LEGALITY OF THE EXEMPTION OF HEADS OF SERVICE OF THE FEDERATION AND FEDERAL PERMANENT SECRETARIES FROM THE CONTRIBUTORY PENSION SCHEME BY IVO TAKOR, mni Esq. DIRECTOR, CENTRE FOR PENSION RIGHT ADVOCACY
The most useful old-age benefit in social security is life pension. Pension is a retirement plan that provides monthly income in retirement. In Nigeria, pension has received significant attention since the establishment of the first public sector pension scheme, the Pension Ordinance of 1951, which had a retrospective effect from January 1, 1946.
In 2004 Nigeria carried out a pension reform, which introduced the Contributory Pension Scheme (CPS) in order to address the myriad of problems bedevilling the pension system in the country and to provide stable, predictable and adequate source of retirement income for each pensioner in the country. Within the eighteen (18) years of its implementation, the CPS has stemmed the growth of outstanding pension liabilities of the Federal Government, reduced fiscal cost to Government, stimulated domestic savings, generated pool of long-term funds for developmental projects and increased private investments in Nigeria. As at June 2022, over N14.26 trillion pool of long-term pension assets has been accumulated by CPS and invested for the economic development of Nigeria.
Due to some implementation challenges, there had been clamour among certain categories of Federal Government employees for exemption from the CPS and reversion to the Defined Benefits Scheme (DBS). Their issues were essentially on the quantum of retirement benefits, which they believed should be enhanced. The prominent categories of such Federal Government employees are the Head of the Civil Service of the Federation (HOS) and Federal Permanent Secretaries (Perm Secs).
In April 2019 the Head of Service of the Federation (HOS) and Federal Permanent Secretaries (Perm Secs) were exempted from the Contributory Pension Scheme allegedly based on a legal opinion by the Attorney General of the Federation (AGF) to the effect that these categories of civil servants are not covered by the Pension Reform Act (PRA) 2014 as they are not ‘employees’, but ‘appointees’ of Mr. President pursuant to Section. 171 of the Federal Republic of Nigeria 1999 Constitution (as amended).
On the basis of the legal opinion, Mr. President gave approval for the exemption of the HOS and Federal Perm Secs from the CPS and placing them under “salary for life” on the Integrated Payroll and Personnel Information System (IPPIS) (where active workers are paid salaries).
The purpose of this write up, is to discuss the justification or otherwise in law, logic and moral of the exemption of HOS, Perm Secs and indeed, any category of Federal employees currently under the CPS from the scheme.
Section 173(1) of the 1999 Constitution (as amended) provides that “… the right of a person in the public service of the Federation to receive pension or gratuity shall be regulated by law” (underlining added).
Pursuant to this provision, the Pension Reform Act (PRA) 2014 was enacted as the principal extant federal law governing pension matters in Nigeria. Complementary Acts were enacted to regulate the pensions of Military and Security Agencies. Also, two (2) Acts were enacted to regulate pensions of Judicial Officers pursuant to Section 291 of the 1999 Constitution (as amended).
Sections 6 and 7 of the PRA 2014 provide that ‘political appointees’, such as the Heads of Service of the Federation (HOS) and Permanent Secretaries (Perm Secs), are covered by the Contributory Pension Scheme (CPS), but shall retire with 100% of their salaries as pensions. Where their Pension Accounts (RSAs) cannot provide this benefit, the Federal Government shall fund the shortfall through budget.
This position was supported by the then Attorney General of the Federation (AGF) in an opinion rendered in March 2015, when these categories of civil servants initially started their agitation for exemption. The second legal opinion of the Office of the current Attorney-General is weak and misleading in view of the following considerations:
Section 171 of the 1999 Constitution relates only to appointment of certain public officers by Mr. President. It does not address the issue of pensions. Section 173 of the 1999 Constitution mandatorily requires all public service pension matters to be regulated by Law (an Act of the National Assembly).
Section 171(3) of the 1999 Constitution (as amended) provide that an appointment to the Office of the Head of the Civil Service of the Federation shall not be made except from among permanent secretaries or equivalent rank in the civil service of the Federation or of the State. Permanent Secretaries on the other hand are appointed from among Directors in the civil service. Subsection 6 of the same section provides that any appointment made pursuant to paragraphs (a) to (e) of subsection (2) of this section shall be at the pleasure of the President and shall cease when the President ceases to hold office; Provided that where a person has been appointed from a public service of the Federation or of a State, he shall be entitled to return to the public service of the Federation or of a State when the President ceases to hold office.
Heads of Service and Permanent Secretaries are civil servants and remain so even as they are appointed by the President. Section 171 (3) and (6) of the Constitution clearly states so. By exempting them from PRA 2014, leaves them with no law governing their pensions, which is contrary to Section 173 of the 1999 Constitution as highlighted above.
Thus, regulating their pensions by administrative instrument as it has been done is unconstitutional. Indeed, the Supreme Court had decided in the case of SARAKI V. FGN (2016) LPELR-SC.852/2015 that no Circular or other administrative instrument can supersede the Constitution or statutes enacted by the National Assembly.
Placing these categories of civil servants on the IPPIS Platform shows that they have no pensions, but “salary for life”. IPPIS policy is a policy implemented to ensure prompt and accurate payment of salaries of active public servants. It was not conceived as a platform for the payment of (salaries for life) pension. Section 173(1) of the 1999 Constitution provides for pension and not salary after retirement.
The Head of the Civil Service of the Federation and Federal Permanent Secretaries by seeking and getting exemption from the CPS have exhibited moral bankruptcy. They are responsible for the implementation of Federal Government policies. They all keyed into the CPS with their other colleagues in the civil service but unfortunately, when they found themselves in privilege positions in the service they manipulated the system and got exemption.
Their exemption has opened a floodgate for all those listed under Section 171 of the Constitution to erroneously and unconstitutionally demand same treatment. Already, the Accounts-General of the Federation, the Auditors-General of the Federation, the Secretary of the Salaries, Income and Wages Commission and the CEOs of Federal Government Parastatals and Agencies are asking for the same treatment.
The legal opinion of the Attorney General of the Federation is unconstitutional, misleading and if not reverse, will reverse all the gains of the CPS to civil servants and economic development of the nation. The Head of Service and Permanent Secretaries on their part, have a moral burden in ensuring the smooth implementation of the CPS, a policy they lack faith in. Their exemption should be reverted. The policy of allowing them to retire with full retirement benefits should be accommodated within the CPS. Section 7(1) (e) of PRA 2014 under retirement benefits, provides that other categories of employees entitled, by virtue of their terms and conditions of employment to retire with full benefits shall still apply.
Ivor Takor, mni Esq