PARIS OLYMPIC GAMES
The National Pension Commission has warned the Federal Government against the violation of the 1999 Constitution and the Pension Reform Act by excluding some retirees under the Contributory Pension Scheme (CPS) from pension increases.
It noted that they have been omitted from benefitting from pension increases and the consequential adjustment.
The commission said such omission was contrary to both Section 173 (3) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) and Section 15 (4) of the Pension Reform Act (PRA) 2014.
PENCOM gave the warning in a May 3rd letter to the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun by its Director-General, Aisha Dahir-Umar.
It advised the federal government to address the challenge to avoid a pile-up of the liability and outright violation of the constitution.
It said that although the review of pension rates was good, it ought to accommodate all retirees, including those on CPS.
The commission said a 30th April 2024 circular from the National Salaries, Incomes and Wages Commission on new pension rates might further alienate the retirees under the CPS.
It has, however, alerted the federal government of a liability of N314, 817,628,669 arising from pension increases for retirees.
It said the accumulated liability arose from pension increases of 15% in 2007, 33% in 2010 and 2019.
The commission expressed concern at what it called the lopsided implementation of the pension increases of 15% in 2007, 33% in 2010 and 2019 by successive administrations.
It appealed to the minister to correct the errors of the past because of the legal and constitutional implications.
The letter reads in part: “The Honourable Minster is invited to recall that the Federal Government had, pursuant to Section 173(3) of the Constitution, approved pension increases of 15% in 2007 and 33% in 2010 respectively following salary reviews in the Public Service. There was also a subsequent consequential adjustment in the pension benefits of FGN retirees, following the Federal Government’s approval of N30,000 minimum wage in 2019.
“Accordingly, the commission had, in line with Section 39 (3) of the PRA 2014, submitted to the Budget Office of the Federation on an annual basis, the financial implications for the implementation of the pension increases for retirees under the CPS. Please see attached as Appendix 3 a copy of a letter dated 31 August 2023 to the Federal Ministry of Finance on the subject.
“It is, however, worthy of note that the necessary appropriation and release of funds for the implementation of the pension increases, and the consequential adjustment is yet to be effected.
“ Consequently, while the pension increases of 2007 and 2010 and the consequential adjustment of 2019 have been implemented for retirees under the Defined Benefits Scheme, the same are yet to be extended to retirees under the CPS.”
“This was brought to the attention of the Head of the Civil Service of the Federation and the Chief of Staff to the President, vide letters dated 28 November 2023 and 22 March 2024 (copies attached as Appendix 4(a) and 4(b), respectively it would, therefore, appear that the present circular issued by the National Salaries, Income and Wages Commission is a continuation of this non-implementation of the constitutional and legal rights of retirees under the CPS.
“In view of the foregoing and the imperative need to ensure the settlement of all pension liabilities of the Federal Government under the CPS a Joint Technical Committee comprising staff of the Commission and the Debt Management Office (DMO) had in 2023, determined the Federal Government’s total liability for the implementation of the pension increases and consequential adjustment in respect of retirees under the CPS as N314,817 628,669 00 (Three Hundred and Fourteen Billion, Five Hundred and Seventeen Million, Six Hundred and Twenty Eight Thousand, Five Hundred and Sixty Nine Naira Only) This figure would now increase upon the implementation of the National Salaries, Income and Wages Commission’s circular, thereby further alienating the retirees under the CPS.
“ It is Important to note that the implementation of the 15% and 33% pension increases, the 2019 consequential adjustment for retirees under the CPS and now the 2024 increases, would have enhanced the quantum of retirement benefits of retirees under the CPS, thereby addressing the pension adequacy concerns advanced in support of the agitations for exemption from the CPS.”
PENCOM highlighted the pitfalls in the new pension rates released by the National Salaries, Incomes and Wages Commission
The letter added: “The National Pension Commission (the Commission) refers to the circular referenced SWC/S/04/S.542/1/449 of 30 April 2024 from the National Salaries, Incomes and Wages Commission conveying the approval for the implementation of new pension rates for pensioners under the Defined Benefits Scheme (DBS), following the recent increase in salaries for employees of treasury-funded Ministries, Departments and Agencies (MDAs).
