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Why Pension Reform Act 2004 needs amendment – PenCom

Continues from last week

xvii. Provision of Additional Benefits (S. 4(4) of the Bill)

There were serious and persistent complaints by stakeholders against the abolition of gratuity under the PRA 2004. The issues was extensively discussed and there was consensus among stakeholders that a provision should be inserted in the PRA that would allow the employer and the employees to agree, through collective bargaining, on payment of additional benefits upon retirement or cessation of employment. The amendment in the 2013 Bill seeks to address this agitation of labour for a provision on gratuity in addition to the pension.

xviii. Protection of RSAs from Garnishee Proceedings (S. 116 of the Bill)

The PRA 2004 only protects the pension fund assets from attachment in the execution of judgment debt or winding up proceedings for Pension Fund Custodians (PFCs). However, no protection is given to pension fund assets in the event of attachment, garnishee proceedings or injunctive reliefs against RSAs or PFAs. The PRA 2013 Bill therefore seeks to protect the pension assets in Retirement Savings Account (RSA) from being subject to these, attachment, injunctive and garnishee orders.

xix. Licensing Requirements of Pension Operators (S. 60 – 64 of the Bill)

The PRA 2013 Bill also amended the provisions on the minimum capital requirement for Pension Fund Administrators and Pension Fund Custodians have been reviewed upwards to bring it in line with current realities.

xx.Adoption of the CPS by States and Local Governments (Ss. 2 & 3 of the Bill)

Given the clear benefits recorded from the implementation of the CPS by the Federal Government and the private sector, there is a consensus among stakeholders on the need to provide the framework that would facilitate the adoption of the CPS by States and Local Governments subject to local variations. A provision to that effect had been inserted into the PRA 2013 Bill.

xxi.  Consolidation of Previous Legislations Amending the PRA 2004 S. 5 of the Bill)

The PRA 2013 Bill seeks to consolidate earlier amendments to the PRA 2004, which were passed by the National Assembly.

University professors

These include the Pension Reform (Amendment) Act 2011  which exempts the personnel of the Military and the Security Agencies from the CPS as well as the Universities (Miscellaneous) Provisions Act 2012, which reviewed the retirement age and benefits of University Professors. Furthermore, the Bill seeks to incorporate the amendment to the 1999 Constitution vide the Third Alteration Act which vests jurisdiction on pension matters in the National Industrial Court.

xxii. Interpretation (S. 120 of the Bill)

In order to remove ambiguity from the Act and for clarity of interpretations, the 2013 Bill defines a number of terms used in the PRA 2004 as well as new terms introduced by the amendments.

xxiii. Editorials

There were significant editorial errors observed in some provisions of the PRA 2004 both in terms of spellings and cross referencing. Consequently, the 2013 Bill seeks to effect the necessary corrections.

3-0  Further Recommendations

3.1  Following a review of the provisions of the PRA 2013 Bill, the Commission observed that certain provisions needs further review in order to remove ambiguity in their wordings and enhance their implementation. Accordingly, we would like to further recommend as follows:

a)  Years of Qualifying Experience for the Director-General and Commissioners (S. 26(2)(d) and S. 26(5) of the Bill): The PRA 2013 Bill reviewed the provision of the 2004 Act with respect to qualifying years of experience for the Director-General such that the requirement is graduated in descending order from that of the Chairman at 20 years to that of the Director-General at 15 years. It also stipulates a requirement for 15 years qualifying years of experience for the Commissioners, who act for the Director-General in his absence. There is no such requirement for Commissioners under the PRA 2004.

It would appear that specifying a minimum of 15 years experience for the Director-General of the Commission and the Commissioners seeks to fortify the standard and streamline it with the requirements in other Government Institutions in the financial Services industry.

For instance, a review of Section 8 of the Central Bank of Nigeria (CBN) Act 2007 and Section 8 of the Nigeria Deposit Insurance Corporation (NDIC) Act 2006 showed that no qualifying years of experience is stipulated for appointment to the positions of the CBN Governor and Deputy Governors and Managing Director and Executive Directors of the two institutions respectively.

Section 3(2) of the Investment and Securities Act 2007 stipulated 15 years experience for the Director-General and 12 years experience for the Executive Directors of the Securities and Exchange Commission (SEC). Section 10(2) of the National Insurance Commission (NAICOM) Act 1997 also stipulated 15 years experience for appointment as Commissioner of Insurance. The Companies and Allied Matters Act (CAMA) 1990 stipulates 10 years experience for appointment as Registrar-General of the Corporate Affairs Commission (CAC).


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