Court orders Pencom to issue guidelines for reintegration of re-engaged workers

Justice Nelson Ogbuanya of the National Industrial Court of Nigeria (NICN), Port Harcourt, has ordered the National Pension Commission (Pencom) to develop and issue guidelines regarding workers, who get fresh employment after being disengaged in their previous work place.

The judge held there are anomalous lacunas in pension fund administration owing to the absence of requisite guidelines and unclarified practice by Pencom. Delivering judgment in suit marked NICN/PHC/159/2021 between Sotonye Boyle (applicant) versus Arm Pension Manager Limited and Pencom (1st and 2nd defendants), the judge held that the applicant (Boyle) is not qualified for another withdrawal of 25 per cent lump sum from his Retirement Savings Account (RSA), having withdrawn the sum earlier during his disengagement from first employment.

The court declared that Mr. Boyle having attained the statutory age of 50 years as at August 31, 2022 is entitled to access and undertake withdrawal of the remaining credit sum in his RSA with the Arm Pension Managers, in line with the programmed fund withdrawals or annuity for life pursuant to Section 7(1) (a)-(c) of the Pension Reform Act 2014.

Justice Ogbuanya ordered the Pencom to issue and publish, within two months of the judgment, the guidelines pursuant to Section 16(3) of the Pension Reform Act 2014, for Re-integrating of persons, who retired/disengaged from their employment but later secured second employment, which it has not issued in that respect.

The Court further directed National Pension Commission to also issue clarifications for implementation by the Pension Fund Administrators (PFAs) with respect to payment of benefits pursuant to Section 5(2) of the Act, for persons who participated in the Contributory Pension Scheme prior to take up an appointment that falls under the category of persons exempted from Contributory Pension Scheme, pursuant to Section 5(1) (a) of the Act, and evidence of such compliances shall be filed in the case file by the learned counsel for PenCom, for record purpose.

From facts, the applicant sued his PFA (Arms Pension Managers) and National Pension Commission for refusal to process his 25 per cent statutory lump sum payment after he had accessed the said statutory payment, when he disengaged from his first employment and contended that having accessed the statutory lump sum portion of RSA for his 1st employer when he voluntarily retired, he is also entitled to collect same statutory portion, when he disengaged from the 2nd employer even when he has not attained 50 years.

It is his counsel’s submission that Mr. Boyle is entitled to access 25 per cent statutory lump sum payment from the contribution of his 2nd employer, as it is a separate contribution though paid in the same RSA with his PFA, and urged the court to make necessary orders to remedy the lacuna presented in the Pension Reforms Act 2014, pointing out that there is no provision restricting having several retirement RSA by same employee in different PFA.

The defendants, respectively, disagreed, contending that Mr. Boyle is not entitled to further lump sum payment of 25 per cent or access to withdrawal from the RSA on the ground that he has not attained the age of 50 years and that he cannot be paid the lump sum twice from the same RSA.

The Pencom urged the court to strike out its name on the ground that the case discloses no reasonable cause of action, and further that the fact of Mr. Sotonye attaining the age of 50 years at the pendency of the suit would not affect the outcome of the suit, as he did not attain the age at the commencement of the suit.

In opposition, Mr. Sotonye’s counsel, Isa Seidu, urged the court to discountenance the defendant’s submission, and hold that having attained the age of the requisite 50 years prior to the determination of the matter, he is entitled to access the pension fund, and urged the court to grant the reliefs sought in the interest of justice.

In a well-considered judgment after careful evaluation of the submissions of all the parties, the trial held that there is no provision in the Pension Reform Act 2014 entitling an RSA holder to access twice the 25 per cent lump sum withdrawal from a single RSA maintained by a PFA and affirmed that the case disclosed a reasonable cause of action against the National Pension Commission.

The court noted that it is PenCom’s failure to issue the required Guidelines pursuant to S.16 (3) of the Pension Reform Act 2014, which led to the Claimant’s belief that he can assess lump sum payment twice, for contributions made in the same RSA under his second employment.

Justice Ogbuanya held that Mr. Boyle is not entitled to access and make withdrawals from his RSA up to 25 per cent of his total savings domiciled with the Arm Pension Managers, having so accessed and withdrawn such sum earlier during his early disengagement from his first employment.

He also held that even though the applicant is no longer eligible for another lump sum payment, he is eligible for programmed fund withdrawals or annuity for life having attained the age of 50 years, and therefore, is entitled to access and undertake withdrawal of the remaining credit sum in his said RSA with the Arm Pension Managers.

Declaring further, Justice Ogbuanya held that the current practice of payment of only ‘Employee Portion’ of the total contributions in the RSA to such a person who later takes up appointment exempted from the contributory pension scheme under S.5 (1) (a) of the Act, is borne out of the unclarified legal foundation, and ought to be clarified by PenCom.