PRA 2013: Towards a better life for pensioners



ABDULRAHMAN A. ABDULRAUF writes on the need for the House of Representatives to step up effort and give concurrence to the Pension Reform Bill (2013) recently passed into an Act by the Senate

Pensioners’ plight
Selfless service to the nation is generally believed to be an act of patriotism and commitment on the part of the citizenry. At the end of the meritorious service, it is always expected that such individuals will be handsomely rewarded by the system. However, recent events have shown that rendering service to one’s fatherland has become an anathema in Nigeria, as senior citizens often get abused for this rather than being celebrated and appreciated.  Getting their benefits has become a serious problem as handlers of such pension fund freely embezzled same in trillions and billions of naira for their personal use.

The Bill
This necessitated the sponsoring of  Pension Reform Bill 2013 by the Deputy Senate President, Senator Ike Ekweremadu which among others, seeks to preserve the integrity of the senior citizens. And in actualization of this effort, the Senate passed the Bill into an Act, making it the first leg of the journey to the promised land.   Among others, the Act officially accommodates employees of private firms in the Contributory Pension Scheme(CPS).

Its passage
This passage  automatically repealed the Pension Reform Act 2004 thereby making it possible for every person who worked in either the public service of the Federation, Federal Capital Territory, States or Local Government or  private sector, to receive pension benefits as and when due. The scheme covers private organizations  with at least three or more employees.

After an exhaustive debate on the bill at its Committee of the whole, the Senate  voted for its passage to law and urged President Goodluck Jonathan to sign it into law as soon as possible. For instance, as a punitive measure, the Act  prescribes a 10-year jail term for anyone who misappropriates pension fund apart from refunding three times higher, the amount embezzled by him or her. Besides, It also stipulates that whoever attempts to misappropriate the fund, on conviction, is to be  liable to the same punishment as it is prescribed for the full offence in the act. Also,  all monies received as penalty by the Pension Commission shall be paid into the Pension Protection Fund which would had been established under section 82 of the Act.

In addition to payment of fines and serving the required jail terms, the Act also mandates anyone who misappropriates pension fund to forfeit  the federal government, any property, asset or fund with accruing interest on the stolen money. The Act also imposes a fine of N10million on any pension fund administrator which failed to meet the obligations of the contributors while each of the directors of the firm would pay N5milllion each as fines.

“Notwithstanding the provisions of any other law, the commission may, in addition to the penalties stipulated under this Act, impose additional sanctions on the board, any director, management, manager or officer of a pension fund administrator or pension fund custodian that violates any of the provisions of this Act”, It added.

Clarifications
Shedding further light on the Act as it affects the contentious cognate experience of potential   PENCOM  D-G,  Chairman,  Senate Committee on Establishment and Public Service, Senator Aloysius Etok,  said “When the committee report got to the chamber on the first day of presentation of the report it the committee’s recommendation of a fit and proper person was rejected and 15 years of post qualification was adopted.

“So the post-qualification experience for the one who would be DG of PENCOM is 15 years. In Nigeria professional pension administration would be about 10. And because we are talking about cognate experience not post qualification experience. If you are talking about post qualification experience what about somebody who has 30 years post qualification experience with two years cognate pension experience. Is he better than someone with 10 years cognate experience in pension administration?”

“So having realized that we have slightly below 10 years professional pension administration experience possessed by anybody in this country, we decided if somebody must have had 5 years somewhere else and then have additional 10 years cognate experience in professional pension management. That would be a fit and proper person to serve as DG.
“So, the current situation as contained and accepted is 15 years post qualification experience for the post of DG PENCOM,” Eytuk added.

On  penalty for defaulters, he said the  Head of Service and heads of different departments have directed all the accounting departments to make sure that whatever pension deduction should be treated as a sacred one and immediately transmitted to the receiving authority. The problem which PENCOM has continuously explained, according to him, is that people have failed to provide genuine and credible data on themselves including their PFAs. He noted that there were some who have not even appointed PFAs and therefore once such funds were deducted,  they kept in accounts pending when they have the data to transfer them.

