ON THURSDAY, September 12, 2024, the federal government took a decisive step toward addressing issues stemming from the provisions of the newly enacted National Minimum Wage Act 2024 by inaugurating the 16-member Committee on Consequential Adjustment of Federal Civil Service Salaries. The committee, chaired by the Head of Civil Service of the Federation, Mrs. Didi Esther Walson-Jack, was tasked with the critical mandate of ensuring that salary structures within the federal civil service remain equitable and fair in the light of the new minimum wage.
One of the greatest challenges in past salary adjustments has been the exclusion of pensioners under the Contributory Pension Scheme (CPS) from pension reviews. Unlike their counterparts under the Defined Benefits Scheme (DBS), pensioners who retired under the CPS have consistently been left out of previous pension adjustments. This disparity has created a significant gap in the benefits received by retirees under both schemes.
During the inauguration, Mrs. Walson-Jack, a lawyer and administrator, highlighted the significance of the committee’s role in navigating the new economic realities ushered in by the wage increase. The minimum wage, which has been raised from N30,000 to N70,000 per month, representing a 133.33% increment, demands a thorough review of salaries across all levels of the federal workforce to ensure that the pay structure aligns with the new benchmark and does not create disparities.
Mrs. Walson-Jack underscored that the work of the committee is not just about adjusting salaries but also about maintaining fairness across the federal civil service. She said: “This review is necessary not just to maintain an equitable salary structure, but to recognize the invaluable contributions of civil servants in nation-building.”
It is expected that the committee will also consider pension concerns, particularly the provisions of section 173(3) of the Constitution of the Federal Republic of Nigeria (as amended). This section stipulates that pensions should be reviewed every five years or alongside any salary review for federal civil servants, whichever comes first. Given the substantial increase in the minimum wage, there are anticipations that pension adjustments will follow suit, as failure to do so would create significant imbalances between the salaries of active civil servants and the pensions of retirees.
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This constitutional mandate reflects government’s obligation to ensure that pensioners, who dedicated their years of service to the nation, are not left behind in the face of rising inflation and living costs. The Committee, therefore, bears the responsibility of reviewing pensions in tandem with salaries, to uphold the constitutional provision and deliver justice to Nigeria’s retired public servants.
The 16-member committee consists of representatives from relevant federal ministries, departments, and agencies, including the Federal Ministry of Labour and Employment, Budget Office of the Federation, Office of the Accountant-General, and other key stakeholders. Members of the labour side of the committee, are mostly drawn from unions in the Joint National Public Service Negotiating Council (JNPSNC), some of who hold leadership positions in the Nigeria Labour Congress (NLC).
The exclusion of CPS pensioners from these adjustments has long been a point of contention. However, Section 39(3) of the Pension Reform Act 2014 provides a legal basis for addressing this disparity. The section mandates that the National Pension Commission (PenCom) annually assess the adequacy of the Redemption Fund Account, used to meet the pension liabilities of the government under the CPS, against the projected pension liabilities arising from retirements, deaths, or other exits from service. This provision ensures that the rights of pensioners under the CPS to a review and adjustment of pensions are recognised in line with Section 173(3) of the Constitution, which stipulates that pensions should be reviewed every five years or with any federal civil service salary review, whichever is earlier.
The outcome of the committee’s work is eagerly awaited by civil servants and pensioners alike, as it will define the fiscal landscape of Nigeria’s workforce in the coming years. Their recommendations are likely to have far-reaching effects not only on public sector wages but also on the nation’s economy as a whole.
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As Nigeria continues to grapple with inflation and the rising cost of living, it is crucial that the Committee strikes the right balance between maintaining fiscal responsibility and ensuring that wages and pensions of civil servants and retirees meet their needs. The successful implementation of its recommendations will contribute to a more motivated and productive workforce, ultimately supporting the nation’s broader economic goals.
One of the greatest challenges in past salary adjustments has been the exclusion of pensioners under the Contributory Pension Scheme (CPS) from pension reviews. Unlike their counterparts under the Defined Benefits Scheme (DBS), pensioners who retired under the CPS have consistently been left out of previous pension adjustments. This disparity has created a significant gap in the benefits received by retirees under both schemes.
Since the inception of the CPS in 2007, federal public service pensioners under the DBS have benefited from four pension increases, while CPS retirees have been excluded. These increases were as follows:
1. A 15% increase in 2007;
2. A 33% increase in 2010;
3. A consequential adjustment in 2019 following the increase in the national minimum wage;
4. A 20% to 28% increase in 2024.
The exclusion of CPS pensioners from these adjustments has long been a point of contention. However, Section 39(3) of the Pension Reform Act 2014 provides a legal basis for addressing this disparity. The section mandates that the National Pension Commission (PenCom) annually assess the adequacy of the Redemption Fund Account, used to meet the pension liabilities of the government under the CPS, against the projected pension liabilities arising from retirements, deaths, or other exits from service. This provision ensures that the rights of pensioners under the CPS to a review and adjustment of pensions are recognised in line with Section 173(3) of the Constitution, which stipulates that pensions should be reviewed every five years or with any federal civil service salary review, whichever is earlier.
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The interplay between Section 173(3) of the Constitution and Section 39(3) of the Pension Reform Act 2014 establishes a comprehensive legal framework that mandates pension reviews for both DBS and CPS retirees. This framework ensures that pensioners under the CPS are not left behind and that they receive corresponding pension adjustments to maintain parity with their DBS counterparts.
The legal and moral imperatives for compliance are urgent and clear. Until pensioners under the CPS are afforded the same rights and protections as their counterparts under the DBS, the integrity of Nigeria’s pension system will remain in question. The government must act decisively to close this gap, ensuring that all pensioners receive the fair and equitable treatment they deserve.
To rectify this situation, the government must do the following:
Ensure immediate compliance by implementing a system for periodic pension adjustments for CPS retirees, in line with the provisions of the Constitution and the Pension Reform Act 2014.
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Equalise pensions adjustments by creating parity between pensioners under the CPS and DBS by ensuring that future pension reviews apply to all retirees, regardless of the scheme they retired under.
Address past disparities through retrospective adjustment of pensions for CPS retirees to account for the increases they have been excluded from in previous years.
As the Committee on Consequential Adjustment of Federal Civil Service Salaries begins its work, it is expected to consider these provisions and ensure that the historical exclusion of CPS pensioners is rectified. This step would not only address long-standing grievances but also reinforce the government’s commitment to equity and fairness for all its retirees, regardless of the pension scheme under which they retired.
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.
