Breaking News
Translate

Gratuity subsists, Labour tells employers

By VICTOR AHIUMA-YOUNG

ORGANISED Labour has advised private sector employers in the country to avoid unnecessary tension and restiveness their planned scraping of gratuity as a result the Perform Reform Act, PRA, 2004, which gave rise to the Contributory Pension Scheme, CPS, is causing warning that the plan is a time bomb waiting to explode.

Presenting a paper on “Pension Reform Act 2004: Trade Unions Perspective”, at Labour representative in the Board of the National Pension Commission, PENCOM, Comrade Ivor M. Takor, argued that gratuity subsists because there is nowhere in the PRA where the issue of gratuity is addressed.

Comrade Takor delivered the paper at a PENCOM organised programme in Ibadan, Oyo State, lamented that even efforts by PENCOM to resolve the unnecessary controversy, was frustrated by employers’ body.

According to him: “Payment of gratuity in the private sector has become a contentious issue between us (Labour) and Nigeria Employers Consultative Association, NECA.. The coming ,into force of the Pension Reform Act 2004, which introduced the Contributory Pension Scheme, has more or less silenced gratuity. The facts are as follows: The Contributory Pension Scheme which draws contributions from both workers and employers is a scheme working towards the pension of workers and not gratuity. Gratuity is supposed to be the sole business of the employer. As the name implies, it is a gratuitous (golden hand shake) for the employer to the employee expressing gratitude for the services he/she had rendered to the company during active service. Payment of gratuity in the private sector is a product of collective bargaining and pension reform was not put in place to take away that which had been achieved through collective bargaining.”

“PenCom had in keeping in with the above spirit, put up a draft guideline on management and payment of gratuity in the private sector. NECA kicked against the guideline, while advising that the Commission should not supervise or regulate gratuity as the PRA 2004 does not have any provision for gratuity. Granted that the PRA 2004 has not provided for the Commission to supervise or regulate gratuity, it has not also abolished the payment of gratuity in the private sector. Employers had always paid gratuity along with their contributions for the defunct Nigeria Social Insurance Trust Fund, NSITF pension scheme.”

He called on labour especially, NLC to “take up the issue frontally, challenge the position of NECA, sustain her position on the payment of gratuity in the private sector and prosecute the issue to its logical conclusion.”

He said: “Section 4 (1) of the Pension Reform Act 2004 provides that a holder of a retirement savings account upon retirement or attaining the age of 50 years, whichever is earlier, shall utilize the balance standing to the credit of his retirement savings account for the following benefits- (a) Programmed monthly or quarterly withdrawals calculated on the basis of an expected life span; (b) Annuity for life purchased from a life insurance company licensed by the National Insurance Commission with monthly or quarterly payment. The programmed withdrawal seems strait forward while annuity seems complicated and it is new even in the Insurance Industry in Nigeria. The Commission in collaboration with the National Insurance Commission has put up regulations for annuity. There is however a need for serious education of contributors on the options, especially the annuity.”

“Section 4 (1) C of the Act does not state the quantum of the lump sum that a contributor can withdraw. To leave the determination of what constitute a lump sum or its negotiation, to the retiree and the Pension Fund Administrator, is not helpful. Retirees especially the majority of those our unions cover, do not have the capacity to engage the Pension Fund Administrators in such type of negotiation.

Section 21(a) provides that the Commission shall have power to formulate, direct and oversee the overall policy on pension matters in Nigeria. Furthermore, Section 97 states that the Commission may make regulations generally for the carrying into effect the provisions of the Act. These sections confer on the Commission, powers to make rules which will be binding. The Commission should therefore, draw from the powers conferred on it by the above provisions, to formulate a policy on the quantum of the lump sum and direct the Pension Fund Administrators, PFAs,’ accordingly.”


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.