The plight of Nigerian pensioners: A legal and moral burden on federal and states governments

In time past, Nigerians were protected from destitution and poverty, throughtraditional social security system, which was based on the concept of “our brothers keepers” and was influenced by and derived from both culture and religious characteristics of society. It was largely kinship base.Unfortunately, the traditional system of social security, where kinsmen built houses and farmed for each other and also provided for the upkeep of theelderly among them has broken down. Urbanisation and industrial culture are contributing factors to the breakdown of traditional social security system.

The advent of paid employment, introduced planning against old age destitution and poverty, through the introduction of pension schemes.Pension is the most visible Program of any social security scheme, it is meant to provide protection for citizens from old age poverty. International conventions and standards, particularly the International Labour Organisation (ILO) Declaration of Philadelphia, the Universal Declaration of Human Rights and the Social Security (Minimum Standards) Convention 1952, establish the right of all to social security and expressed the responsibility of national governments and the international communities to guarantee that right in practice.

Nigeria has domesticated these Conventions through the enactment of pension laws. Furthermore, the Constitution of the Federal Republic ofNigeria 1999 as amended, envisages a Nigeria where no one will be neglected by the State, thereby causing them to sleep under bridges, beg in streets or steal bread. It is in recognition of this that Section 17(3)(f) and (g) of the Constitution provides for protection of young persons and the aged against moral and material neglect and public assistance in deserving cases or other conditions of need.

In Nigeria, the first public sector pension scheme was the pension ordinance of 1951, with retroactive effect from January 1, 1946. The law provided public servants with both pension and gratuity. Pensions Decrees 102 and 103 of 1979 were enacted for civil servants and the military respectively, with retroactive effect from April 1974. These decrees whichwere later referred to as the Pension Act 1990 and the Armed Forces Pension Act, 1990 respectively, remained the operative laws on public service (federal, states and local governments) and military pension in Nigeria until they were repealed by the Pension Reform Act 2004 in June 2004, which was later replaced by the Pension Reform Act 2014, in 2014.

The National Provident Fund (NPF), which was established in 1961 was the first formal pension scheme in the private sector. It was largely a saving scheme providing a one-off lump sum benefits. The Nigerian Social Insurance Trust Fund (NSITF) established in 1993 took over from NPF and commenced business in July 1994.

Nigerian pensioners have had a raw deal and continue to suffer in the hands of employers, who are expected to protect them against old age poverty and destitution. Employers in the first place, based on contractual agreements have a legal and moral obligation to protect workers against old age destitution and poverty. Unfortunately, it is these same employers who have opened them up against old age destitution and povertyespecially in the public service.

The plight of Nigerian pensioners can be viewed under two eras. Pre pension reform and post pension reform.

In the pre pension reform era, public service pensioners, including military pensioners, passed through very tough times. The pension scheme operational then was the Defined Benefit Scheme (Pay As You Go). Public service pension was unfunded, relying on annual budgetary allocation thereby having outstanding liabilities, with workers who retired, not knowing when their benefits will be paid, thereby leaving then in the streets as destitute begging. It was common sight around Agura hotel in Abuja to see military pensioners who came from their home states or who were unable to return to their home states, waiting indefinitely for the day their retirement benefits will be paid. It was a disgraceful and pitiable sight to behold senior citizens of this country who had given their whole active life for the development of the nation and therefore no longer able to actively support themselves and families sleeping in the open under sun and rain.

Civilian public service pensioners were not better off. They also became destitute, dying in droves as a result of hunger and lack of health care. The real shame for the nation was during the annual dehumanising ritual called pensioners verification exercise. This was the time when these senior citizens were made to lineup supported by their children or relations to be counted among the living. It was meant to be a punishment for those of them who were still alive, for haven not died like their colleagues who had died without testing the fruits of their labour (gratuity and pension).

The administration of public service pension during this era was weak, lacking supervision and regulatory control. It was during this period that Nigeria found itself among the League of Nations, that are classified as “blood money nations”. While others got there as a result of dealing in illicit drugs or criminal activities, Nigeria was elevated to that statue as a result of illegal dealings with pension money; people’s sweat, blood and lives.

