By Joseph Ifebunandu

Pension has remained a key electioneering and governance issue as governments and political parties around the world seek better ways to cater for the welfare of workers who have retired due to old age, attainment of mandatory years of service, downsize of workforce, injury or sickness.

Whereas Nigeria’s pension system worked for a while, soaring pension bills, corruption, and maladministration in the old pension system resulted in irregular and, in many cases, non-payment of pensions. This in turn brought untold hardship on pensioners, as the awful state of pensioners from state to federal level became a perennial national embarrassment.

It was for this reason that the Federal Government undertook a thorough overhaul of the pension system, resulting in the Pension Reform Act 2004.
However, much as the reforms literally transformed the nation’s pension system, especially as it concerns Federal Government employees and the organised private sector, the operation of the Pension Reform Act 2004 in the last nine years has also exposed several loopholes and concerns, which must be addressed.

For instance, the rampant allegations of looting in the various Pension Departments were so rampant that the National Assembly had to carry out a thorough investigation into the matter. The findings were so outrageous that the Senate President, David mark described this wickedness against our aged ones who gave their prime years to the nation as equal to blood money.

It was for all such reasons, therefore, that the nation heaved a sigh of relief when President Goodluck Jonathan Administration proposed the Pension Reform Bill 2013 to the National Assembly. The cardinal objectives of the Pension Reform Bill, which has reached advanced stages at the National Assembly, are to enhance the powers of the National Pension Commission (PENCOM) in its regulatory and enforcement activities enhance the protection of pension funds and assets, and unlock the opportunities for the utilization of pension assets for national development.

Others are to review the sanctions regime to reflect current realities, provide for the participation of the Informal Sector, and also to provide the framework for the adoption of the Contributory Pension Scheme by States and Local Governments.
Importantly, the Bill provides for the proper establishment of the Pension Transition Arrangement Departments (PTADs) to take over the remittance of benefits to pensioners under the Defined Benefits Scheme.

It will ensure greater efficiency and accountability in the administration and payment of pensions under the Defined Benefits Scheme, as pensioners under the old scheme will now receive their pensions directly rather than through third parties. This will bring the era of impunity and corruption in the various Pension Departments to an end and enhance the regulatory authority and efficiency of PENCOM to reposition and provide greater oversight on the PTADs.

Other major highlights of the proposed law include the reduction of the waiting period for accessing benefits in the event of loss of job from six months to four months, creation of new offences and provisions for stiffer penalties that will serve as deterrence against the mismanagement or diversion of pension funds and assets under any guise or the infractions on pension law. It also addresses challenges and ambiguities relating to Death Benefits.

Very importantly, the Bill seeks amendment to allow for the payment of additional benefits, apart from the accruals from the Contributory Pension, to workers at the end of their employment based on collective bargaining with their employers.

It further seeks to raise pension contribution from 15 per cent where both employer and employee make an economically disproportional contribution of 7.5 percent each to 20 percent contribution with a more proportional minimum of 12 percent contribution by employer and 8 percent by the employee. This translates to more savings for the workers.

The Bill also seeks to emphasize competence in the qualification for appointment as the Director-General of PENCOM rather than the current 20 years cognate experience. Stakeholders have also upheld this move. They argue that the 20 years experience requirement in the current law is out of sync with local and global best practices in financial regulatory institutions. For instance, the Central Bank of Nigeria (CBN), which is the apex financial regulatory institution and economic powerhouse of the nation does not demand any years of experience for appointment as the Governor or Deputy Governor of the CBN.