IN NIGERIA today, there are two primary categories of federal pensioners: those under the old Defined Benefits Scheme (DBS). These are retirees who had been on pension pay roll of the federal government before 25th June, 2004 when the Pension Reform Act 2004 that introduced the Contributory Pension Scheme (CPS) took effect, including public servants exempted from the CPS under Section 5(1) of the Act and retirees under the CPS.
Section 173(1) of the Constitution of the Federal Republic of Nigeria (as amended) provides that “the rights of a person in the public service of the Federation to receive pension or gratuity shall be regulated by law.”
On 30th April, 2024, the National Salaries, Incomes and Wages Commission issued a circular regarding review of pensions, aligning with the provisions of Section 173(3) of the Constitution. The circular explicitly states that the new pension rates apply specifically to pensioners under the DBS. This move indicates a step towards fulfilling constitutional obligations and addressing the needs of pensioners under this scheme.
Section 173(2) provides that “Any benefit to which a person is entitled in accordance with or under such law as is referred to in subsection (1) of this section shall not be withheld or altered to his disadvantage except to such extent as is permissible under any law, including the Code of Conduct.”
Section 173(3) provides that “Pensions shall be reviewed every five years or together with any Federal Civil Service salary reviews, whichever is earlier.”
Section 39(3) of PRA 2014 provides that “Without prejudice to sub-section (2) of this section, the Commission shall, by the end of every calendar year, determine the adequacy of the Redemption Fund against the projected pension liability of Government arising from voluntary and mandatory retirements, death of employees in service and the right of pensioners to pension review in line with section 173(3) of the 1999 Constitution (as amended), and advise the Budget Office of the Federation of shortfall, if any.”
The accrued pension rights of federal public servants are protected by Section 15(1) of PRA 2014. The section provides that “As from 25 June, 2004, being the commencement of the Pension Reform Act 2004, the accrued pension Rights to retirement benefits of any employee who is already under any pension scheme existing before the commencement of that Act and has over 3 years to retire shall (a) in the case of employees of the Public Service of the Federation where the scheme is unfunded, be recognised in the form of an amount acknowledge through the issuance of Federal Government Retirement Benefits Bonds by the Debt Management Office in favour of the employees and the bond issued under this subsection shall be redeemed upon the retirement of the employee in accordance with Section 39 of this Act and the amount so redeemed shall be added to the balance of the retirement savings account of the employee and applied in accordance with the provisions of Section 7 of this Act.”
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Taking actions contrary to legal provisions and fairness in pension matters by the government promotes dissatisfaction among employees covered under the CPS. Such actions create an environment of mistrust and frustration, undermining the confidence of workers in the pension system. It is crucial for the government to uphold transparency and equity to foster trust and satisfaction among employees regarding their pension arrangements under the CPS.
Paragraph (b) of the subsection is a reproduction of paragraph (a) in the case of employees of Federal Capital Territory.
All pensioners under the CPS had the bulk of their pension under the accrued pension rights from the old DBS. Since 25th June, 2007 when the first batch of pensioners came on board under the CPS to date, there have been several increases in pensions for retirees under the old DBS in line with the provisions of Section 173(3) of the Constitution, while excluding pensioners under the CPS.
The governments of Goodluck Jonathan and Muhammadu Buhari breached the provisions of Section 173(3) of the Constitution and Section 39(3) of the Pension Reform Act 2014 by failing to implement pension adjustments for pensioners under the CPS. Unfortunately, President Tinubu’s government has followed the same path, perpetuating the disregards for CPS pensioners’ rights as outlined in these crucial legal frameworks.
On 30th April, 2024, the National Salaries, Incomes and Wages Commission issued a circular regarding review of pensions, aligning with the provisions of Section 173(3) of the Constitution. The circular explicitly states that the new pension rates apply specifically to pensioners under the DBS. This move indicates a step towards fulfilling constitutional obligations and addressing the needs of pensioners under this scheme.
While applauding the government for reviewing pensions under the DBS, it is crucial to to note that the continued discrimination against pensioners under the CPS goes against the provisions of both the Constitution and the Pension Reform Act 2014. This discriminatory practice should be condemned as it undermines the principles of fairness and equality that are central to these legal frameworks. All pensioners, regardless of their pension schemes, deserve equal consideration and treatment under the law.
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President Tinubu must veer away from the unconstitutional path followed by his predecessors, characterised by flagrant disregard for the law, particularly in pension matters. It is imperative that he directs the review of pensions for pensioners under the CPS to align with constitutional provisions and the Pension Reform Act 2014. This action would signify a commitment to fairness and justice for all pensioners, irrespective of their pension scheme.
The President should always bear in mind that the government is the largest employer in the country and also the regulator of the CPS. Therefore, it is essential for the government to set a positive example in pension matters, adhering strictly to legal provisions and ensuring fairness across pension schemes. By doing so, the government can influence and encourage private sector employers to follow suit, promoting good practices and safeguarding the rights of pensioners in the country.
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Taking actions contrary to legal provisions and fairness in pension matters by the government promotes dissatisfaction among employees covered under the CPS. Such actions create an environment of mistrust and frustration, undermining the confidence of workers in the pension system. It is crucial for the government to uphold transparency and equity to foster trust and satisfaction among employees regarding their pension arrangements under the CPS.
Comrade Takor was a two-term President of NASU, a two-term National Treasurer of NLC and an inaugural member of the Board of PenCom. Comrade Takor retired as a Director in federal service and is now a Lagos-based legal practitioner. He is an alumnus of the National Institute of Policy and Strategic Studies (NIPSS), Kuru-Jos, Plateau State.