The lawmaker further added: “We have penalties ranging from 10 years imprisonment. For even failing to give proper information, you have to pay N500,000 daily by any agency. And if you embezzle pensions funds now you will pay not less than three times the amount of funds you embezzled. That is how serious this Bill has treated pension funds.

“If you embezzle N10,000 you are bound to pay a minimum of N30,000 and in some circumstances the presiding judge has the right to make you refund and even go to prison.”
On the fate of those standing trial for alleged embezzlement of  pension fund, Etuk clarified thus:  “I am sure if this bill is signed by Mr President into law and your case is settled, I am sure the presiding judge would want to refer to the current law in passing the sentence.
” I am sure those people who are still standing trial would be unlucky if their cases are decided after the signing of this Bill.”

Highpoints
The principal thrusts of the PRA 2013 Bill are to enhance the powers of the Commission in its regulatory and enforcement activities, enhance the protection of pension fund assets, unlock the opportunities for the deployment of pension assets for national development, review the sanctions regime to reflect current realities, provide for the participation of the Informal Sector and also provide the framework for the adoption of the Contributory Pension Scheme (CPS) by States and Local Governments.

The Pension Transition Arrangement Departments (PTADs) is designed to take over the payment of pensions to pre-Pension Reform retirees from the Police Pension Office; Customs, Immigration, and Pension Office, and the Civil Service Pension Department, which are where the looting scandals in pension are coming from.
It is designed to have monies of pre-2004 Reforms pensioners (old pension scheme) to have their pension transmitted directly into their bank accounts rather than through a third-party (the pension departments).

Under the previous arrangement,  the PTAD was not activated in line with Section 30, Sub Section 2 (a) of the Pension Reform Act 2004 until the present Ag. DG took over. And in  order to put a permanent end to the era of impunity and, in some instances, widespread corruption in the various Pension Departments, the PRA 2013 Bill seeks to enhance the regulatory authority and efficiency of the Commission to provide greater oversight on, and reposition the PTADs for greater efficiency and accountability in the administration and payment of pensions under the Defined Benefits Scheme.

Also in Section 85-91 of the bill entitled Utilisation of  pension funds for national development, there is a consensus amongst stakeholders that the PRA should facilitate the optimal utilization of pool of funds generated by the CPS towards national development. Accordingly, provisions have been inserted in the Bill such that the sphere of permissible investment instruments would be expanded to accommodate initiatives for national development, such as investment in the real sector, including infrastructure and housing development while at the same time ensuring the safety of pension fund assets.

On staffing/funding of  PTAD  which Section  42 – 49 of the bill focuses on,  it  does not provide for the staffing and funding for the FGN and FCT PTADs. Consequently, it is recommended that additional provisions should be inserted to empower the PTADs to employ their staff and make provision for their sources of funding, which should primarily be from government subvention.   This certainly, will give them some level of freedom and independence.

Another area of interest is that dealing with Access to benefits in event of loss of job, which in the past had been characterised by some difficulties.  Following  complaints mainly from the labour unions, the PRA 2013 has reduced the waiting period for accessing benefits in the event of loss of job from six (6) months to four (4) months. This definitely will reduce the psychological  trauma suffered by the person who lost his/her job.

Similarly,  the section which harps on prohibition of conflict of interest situations, is one other area that will surely reduce or permanently remove some sharp practices in pension administration. In this regard, the bill seeks to prohibit members of the Board of PenCom or their related parties from owning shares in operator companies. This, certainly  will  entrench the principles of good corporate governance.

Also on the table is the Review of the Penalties and Sanctions (Ss. 91 – 104 of the Bill). This became imperative in view of the fact that the  sanctions currently provided under the PRA 2004 are no longer sufficient deterrents against infractions . Besides,  there are currently more sophisticated mode of diversion of pension assets, such as diversion and/or non-disclosure of interests and commissions accruable to pension fund assets, which were not envisaged or addressed by the PRA 2004. Consequently, the Bill seeks to create new offences and provide for stiffer penalties that will serve as deterrence against mismanagement or diversion of pension funds assets under any guise, as well as other infractions of the provisions of the Act.

