the federation are having difficulties paying their workers’ salaries due to the country’s economic woes. Mr President was only reminding his party’s members who included Governors’ elected on the party’s platform, what was already known to every Nigeria. If nothing else points to the obvious bankruptcy of most States Governments, the recent cry by States Governors for bail out from the Federal Government to assist them to pay outstanding workers’ salaries was a direct acceptance of the bankruptcy of most States Governments.

The bail out to States from the Federal Government was used to pay outstanding salaries and nothing was said about payment of pensions. The reason is not farfetched. It is only current workers who can tackle States Governments because of outstanding salaries areas. Pensioners apart from being weak and old, their platform the Nigeria Union of Pensioners can only beg and rely on the conscience (something that is facing extinction in public governance) of State Governors for their members to pay. The way to redeem States and Local Government Workers from old age poverty and penury is for States to immediately key into the Contributory Pension Scheme.

Under the Contributory Pension Scheme, pension is fully funded through contributions by the employer and the employee. In a fully funded pension scheme, pension funds and assets match pension liabilities at any given time. The Contributions are paid into a personal pension account of the employee (Contributor) known as Retirement Savings Account (RSA). The funds in the RSA are invested to generate additional fund. On retirement, the employee is paid from the outstanding fund in the RSA, which includes the contributions of the employer and the employee and the return on investment thereof and any pension benefit accruing to the retiree before the commencement of the Contributory Pension Scheme.

The Contributory Pension Scheme unlike the old Define Benefit Scheme it replaced, has inbuilt safeguards meant to protect the fund from mismanagement and fraudulent practices.  The monthly contributions are put into an RSA, which the employer cannot access, while the fund is warehoused by the Pension Fund Custodians and managed by a Pension Fund Administrators. The law established the National Pension Commission, among other objectives, to regulate, supervise and ensure the effective administration of pension matters and retirement benefits in Nigeria.

Ten years into the commencement of the Contributory Pension Scheme, for workers of the Federal Public Service and Private Sectors employees, a non-existing pension industry, which came into effect with the enactment of Pension Reform Act 2004, which introduced the Contributory Pension Scheme, is now boasting of over 5 trillion Naira investable fund, and the has become the beautiful bride of investment in the country.

Keying into the Contributory Pension Scheme by States Governments will ensure that States and Local Government Employees receive their pension without any delay. Payment of pension will no longer be relied on annual budgetary provision by States, most of who are relying on Federal Government bail outs to pay salaries of current employees. States will not voluntarily key into the scheme. If they did not do so when their economies where not the way they are now, they will not on their own do so now even though it is the only way out. It is time for the National Pension Commission, the Nigeria Labour Congress, the Trade Union Congress, industrial unions and the persuasion of the Federal Government to get them to key in.

***Takor, mni is Director, Centre for Pension Right Advocacy