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‘Political office holders have no benefit in Pension Reform Act’

By Godwin Dunia
25 April 2017   |   4:00 am
A lot of Nigerian’s are disappointed that some public officers are earning humongous pensions from their previous offices while still serving in other capacities in government.

National Industrial Court of Nigeria

Outrageous pension benefits approved by various state Houses of Assembly to their respective former governors, have remained a burden to Nigeria’s economy. In this encounter, a Lagos-based lawyer and expert in industrial law, Paul Omoijiade, speaks with Godwin Dunia, on how this trend can be checked.

A lot of Nigerian’s are disappointed that some public officers are earning humongous pensions from their previous offices while still serving in other capacities in government. What has now become a major challenge is how to tackle the outrageous pension packages and drawing of double salaries by some former governors, who are currently serving as Senators in the National Assembly. For Omoijiade, the issue can only be resolved through the instrumentality of the law.

He said: “It is only through judicial intervention that somebody challenges the illegality because equity frowns at double portion. Another way to fight against such inequality is if the National Assembly enacts a law that will prohibit such practice in our system. But the point is that, they may not enact such laws because they are the main beneficiary of such anomaly. It can also be stopped through pressure from the people, because sovereignty resides with the people. We as a people have the right to decide what we want.

The aim of instituting a pension scheme is that when you retire, you should have something to fall back on. So, if you have retired and immediately you secure another employment and you are now getting full salary, it is questionable for you to be drawing two salaries from a source. More so, it is a public fund, except in a situation where you have retired and set up a business and earn income from your business as well as salary as a pensioner. Otherwise, the public should have interest in how their money is been disbursed. If you don’t want to give up your pension as former governor, then you
must not go to the Senate, otherwise you keep in abeyance your entitlement to that office of Senator.”

Asked if it could be that the problem was created by the Pension Act itself? He thinks the Act was enacted to take care of such issues. He said: “The Pension Reform Act is specifically put in place to ensure that pension are accruable to employees in both the private and public
sector after their retirement. Though in the public sector, we use to have Pension Scheme before the advent of the Pension Reform Act. We have some well organized establishments that have their pension scheme in place against some that don’t have such in place. So the PRA
came to cure that defect. And moreover, the PRA ensures that establishments have no control over the pension fund. Take for instance, the Nigerian Railway, they had a lot of fund in their pension reserve but when the going was bad it was withdrawn. But this cannot happen under the PRA.
   Though the PRA has undergone one amendment in 2004 and in 2014 to ensure that certain defects are curbed in pension. If for instance, certain people are going to be exempted, it should be very clear, like judges, university dons, members of the arm forces who are not under the PRA because of the sensitivity of their positions but they have put in their best and need to get adequate pension when they retired.”

On the difficulty in accessing pension funds, he stated that there is provision under the PRA. His words: “Under section 16 of the new PRA, there is provision to access the funds. For instance, I have an issue with the PRA. When some of my clients were retired by their employers, they said until you are 50 years and above, you cannot access your pension. The position of the Act is, if you are retired in line with terms of the condition of your service, you are entitle to your fund, because they cannot allow you to stay without money. Another issue is that people drew fund through the Pension Fund Administrators (PFA) by taking certain percentage after certain amounts were computed under their accrued rights, when they went later to their PFA, they were told that since they have drawn before, they cannot take anything from their retirement savings account.

This is not in line with the PRA. However, section 16 of the PRA 2014 is clear on the requirement for accessing your fund-employment letter, confirmation of employment of age, length of service among others. And once you are able to do that, you can then choose one option, either withdrawal, which entitles you to fix withdrawal every months for predetermined number of years or administrative scheme, which means you can draw your benefits for life. The major flaw in this arrangement is that the pension funds records periodic growth but it is not reflected in the take home of the pensioners. Whereas under the old regime, that is Pension Scheme, those institution that have organized pension scheme in place are subject to periodic growth of three years. But section 173 of the constitution states that pension must be reviewed every five years, but you also discovered that those in the private sector are not favoured by this provisions, they don’t record any growth.”

On whether if the old pension regime is better than the new PRA, Omoijiade said: “I will say yes to a very large extent, where the scheme is well managed like you have in the past like Union Trustees, who managed the pension fund for the Union bank and there was no occasion when the pensioners got to the bank and could not access their funds. But you discovered that most people who managed the scheme realised that the fund was no longer going to be sustainable in future. It was then that they saw the new pension regime as a way out. So whether the old regime is better only depend on if it is well managed. But then, there are other establishments that did not have organized pension scheme and when you retire, to access the funds were difficult because the funds are not there or the fund were not regular. But under the new arrangement, though the money may be small, people still get their alert every month.”

What are the determinants of legal fees collected by lawyers from clients, is there any rule guiding this? He said most of the services rendered by lawyers are contracted. According to him, two parties bargained on a service and what the fee should be. His words: “For example, when you listen to Ozekhome in his N75million case with EFCC, he alluded to the fact that in some election cases, some clients pay as much as N500million. Though, most of these fees are regulated and some are subject to the agreement reached by parties. Even when you are paid from public funds, there is still guidelines on how it should be done. What we saying is that, there are always guiding rules, but then, they are based on agreement reached by parties”.

Responding to the question on whether it is the same method of payment of fee that is applicable in National Industrial Courts (NIC) matters, Omoijiade noted that the jurisdiction of the NIC has been enlarged.  “You discover that under the common law, collective agreement was a gentle-man agreement. It was not legally enforceable. But in recent times, collective agreement is no longer a gentle-man issue. So there are new provisions that has taken us away from the provision of the common law. The point is that we are still holding tenaciously to the common laws instead of the new regime,” he declared.