In similar vein, the appropriate funding of the Retirement Benefits Bond Redemption Fund (RBBRF) Account is one of the major challenges  faced in  the implementation of the CPS for the federal public sector. Under this arrangement, the  fund set aside by the government to pay the accrued rights for past service is hardly sufficient. In the light of this therefore, the  Bill seeks to amend Section 29(2) of the PRA 2004 to indicate that the 5% deduction of monthly FGN wage bill should rather be a minimum amount and the Commission should determine and advise the Federal Government as well as the FCT Administration, on appropriate rates, from time to time, that is sufficient to address the projected yearly pension liability of the Government.

Also, the Bill seeks an upward review of minimum rate of pension contribution. This again, is premised on the position of the stakeholders who believed  that the minimum pension contribution of 15% of employee’s monthly emolument is not adequate enough to generate the required retirement benefits for the worker. The proposed minimum rate is 20% of the monthly emolument: 12% by the employer and 8% by the employee.

Reactions
The passage of the bill has started generating some reactions from stakeholders, especially the pensioners who will be the direct beneficiaries  when passed into law.  In a reaction, the President , Federal Universities Pensioners Association (FUPA), Dr. Ayuba Kura, said “this has been long awaited from the Senate and the entire National Assembly, especially given the diligent and eye-opening investigation by the legislature into sharp practices in various pension departments.

“Such lootings have brought untold hardship and untimely deaths upon pensioners. We therefore welcome the Senate’s patriotic endorsement of the Dr. Goodluck Jonathan Administration’s move to reposition the pension system.”
Specifically, the association commended the Senate “for providing for the creation of new offences and for harsher penalties against the infractions on pension law and all forms of mismanagement or diversion of pension funds and assets under any guise. Those who steal pension funds do not have mercy on the elderly and weak and deserve harsher punishment, which this law has tried to entrench.”

“We further endorse the lowering of the minimum years of experience required for appointment as the Director-General of the National Pension Commission (PENCOM) from 20 to 15 years, even though we had thought the Senate should have gone lower than that in line with local and international best practices in pensions and financial regulatory agencies,” Kura added.
Also in its position, the  National Association of Nigerian Students (NANS)  said: “We, the Nigerian students and vibrant youths of this nation, believe that age and experience though important do not translate to competence.”

NANS Vice President, External Affiars, (Comrade Adamu Kabiru Matazu,  who made the position known in a statement said : “We demand that the  abolition of 20 years “as is obtainable in comparator organizations such as the Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), National Insurance Commission of Nigeria (NAICOM) and the Nigeria Deposit Insurance Corporation (NDIC).

“We consider this campaign against competence-based leadership as not only mischievous and devilish, but runs contrary to the beliefs and ideals of this great and the efforts to move it forward. We refer to them as enemies of the pension reform who prefer the return to status quo ante rather than embrace change and move on. Recycling of old leaders is not in tandem with recent development strides achieved by the youths all over the world.”

They further argued that “If our constitution sets the age qualification to be president at 40 years, what stops a Director General at 40 years or below from occupying the position if found competent, especially when the DG would be reporting to the President? We find this antithetical to Mr. President’s transformation agenda of enhancing efficiency, resourcefulness and competence of human resource personnel for nation building.”

Similar support for the lowering of the cognate experience of potential PENCOM DG to 15 years also came from Customs, Immigration and Prisons Pension Office(CIPPO), which said : “Fifteen years is     enough for anybody to be so appointed more especially, if the person had worked within the system. In addition to cognate experience, there is something that you cannot take away from a person who has worked within a system and knows the nitty-gritty of it.”

Sharing similar sentiment,  Vice President, Nigeria Labour Congress(NLC), Comrade  Issa Aremu, believed setting long years of experience to attain a  level negates competence and merit, saying,  “beyond the experience, people also want to know your commitment and integrity. “So, as experience and years also matter, I think we should also add the issue of integrity and I think if we have a new amendment that made a case to put experiences for the commissioners, and the DG, as proposed, that would be dynamic.”

With the Senate completing its own part of the bargaining, the onus has shifted to the House of Representatives where stakeholders expect that same will be done. When given a concurrence by the Lower Chamber and same is speedily passed into law, then there will certainly be a better life for Nigerian pensioners.