It was the era when top civil servants, with seared conscience, were put in charge of pension administration in the Office of Head of the Civil Serviceof the Federation, Police, Customs, Immigration, Prisons and other Pension departments in the Federal Public Service. Their counterparts were foundin States and Local Governments Pension Boards. These criminals derived pleasure in not paying or under paying pensioners and bringing them annually to die on verification lines, with the sole aim of attracting public attention to the plight of these senior citizens. What was their interest in these verification exercises? Their interest lied in the fact that they succeed in blackmailing governments to release huge sums of monies for conducting pensioners verifications and payment of pensioners without accounting for the monies so released, in order to stave off public outcry as a result of the suffering of these senior citizens.

Lack of effective supervision, regulatory control and accountability opened the door for these criminals to corruptly enrich themselves. Building castles and business empires for themselves, children and grand children yet unborn. It was an era of criminal and primitive acquisition of blood wealth.

The whole talk on pension corruption got to a crescendo in the year 2012, leading to the then Federal government setting up a Pension Task Team headed by a Deputy Director in the federal public service, AbdulrasheedMaina to reorganise the Federal Public Service Pension Departments earlier mentioned. In the words of Maina, monumental fraudulent activities were uncovered by his Team in these departments especially the Police Pension Department.

In the cause of the work of the Task Team, a pandora box on pensionembezzlement was opened as the Task Team, the expected hunter of pension criminals became the hunted, as it was alleged that the Team members were swimming in the ocean of embezzlement of pension fundthemselves. The Senate therefore set up a Committee to investigate the Abdulrasheed Maina’s Task Team. According to the report of the the Senate Committee, Maina, his colleagues in the Team and their accomplices were actually drowning in the ocean of pension embezzlementand therefore recommended to the government that they should be rescued through the EFCC with a view to being taken to protective custody in either Kuje, Kirikiri or Gasua prisons, from the reach of the sharks in the pension corrupt ocean. This has given birth to what is now referred to as Mainagate.

Anti corruption agencies are involved and have prosecuted some of those involved in this blood money scandal including seizing of some properties acquired with the blood money. All the prosecutions and seizing of properties not withstanding, there has no visible change in the living conditions of pensioners. Federal pensioners under the old Defined Benefits Scheme are still being owed areas of token percentage increasesgranted them in line with Section 173(3) of the Constitution. Military pensioners may not be better off. Nothing points to this more like the news carried by Sun Newspaper on September 13, 2017 captioned “Ex-military men shut down Finance Ministry in protest”. The paper also carried a picture of protesters it claimed were retired military officers. The Punch Newspaper on September 14, 2017 carried the same story.

States and local governments pensioners are worse off. With the exception of Lagos State, the shining mirror of pension administration in Nigeria and some others, such as Kaduna, Jigawa, most states retirees are not sure they will ever collect their gratuities and pensions before they die. The latest protest of a state’s pensioners was carried out in Abia State and reported in the Vanguard newspaper of November 9, 22017. The Chairman of Nigeria Union of Pensioners, Abia State branch was reported to have complained that the State government was owning retirees 15 months pension while gratuities were last paid in 2002.

The plight of pensioners especially in some of the states goes beyond the economic situations of these states. It is in the public domain that evenwhen the Federal Government gave bailouts funds to States Governments to pay areas of salaries and pensions, most of the States’ diverted the funds and did not pay pensioners. The Governors of States that actually diverted the bailout funds are worse than the criminals involved in criminal conversion of pension funds.

Nigeria, in 2004 carried out a comprehensive reform of its pension schemes, with the promulgation of the Pension Reform Act 2004, which was later replaced with the Pension Reform Act 2014. The main objective of the pension reform, which introduced the Contributory Pension Scheme (CPS) is to ensure that every person that worked in either the public or private sector in Nigeria receives his or her retirement benefits as and when due.

Under the post reform era, federal public servants are almost back to the pre pension reform era, where under the Defined Benefit Scheme (Pay As You Go), retired federal public servants were not sure when their retirement benefits will be paid. federal public servants who retired as far back as October 2015 were not paid their retirement benefits under the Contributory Pension Scheme until early 2017. The same for the next of kins of deceased federal public servants within the period. To date federal public servants who retired in January 2017 are yet to be paid their benefits.

However, this is not an indication that the reform of the pension industry, which jettisoned the Defined Benefit Scheme for the Contributory Pension Scheme was ill conceived or that the new scheme is not working. The scheme is working because private sector employees, who are under the same scheme, regulated and supervised by the National Pension Commission (PenCom), using the same Pension Fund Administrators and Custodians are not facing the same challenge being faced by federal public servants.

