The news that most state governments have not been remitting the monthly pension contributions of their workers demands a very strong response from critical stakeholders, especially the regulatory authority, the National Pension Commission. Beyond the irresponsibility of the culprit state governors, both the regulators and the workers’ unions have also shirked their responsibility to protect workers and their future. There should be a paradigm shift in the priorities of the labour movement and more robust enforcement of pension rules by the authorities.
Defined as “a fund from which pensions are paid, accumulated from employers, employees or both,” they provide a safety net for workers and their dependents when a person is no longer able to work full time. Beyond this, pension funds typically mobilise a large pool of investible, long-term funds. No serious government therefore toys with the safety and management of pension funds.
What then do we make of the tardiness of Nigeria’s regulatory authorities or the carelessness of the organised labour movement over pension issues? According to the Nigeria Labour Congress, only eight out of the 36 states of the federation had by April 2015 been remitting the monthly contributions of their employees to the Pension Fund Administrators. Such unconscionable and criminal act should not be perpetrated by any responsible government. It is bad when an individual or private firm deducts pension contributions from workers’ salaries and fails to remit; it is unpardonable for elected officials to toe this felonious line. Not surprisingly, the National Pension Commission has been reporting defaults by private sector organisations in remitting contributions under the Contributory Pension Scheme. As of May 2014, Chinelo Anohu-Amazu, Director-General of PenCom, had said that only 498 employers had fully complied with the Pension Reform Act 2004 (now replaced by the PRA 2014) and had been issued certificates of compliance. Compared to the 600,000 registered firms by 2008 and 20,080 registered in the four months to February 2013, the coverage under the Retirement Savings Accounts scheme is still very low.
We hold the labour centres – NLC and the Trade Union Congress – and their affiliates as culpable as the errant employers and PenCom for toying with the future of workers. While the NLC is always eager to picket oil companies and banks over wage and casualisation issues, it is curiously complacent over the equally crucial issue of pensions. It has typically failed to follow up on the petition it sent last year to President Muhammadu Buhari, alleging the non-remittance of N35 billion in pension deductions by government parastatals. Like PenCom that claimed in March 2014 to have “concluded plans” to prosecute 335 private sector employers for failing to remit N13.33 billion to the RSAs and since then, has not visibly done much, our labour unions fail to give priority to the protection of workers’ pensions.
Unions should realise that a viable pension scheme is the only barrier between abject poverty and a tolerable existence for a retiree. For a country that has no social security safety net, only their RSAs offer some succour for the 6.74 million workers signed on to the scheme as of November 2015. Anohu-Amazu revealed recently that the pension funds had harnessed just over N5 trillion since the PRA came into force 10 years ago. While PenCom deserves praise for its pioneering efforts so far, it needs to take advantage of the amendments made to the Act in 2014 that raised employers’ contribution to 10 per cent of employees’ basic pay and an eight per cent counterpart contribution by the employees. More importantly, it should step up its surveillance and enforcement activities.
Unions should actively insist on the registration of all workers in the formal sector in the RSA and on all 36 state governments and their agencies joining the CPS. The government took a bold step by legislating the PRA to replace the old fraud-ridden system that sees our senior citizens collapsing in pension verification queues while corrupt officials amass billions of naira at their expense. The penalties spelt out in the amended PRA are strong enough to compel full compliance with the law and punish offenders. It should muster the political will, especially now that we are under a new government that vows to move away from the irresponsible past, to wield the hammer.
By 2008, global investment bank, Morgan Stanley, reported that over $20 trillion in assets were held by pension funds worldwide. Japan’s $1.1 trillion is the largest, while emerging economies like Malaysia, South Africa and Brazil have $130 billion, $112 billion and $80 billion respectively. Our N5 trillion at current (official) exchange rate is only about $25.38 billion but has great potential to rise much higher and be available for investment in critical sectors of the economy. A report found that pension funds trump other fund categories like insurance, mutual funds, sovereign wealth funds, currency reserves, hedge funds or private equity funds.
Apart from their legitimate agitation for better pay, opposing retrenchment and casualisation, NLC, TUC and all labour and professional unions should take special interest in workers’ pension. As a priority, they should monitor their members’ contributions and their prompt remittance to PFAs within two weeks of deduction. They should agitate vigorously to ensure that all the 36 states and all formal employers of labour sign their staff on to the RSA scheme.
