PARADOX OF THE CONTRIBUTORY PENSION SCHEME

 ADAMU RABIU-BAKONDARE contends that the exemption of some top officials from the scheme is unlawful

In the complex and heart of Nigeria’s economic framework stands the Contributory Pension Scheme (CPS), a testament to the country’s commitment to ensuring a secure future for its retiring public and private workforce. However, this well-intentioned journey has been fraught with challenges, compliance issues, legal interpretations issues, executive brigandage and legislative ambush.

Nigeria’s pension system underwent a significant transformation with the enactment of the Pensions Reform Act (PRA) in 2004, later replaced with the PRA 2014. Born out of necessity, the CPS was necessitated by the failures, inability to address the myriads of problems bedevilling the unsustainable Defined Benefit Schemes (DBS), which relied heavily on government budgetary allocations. Under the CPS, both employers and employees in the public and private sector are required to contribute a percentage amount to their retirement benefits, creating a more stable, predictable and self-sustaining pension system.

Within 20 years of its implementation, the CPS has stemmed the growth of outstanding pension liabilities of the federal government, reduced fiscal cost to government, stimulated domestic savings, generated pool of long-term funds for developmental projects and increased private sector investments in Nigeria. According to PenCom, as at March 31st, 2024, the sum of NGN19.7 trillion pool of long-term pension assets has been accumulated by the CPS and invested for the economic development of Nigeria.

In recent years there have been a racket among certain categories of federal government employees for exemption from the CPS and reversion to the DBS. Their issues were essentially on the quantum of retirement benefits, which they believed should be enhanced (how crooked and selfish some Nigerians can be!) The prominent categories of such federal government employees are the Head of the Civil Service of the Federation (HCSoF) and Federal Permanent Secretaries (Perm Secs).

In 2019, a presidential directive of President Muhammadu Buhari exempted the HCSoFs and Perm Secs from the CPS, allowing them to receive full salaries for life. Thereafter before a blink of an eye, a directive from the Ministry of Finance, Budget and National Planning directed the domiciliation of the pension entitlements of retired HCSoFs and Perm Secs with the Office of Head of Civil Service of the Federation, directing the payment of full salaries as pensions through IPPIS. The Integrated Payroll and Personnel Information System (IPPIS) was designed for active workers, not retirees!

The exemption of the HCSoF and Perm Secs from the CPS was based on the bilirubin of a legal opinion by the then Attorney General of the Federation. This opinion stated that these officials are not ’employees’ under

 the Pension Reform Act 2014 but are ‘appointees’ of the President as per Section 171 of the Federal Republic of Nigeria 1999 Constitution (as amended). Consequently, in April 2019, the President approved their exemption from the CPS, placing them under a “salary for life”.

Questions: When did an opinion become law? Is the IPPIS meant for salaries and allowances for period of employment or including salaries for life?

The pallid interpretation is challenged on several grounds including: Section 171 of the 1999 Constitution relates to appointment of certain public officers by Mr. President. It does not address the issue of pensions. It is therefore, unconstitutional! Two, Section 173(1) of the 1999 Constitution mandates that all public service pension matters be regulated by an Act of the National Assembly. Three, HCSoF and Perm Secs are civil servants and remain so even as they are appointed by the President. Section 171 (3) and (6) of the Constitution clearly states so. By exempting them from PRA 2014, leaves them with no law governing their pensions. The Pension Reform Act (PRA) 2014 is the principal extant federal law governing pension matters in Nigeria. Complementary Acts were enacted to regulate the pensions of military and security agencies. Also, two acts were enacted to regulate pensions of Judicial Officers pursuant to Section 291 of the 1999 Constitution (as amended), and employees who had three years or less to retire as at June 2004 are exempted. Sections 6 and 7 of the PRA 2014 provide that ‘political appointees’, such as the HCSoF and Perm. Secs are covered by the Contributory Pension Scheme, but shall retire with 100% of their salaries as pensions. Where their Pension Accounts (RSAs) cannot provide this benefit, the federal government shall fund the shortfall through budget.

The Supreme Court had decided in the case of SARAKI Vs. FGN (in 2016) LPELR-SC.852/2015 that no Circular or other administrative Instrument can supersede the constitution or statutes enacted by the National Assembly. The Pension Reform Act of 2014 grants PenCom exclusive authority over pension administration.

Indeed, the HCSoFs and Perm. Secs, by fluke of luck and finding themselves in privileged positions, they sought, got exemption and are eating from the sweat of Nigeria and as a body responsible for the implementation of federal government policies have shown ethical and moral bankruptcy for which the bureaucracy is supposed to stand for.

 Exempting these top officials from the CPS and placing them on life salaries poses a significant financial burden and potentially unsettle the federal government’s fiscal policy and financial system stability. The monthly salary of a serving Permanent Secretary is in the range of NGN898,000, and their entitlements post-retirement can exceed NGN1m. This arrangement not only strains government finances but also sets a dangerous precedent that will lead to similar demands from other civil servants, further exacerbating the fiscal challenges.

In the 2023 budget, the federal government allocated NGN854.81b to pension, gratuities, and retirees benefits. This figure will keep growing.

The yearly budgetary provision for this group of unpatriotic Nigerians is scary, even PenCom will shiver to put that figure in the public domain and don’t forget they collect full salary while on those privileged seats!

And where is ethics, the separation of powers and the rule of law?

This is a precedent for other exemptions. The National Assembly has passed a bill that has exempted its workers from the CPS. An analysis is pertinent there too!

It looks like some Nigerians lack conscience! It is essential to ensure that pension systems are sustainable and fair to all members of the civil service to maintain trust, The exemption shows that there is a privileged class within the civil service. The exemptions threaten the integrity and sustainability of the CPS, undermining the principle of uniformity and inclusiveness that the scheme was designed to uphold.

 This group of individuals have ended up most likely opening a floodgate for others to follow suit as they lack the moral right to force others to stay within the CPS as they themselves lack faith in the policy.

 The penalties for violating the Code of Conduct for Public Officers in Nigeria include disciplinary actions, dismissal, and even criminal prosecution. Public officers found guilty of using their positions to gain undue advantage or privileges are to face legal consequences such as fines, imprisonment, or both. It’s essential for public officials to adhere to ethical standards and avoid any actions that undermine public trust and confidence in governance.

 Part I of the Fifth Schedule of the 1999 Nigerian Constitution, specifically, Paragraph 18 states: “Any allegation that a public officer has committed a breach of or has not complied with the provisions of this Code shall be made to the Code of Conduct Bureau.”

 PenCom, which way do we go now?

Alhaji Rabiu -Bakondare writes from Kaduna