BY VICTOR AHIUMA-YOUNG

IMMEDIATE past representative of labour on the board of the National Pension Commission, PenCom, Comrade Ivor Takor, has said the recommendations of the Presidential Committee and Restructuring of Federal Government Parastatals, Commissions and Agencies, will have serious implications on Pension Reform and the Contributory Pension Scheme, CPS.

Takor, a lawyer, and ex-President of Non-Academic Staff Union of Educational and Related Institutions, NASU, argued that should the report of the committee headed by Chief Steve Orosanye be implemented fully, it would throw thousands of workers into the job market.

Giving the implication of the recommendation on the Pension Reform, Comrade Takor said, “Section 12(1) (a) of the Pension Reform Act, PRA, 2004, guarantees the employee’s right to accrued retirement benefits for the previous years he/she has been in employment before the coming into effect of the Act.

“In the case of public service of the Federation and the Federal Capital Territory, where pension scheme was unfunded, the right would be acknowledge through the issuance of a “Federal Government Retirement Bond” to such employee. The Bond will be redeemable upon retirement of the employee.

...Takor

“The Pension Reform Act 2004 in Section 29 provides for the Federal Government to establish a Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria. The Federal Government is already making a monthly payment into the Fund of an amount equal to 5% of the total monthly wage bill payable to all employees of the Federal Government and the Federal Capital Territory.”

“At the commencement of the contributory pension scheme, public service retirees got their Retirement Service Accounts (RSA’s) credited as and when they retire. Unfortunately, public servants who retire from service, no longer have their Retirement Savings Accounts (RSA) with the Pension Fund Administrators credited promptly with the accrued retirements benefit or the Federal Government Retirement Bonds redeemed by the National Pension Commission promptly as it used to be when the scheme commenced.

“Two government policies are responsible for this. They are the 2007 retrenchment exercise, which included the scrapping of two cadres (cleaners and security) in the public service and the eight years tenure for federal directors and permanent secretaries.”

Comrade Takor who is also a former Treasurer of Nigeria Labour Congress, NLC, said “The two policies caused the abrupt retirement of thousands of federal public servants without the federal government taking into consideration the effect of such policy decisions on the accrued pension rights of those public servants. To date issues concerning the payment of monthly pension to the retrenched staff especially those from the parastatals, agencies and commissions are yet to be totally settled.

The policies totally depleted the Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria where 5% of the total monthly wage bill of the federal government was being paid into for the purpose of redeeming the Federal Government Retirement Bond, issued to all federal public servants who were in service before the coming into effect of the Pension Reform Act 2004 in June 2004 as their accrued retirement benefits rights.”

“This has seriously eroded one of the principal gains of the 2004 pension reform, which is the prompt payment of retirees. What happens now is that there is hardly sufficient balance in the Retirement Benefits Bond Redemption Fund Account in the Central Bank Nigeria to pay for the accrued rights of retirees on retirement. Consequently, retirees have two wait for almost six months and above, for the federal government to sufficiently fund the redemption fund account with the Central Bank of Nigeria before the National Pension Commission can credit the Retirement Savings Accounts of retirees.

“The difference between the Contributory Pension Scheme, a product of the pension reform and the old pension schemes is that the old schemes were not fully funded. Therefore, upon retirement, there was no ready fund to pay the retirees and pensioners.

“The new pension scheme is expected to be fully funded. Money is contributed into individual employee’s Retirement Savings Account (RSA) and when he/she retires; there will be money in his/her RSA, including money redeemed from the Federal Government Retirement Bond to pay the retiree.

“Therefore, if there is no money in the Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria, as is being experience now to redeem the bond, retirees will be returning to the pre 2004 pension reform days when retirement benefits could not be paid as and when due because pensions were not fully funded. By “Fully Funded” we mean where pension funds and assets match pension liabilities at any given time.”