Moreover, the Lagos State Government that adopted the Contributory Pension Scheme and enacted its own law similar to that of the Federal Government, with slight modifications is a glowing testimony of the effective working of the Contributory Pension Scheme. While federal public serviceretirees and retirees from other States with a few exceptions, are languishing in abject poverty and blaming the Contributory Pension Scheme, Lagos state government retirees are smiling to banks and feeling happy with the Introduction of the Contributory Pension Scheme. The difference between the Federal and Lagos state schemes is the political will of the Lagos State government to fund its scheme.

The crisis facing Federal Government retirees, stems from the fact that the Federal Government has not been funding the Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria. The bulk of retirees benefits is in accrued rights. Therefore, I will duel a bit more on the issue of accrued rights.

Employees who were in the public service of the Federation and the Federal Capital Territory, before the commencement of the Pension Reform Act 2004, have accrued rights to retirement benefits protected through the issuance of Federal Government Retirement Bonds. The Bonds are to be redeemed upon the retirement of an employee. The Federal Government established a Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria. The Government by law is expected to pay into the Fund, an amount equal to 5 percent of the total monthly wage bill payable to all employees of the Federal Government and the Federal Capital Territory.

Unfortunately, the Federal Government has not been funding the Retirement Benefits Bond Redemption Fund Account in the Central Bankthe way it ought to. Therefore, the bonds cannot be redeemed and the bulk of retirees retirement benefits are in the bonds.

The irony of the whole issue is that more than 50 percent of pension fund generated under the Contributor Pension Scheme is invested in Federal Government Securities and the money is mostly used by the government for recurrent expenditure. It is used for the payment of salaries of active staff and other overhead costs. The question then is why is part of that money not being used to fund the Retirement Redemption Bond Account from where the accrued rights of those who contributed to it are redeemed?The answer may not be far from the fact that, retirees don’t have the capacity to hold the government to meet her obligation to them, through strikes actions as current staff can do if their salaries are not paid.

Accrued pension rights are liabilities of the Federal Government to her employees and therefore the government has a legal and moral obligation to her employees on the accrued rights protected through the issuance of Federal Government Retirement Bond. Part of the money invested in government securities should have been used to pay accrued rights of retirees, who contributed the money in the first place.

Talking about the political will to fund the scheme, It was in the public domain and discussed in several forums that for the 2016 Annual Budget, the National Pension Commission requested for the sum of N91,914,899,000.00 being the actual amount required for the payment of accrued rights of retirees in the year 2016. Out of this, the National Assembly approved only the sum of N50,195,808,918.00 leaving a balance of N41,829,840,756.00. How much of this has so far been released is not known by us. With the government not being able to 100 percent fund the 2016 budget, it will be a miracle if the whole amount approved in the budget has been released. The amount required will surely be more than N100,000,000,000.00 if death benefits and other figures we may not know are taken into consideration.

The other issue militating against federal government retirees is that under the Contributory Pension Scheme, the take home benefits comprises of accrued rights; contributions made by the employees and employers, which are in Retirement Savings Accounts and the return on investments. In order to increase the take home benefits of retiree, when the 2004 Act was review, the contributions were reviewed upward. Therefore the PRA 2014 provides for 12 percent and 8 percent as the new rates of contributions for the employer and employee respectively. Unfortunately, this new rates have not been effected since June 2014 when they became effective.

States and Local governments pensioners are worse off than federal public service workers. Years into the implementation of the Pension Reform Act 2004, which repealed the Pension Act 1990 that was of universalapplication in the whole of Public Sectors in the country and the introduction of the Contributory Pension Scheme, most StatesGovernments have failed to enact laws to protect the pension rights of theirworkers.

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 Schemes in default of their own laws. Is any one therefore surprise that most states government are owning their workers pensions for upward of two to three years.

Nothing so far exposes the greed, avarice and self-centeredness 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 pensions of employees of States and Local Governments they superintended over, were able to within a twinkle of an eye, 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 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 had 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 or superintending over Federal Ministries as Ministers, while some of them are already positioning themselves to be chairmen of “lucrative” Federal parastatals and Agencies.