Pensioners’ plight
Selfless service to the nation is generally believed to be an act of patriotism and commitment on the part of the citizenry. At the end of the meritorious service, it is always expected that such individuals will be handsomely rewarded by the system. However, recent events have shown that rendering service to one’s fatherland has become an anathema in Nigeria, as senior citizens often get abused for this rather than being celebrated and appreciated.  Getting their benefits has become a serious problem as handlers of such pension fund freely embezzled same in trillions and billions of naira for their personal use.

The Bill
This necessitated the sponsoring of  Pension Reform Bill 2013 by the Deputy Senate President, Senator Ike Ekweremadu which among others, seeks to preserve the integrity of the senior citizens. And in actualization of this effort, the Senate passed the Bill into an Act, making it the first leg of the journey to the promised land.   Among others, the Act officially accommodates employees of private firms in the Contributory Pension Scheme(CPS).

Its passage
This passage  automatically repealed the Pension Reform Act 2004 thereby making it possible for every person who worked in either the public service of the Federation, Federal Capital Territory, States or Local Government or  private sector, to receive pension benefits as and when due. The scheme covers private organizations  with at least three or more employees.
After an exhaustive debate on the bill at its Committee of the whole, the Senate  voted for its passage to law and urged President Goodluck Jonathan to sign it into law as soon as possible. For instance, as a punitive measure, the Act  prescribes a 10-year jail term for anyone who misappropriates pension fund apart from refunding three times higher, the amount embezzled by him or her. Besides, It also stipulates that whoever attempts to misappropriate the fund, on conviction, is to be  liable to the same punishment as it is prescribed for the full offence in the act. Also,  all monies received as penalty by the Pension Commission shall be paid into the Pension Protection Fund which would had been established under section 82 of the Act.
In addition to payment of fines and serving the required jail terms, the Act also mandates anyone who misappropriates pension fund to forfeit  the federal government, any property, asset or fund with accruing interest on the stolen money. The Act also imposes a fine of N10million on any pension fund administrator which failed to meet the obligations of the contributors while each of the directors of the firm would pay N5milllion each as fines.
“Notwithstanding the provisions of any other law, the commission may, in addition to the penalties stipulated under this Act, impose additional sanctions on the board, any director, management, manager or officer of a pension fund administrator or pension fund custodian that violates any of the provisions of this Act”, It added.

Clarifications
Shedding further light on the Act as it affects the contentious cognate experience of potential   PENCOM  D-G,  Chairman,  Senate Committee on Establishment and Public Service, Senator Aloysius Etok,  said “When the committee report got to the chamber on the first day of presentation of the report it the committee’s recommendation of a fit and proper person was rejected and 15 years of post qualification was adopted.
“So the post-qualification experience for the one who would be DG of PENCOM is 15 years. In Nigeria professional pension administration would be about 10. And because we are talking about cognate experience not post qualification experience. If you are talking about post qualification experience what about somebody who has 30 years post qualification experience with two years cognate pension experience. Is he better than someone with 10 years cognate experience in pension administration?”
“So having realized that we have slightly below 10 years professional pension administration experience possessed by anybody in this country, we decided if somebody must have had 5 years somewhere else and then have additional 10 years cognate experience in professional pension management. That would be a fit and proper person to serve as DG.
“So, the current situation as contained and accepted is 15 years post qualification experience for the post of DG PENCOM,” Eytuk added.
On  penalty for defaulters, he said the  Head of Service and heads of different departments have directed all the accounting departments to make sure that whatever pension deduction should be treated as a sacred one and immediately transmitted to the receiving authority. The problem which PENCOM has continuously explained, according to him, is that people have failed to provide genuine and credible data on themselves including their PFAs. He noted that there were some who have not even appointed PFAs and therefore once such funds were deducted,  they kept in accounts pending when they have the data to transfer them.
The lawmaker further added: “We have penalties ranging from 10 years imprisonment. For even failing to give proper information, you have to pay N500,000 daily by any agency. And if you embezzle pensions funds now you will pay not less than three times the amount of funds you embezzled. That is how serious this Bill has treated pension funds.
“If you embezzle N10,000 you are bound to pay a minimum of N30,000 and in some circumstances the presiding judge has the right to make you refund and even go to prison.”
On the fate of those standing trial for alleged embezzlement of  pension fund, Etuk clarified thus:  “I am sure if this bill is signed by Mr President into law and your case is settled, I am sure the presiding judge would want to refer to the current law in passing the sentence.
” I am sure those people who are still standing trial would be unlucky if their cases are decided after the signing of this Bill.”