“While the commission commends the gesture of the Federal Government in implementing the constitutional requirement for pension increase, it is a cause for serious concern that the circular under reference omitted pensioners under the Contributory Pension Scheme (CPS) .
“This is especially so as the commission had submitted a letter on the matter dated 21 February 2024 (copy attached as Appendix 1) to the Tripartite Committee of the National Salaries, Incomes and Wages Commission on the National Minimum Wage. Indeed, this fundamental omission is contrary to both Section 173 (3) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) and Section 15 (4) of the Pension Reform Act (PRA) 2014.”
PENCOM gave insights into how the federal government arrived at the recent review of the pension rates.
*It said: “It is, perhaps, apposite to state at the onset that following the 2004 reform, retirement benefits under the CPS consist of both the monthly pension contributions accumulated from the commencement of the Scheme in 2004 and the Accrued Pension Rights for past service rendered prior to the commencement of the Scheme.*
“The two components together with accrued investment income are consolidated at the point of retirement m the Retirement Savings Account (RSA) and accessed as retirement benefits through programmed withdrawal or annuity for life.
“Thus, part of the arrangements for persons transiting from the DBS to the CPS is to recognize their rights under the defunct Scheme, including the constitutional right to pension increases protected under Section 173 (3) of the 1999 Constitution (as amended)
“The commission has noted that the circular under reference was issued pursuant to Section 173 (3) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) which provides that “pensions shall be reviewed every five years or together with any federal civil service salary reviews, whichever is earlier.
“Indeed, the circular was a fall-out of the recent salary increment to employees of treasury-funded MDAs aimed at enhancing the ability of retirees under the DBS to live comfortably, in furtherance of the afore-cited constitutional provision.”
But PENCOM demanded fairness and equity for all retirees, including those in the CPS category.
It clarified that the Pension Reform Act (PRA) 2004 and the PRA 2014 have guaranteed pension increments for retirees under the CPS.
It said:“ However, it is important to note that both the PRA 2004 and the PRA 2014 have not invalidated the constitutional rights to pension increment for retirees under the CPS.
“On the contrary, the constitutional provision is actually reiterated in Section 15(4) of the PRA 2014 which provides amongst other things the accrued Pension rights and entitlements of employees of the Public Service of the Federation shall be reviewed by the Federal Government of Nigeria from time to time in line with the provision of Section 173(3) of the 1999 Constitution as (amended).
“The implication of Section 16 (4) of the PRA 2014 is that the right to pension increment applies to retirees under the CPS on their Accrued Pension Rights portion of the retirement benefits
“The Honourable Minister is kindly invited to note that the PRA 2014 has stipulated the procedure to ensure the implementation of Section 173(3) of the 1999 Constitution and Section 15(4) of the PRA 2014.
“Accordingly, Section 39(3) of the PRA 2014 mandates the Commission to at the end of every calendar year, determine the adequacy of the Retirement Benefit Bond 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 and advise the Budget Office of the Federation of shortfall if any.
“ Furthermore, Section 39(4) of the PRA 2014 mandates the Budget Office of the Federation to, on receipt of advice from the Commission, ensure adequate appropriation for the shortfall and subsequent payment
“The commission wishes to submit that it has been discharging these functions consistently and has, over the years, been engaging and submitting reports to the relevant government agencies and the National Assembly regarding the matter.
PENCOM explained that the exclusion of any category of pensioners from the previous and new pension increases would amount to constitutional infraction.
“In the light of the foregoing, the Commission would like to draw the attention of the Federal Government to the fact that the exclusion of pensioners under the CPS from the implementation of the new and previous pension increases would amount to a fundamental breach and denial of their constitutional rights as enshrined in Section 173 (3) of the 1999 Constitution it is also necessary to state that such action would undermine the pension reform of the Federal Government,” the commission said.
PENCOM advised the minister to address the lapses in the current implementation by ensuring even implementation of pension increments.
“Accordingly, the Commission urges the Honorable Minster to note the above and direct the implementation of the following pension increments for the benefit of retirees under the CPS.”
Leave a comment