It is rather unfortunate that some top public functionaries enter into public office with a seared conscience. The conscience is the God-given moral consciousness within each of us. If the conscience is “seared” literally “cauterised”, then it has been rendered insensitive. Such a conscience does not work properly; it’s as if spiritual scar tissue has dulled the sense of right and wrong. So the heart of an individual with a seared conscience is desensitised to moral pangs. These individuals lack good conscience. A person with a good conscience maintains his integrity. No one with conscience and integrity will betray the trust reposed on him/her.

Matters are made worse because we are in a nation that is administeredwithout a sense of value. Values will help a nation to define its goals and judge conduct of people within the society. The core human values of honesty, integrity, hard work and discipline have given way to celebration of criminals in the society. What embolden these criminals is the fact that theystrongly believe, for good reason, that they can manipulate the justice system to favour them and their ill gotten wealth will open doors for theminto private and public Castles, to enable them wine and dine with apex Spiritual and temporal political leaders and give them access to front rolls in Churches and Mosques, where they think they can use some of the wealth to atone for their sins. It is precisely for this reason, that the AbulrasheedMainas’ of this nation could still be moving about and associating with the “high and mighty”, while they are being “wanted”. There were speculations that his Governorship ambition posters even appeared on streets in BoronuState.

The tragedy of our value system as a nation is that when these criminals put themselves up for elections into political offices, other citizens, including deprived pensioners who they have turned into destitute, will line up under rain and sun, to ensure INEC gives them official clearance to go and up their criminal activities.

The good news is that we can still fine rays of light among them. A State like Lagos has had the privilege of producing during the current civil rule dispensation, Governors who have exhibited some elements of core humanvalues of honesty, integrity, hard work, discipline and kindness. Values that are gradually becoming alien in our daily governance. I know not everyone will agree with me on this but I stand for what I have said. From AsiwajuBola Ahmed Tinubu, Babatunde Fashola SAN to Akinwumi Ambode. Lagos pensioners smile to the bank. Hear what Ambode said recently. “Governments and employers who fail to accept the welfare of people as ultimate law are at risk of ruining their stewardship and the trust of the citizens in governance”. He said this at the opening session of a Workshoptagged: Vital Interpersonal Skills For Pension Administrators. Organised by by Civil Service Pension Office (CSPO) of Lagos Ministry of Establishment and Pension held in Lagos. For those who had chosen to disagree with me earlier on, the question is how many State governments still think of pensioners? Talk less of organizing Workshops for Pension Administrators.

Employees with regular income both in the public and private sector are seriously complaining that the salaries or incomes they are earning, cannot meet their needs under the present economic situation in the country. public servants are not know to have other streams of income during the period of their active service, majority of whom are in rented accommodations. It is therefore left to be imagine, what goes on in the homes of pensioners. In some of these homes both the father and mother are retirees of the same State government.

The plight of Nigerian pensioners cannot be wished away. Rather, it’s unintended outcome is for it to act as a motivator for public servants to become corrupt as they may be tempted to take “necessary actions” that will shield them from old age poverty and destitution. What is required areproactive actions by both Federal and States governments to address the plight of pensioners. The first step towards addressing it has already been taken by the Federal and some States governments through the enactment of laws that have introduced the Contributory Pension Scheme, which is already creating a pool of pension fund. The next step is for the Federal and States governments that have pension laws in place, to develop the political will to effectively implement the laws to the letter. Thirdly, is to through the Council of States, ensure that States that have not yet key into the Contributory Pension Scheme do so without delay. Finally no Governor or political office holder in any State without a working pension scheme for the State and Local government workers, should be allowed to collect any pension on leaving office. Although we all know that through criminal diversions of public fund, they would have collected their pensions upfront.

The Federal government through its 2016 budget, flew a kite, showcasing itself as a government that is interested in the welfare of citizens, with the unveiling of its N500 billion Welfare Package For The Needy. A very laudable policy if well implemented. However, it stands as a political project. The Federal government has an obligation to meet her legal responsibility towards ensuring that her pensioners and retiring public servants are payed all pension areas owed pensioners; appropriately fundthe Retirement Redemption Bond Account opened with the Central Bank, from where accrued rights (outstanding pension liabilities) are paid and the implementation of the rates of contributions in the Pension Reform Act 2014. Anything outside this will only be begging the issue and shedding crocodile tears on the plight of pensioners.

Ivor Takor, mni

A Legal Practitioner, is Executive Director, Centre For Pension Right Advocacy.

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