Highpoints
The principal thrusts of the PRA 2013 Bill are to enhance the powers of the Commission in its regulatory and enforcement activities, enhance the protection of pension fund assets, unlock the opportunities for the deployment of pension assets for national development, review the sanctions regime to reflect current realities, provide for the participation of the Informal Sector and also provide the framework for the adoption of the Contributory Pension Scheme (CPS) by States and Local Governments.
The Pension Transition Arrangement Departments (PTADs) is designed to take over the payment of pensions to pre-Pension Reform retirees from the Police Pension Office; Customs, Immigration, and Pension Office, and the Civil Service Pension Department, which are where the looting scandals in pension are coming from.
It is designed to have monies of pre-2004 Reforms pensioners (old pension scheme) to have their pension transmitted directly into their bank accounts rather than through a third-party (the pension departments).
Under the previous arrangement,  the PTAD was not activated in line with Section 30, Sub Section 2 (a) of the Pension Reform Act 2004 until the present Ag. DG took over. And in  order to put a permanent end to the era of impunity and, in some instances, widespread corruption in the various Pension Departments, the PRA 2013 Bill seeks to enhance the regulatory authority and efficiency of the Commission to provide greater oversight on, and reposition the PTADs for greater efficiency and accountability in the administration and payment of pensions under the Defined Benefits Scheme.
Also in Section 85-91 of the bill entitled Utilisation of  pension funds for national development, there is a consensus amongst stakeholders that the PRA should facilitate the optimal utilization of pool of funds generated by the CPS towards national development. Accordingly, provisions have been inserted in the Bill such that the sphere of permissible investment instruments would be expanded to accommodate initiatives for national development, such as investment in the real sector, including infrastructure and housing development while at the same time ensuring the safety of pension fund assets.
On staffing/funding of  PTAD  which Section  42 – 49 of the bill focuses on,  it  does not provide for the staffing and funding for the FGN and FCT PTADs. Consequently, it is recommended that additional provisions should be inserted to empower the PTADs to employ their staff and make provision for their sources of funding, which should primarily be from government subvention.   This certainly, will give them some level of freedom and independence.
Another area of interest is that dealing with Access to benefits in event of loss of job, which in the past had been characterised by some difficulties.  Following  complaints mainly from the labour unions, the PRA 2013 has reduced the waiting period for accessing benefits in the event of loss of job from six (6) months to four (4) months. This definitely will reduce the psychological  trauma suffered by the person who lost his/her job.
Similarly,  the section which harps on prohibition of conflict of interest situations, is one other area that will surely reduce or permanently remove some sharp practices in pension administration. In this regard, the bill seeks to prohibit members of the Board of PenCom or their related parties from owning shares in operator companies. This, certainly  will  entrench the principles of good corporate governance.
Also on the table is the Review of the Penalties and Sanctions (Ss. 91 – 104 of the Bill). This became imperative in view of the fact that the  sanctions currently provided under the PRA 2004 are no longer sufficient deterrents against infractions . Besides,  there are currently more sophisticated mode of diversion of pension assets, such as diversion and/or non-disclosure of interests and commissions accruable to pension fund assets, which were not envisaged or addressed by the PRA 2004. Consequently, the Bill seeks to create new offences and provide for stiffer penalties that will serve as deterrence against mismanagement or diversion of pension funds assets under any guise, as well as other infractions of the provisions of the Act.
In similar vein, the appropriate funding of the Retirement Benefits Bond Redemption Fund (RBBRF) Account is one of the major challenges  faced in  the implementation of the CPS for the federal public sector. Under this arrangement, the  fund set aside by the government to pay the accrued rights for past service is hardly sufficient. In the light of this therefore, the  Bill seeks to amend Section 29(2) of the PRA 2004 to indicate that the 5% deduction of monthly FGN wage bill should rather be a minimum amount and the Commission should determine and advise the Federal Government as well as the FCT Administration, on appropriate rates, from time to time, that is sufficient to address the projected yearly pension liability of the Government.
Also, the Bill seeks an upward review of minimum rate of pension contribution. This again, is premised on the position of the stakeholders who believed  that the minimum pension contribution of 15% of employee’s monthly emolument is not adequate enough to generate the required retirement benefits for the worker. The proposed minimum rate is 20% of the monthly emolument: 12% by the employer and 8% by the employee.

Reactions
The passage of the bill has started generating some reactions from stakeholders, especially the pensioners who will be the direct beneficiaries  when passed into law.  In a reaction, the President , Federal Universities Pensioners Association (FUPA), Dr. Ayuba Kura, said “this has been long awaited from the Senate and the entire National Assembly, especially given the diligent and eye-opening investigation by the legislature into sharp practices in various pension departments.
“Such lootings have brought untold hardship and untimely deaths upon pensioners. We therefore welcome the Senate’s patriotic endorsement of the Dr. Goodluck Jonathan Administration’s move to reposition the pension system.”
Specifically, the association commended the Senate “for providing for the creation of new offences and for harsher penalties against the infractions on pension law and all forms of mismanagement or diversion of pension funds and assets under any guise. Those who steal pension funds do not have mercy on the elderly and weak and deserve harsher punishment, which this law has tried to entrench.”
“We further endorse the lowering of the minimum years of experience required for appointment as the Director-General of the National Pension Commission (PENCOM) from 20 to 15 years, even though we had thought the Senate should have gone lower than that in line with local and international best practices in pensions and financial regulatory agencies,” Kura added.
Also in its position, the  National Association of Nigerian Students (NANS)  said: “We, the Nigerian students and vibrant youths of this nation, believe that age and experience though important do not translate to competence.”
NANS Vice President, External Affiars, (Comrade Adamu Kabiru Matazu,  who made the position known in a statement said : “We demand that the  abolition of 20 years “as is obtainable in comparator organizations such as the Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), National Insurance Commission of Nigeria (NAICOM) and the Nigeria Deposit Insurance Corporation (NDIC).
“We consider this campaign against competence-based leadership as not only mischievous and devilish, but runs contrary to the beliefs and ideals of this great and the efforts to move it forward. We refer to them as enemies of the pension reform who prefer the return to status quo ante rather than embrace change and move on. Recycling of old leaders is not in tandem with recent development strides achieved by the youths all over the world.”
They further argued that “If our constitution sets the age qualification to be president at 40 years, what stops a Director General at 40 years or below from occupying the position if found competent, especially when the DG would be reporting to the President? We find this antithetical to Mr. President’s transformation agenda of enhancing efficiency, resourcefulness and competence of human resource personnel for nation building.”
Similar support for the lowering of the cognate experience of potential PENCOM DG to 15 years also came from Customs, Immigration and Prisons Pension Office(CIPPO), which said : “Fifteen years is     enough for anybody to be so appointed more especially, if the person had worked within the system. In addition to cognate experience, there is something that you cannot take away from a person who has worked within a system and knows the nitty-gritty of it.”
Sharing similar sentiment,  Vice President, Nigeria Labour Congress(NLC), Comrade  Issa Aremu, believed setting long years of experience to attain a  level negates competence and merit, saying,  “beyond the experience, people also want to know your commitment and integrity. “So, as experience and years also matter, I think we should also add the issue of integrity and I think if we have a new amendment that made a case to put experiences for the commissioners, and the DG, as proposed, that would be dynamic.”
With the Senate completing its own part of the bargaining, the onus has shifted to the House of Representatives where stakeholders expect that same will be done. When given a concurrence by the Lower Chamber and same is speedily passed into law, then there will certainly be a better life for Nigerian pensioners.

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