President Goodluck Jonathan on Tuesday signed the repealed Pension Reform Bill 2014 into law.
The President who assented to the bill in his office was witnessed by Vice President Namadi Sambo, the Attorney General and Minister of Minister of Justice, Mohammed Adoke, Peoples Democratic Party Chairman (PDP), Chairman of National Pension Commission, Adamu Muazu, and Acting Director General, PENCOM, Chinelo Anohu-Amazu.
The major highlights of the Pension Reform Act among other punishments, prescribes a 10-year jail term for anyone who misappropriates pension funds, saying the sanctions in the now repealed law ere no longer sufficient deterrents against infractions of the law.
The new law now empowers PenCom, subject to the fiat of the Attorney General of the Federation, to institute criminal proceedings against employers who persistently fail to deduct and/or remit pension contributions of their employees within the stipulated time.
With the new law, whoever attempts to misappropriate pension funds, would on conviction, be liable to the same punishment as it is prescribed for the full offence in the law.
The major highlights are: “Upward Review of the Penalties and Sanctions: The sanctions provided under the Pension Reform Act 2004 were no longer sufficient deterrents against infractions of the law. Furthermore, 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 addressed by the PRA 2004. Consequently, the Pension Reform Act 2014 has created new offences and provided for stiffer penalties that will serve as deterrence against mismanagement or diversion of pension funds assets under any guise. Thus, operators who mismanage pension fund will be liable on conviction to not less than 10 years imprisonment or fine of an amount equal to three-times the amount so misappropriated or diverted or both imprisonment and fine.
“Power to Institute Criminal Proceedings against Employers for Persistent Refusal to Remit Pension Contributions: The 2014 Act also empowers PenCom, subject to the fiat of the Attorney General of the Federation, to institute criminal proceedings against employers who persistently fail to deduct and/or remit pension contributions of their employees within the stipulated time. This was not provided for by the 2004 Act.
“Corrective Actions on Failing Licensed Operators: The Pension Reform Act 2004 only allowed PenCom to revoke thelicence of erring pension operators but does not provide for other interim remedial measures that may be taken by PenCom to resolve identified challenges in licensed operators. Accordingly, the Pension Reform Act 2014 now empowers PenCom to take proactive corrective measures on licensed operators whose situations, actions or inactions jeopardize the safety of pension assets. This provision further fortifies the pension assets against mismanagement and/or systemic risks.
“Structuring the System of Administration of Pensions under the Defined Benefits Scheme (PTAD): The Pension Reform Act 2014 makes provisions for the repositioning of the Pension Transition Arrangement Directorate (PTAD) to ensure greater efficiency and accountability in the administration of the Defined Benefits Scheme in the federal public service such that payment of pensions would be made directly into pensioners’ bank accounts in line with the current policy of the Federal Government.
“Utilization of Pension Funds for National Development: The Pension Reform Act 2014 also makes provisions that will enable the creation of additional permissible investment instruments to accommodate initiatives for national development, such as investment in the real sector, including infrastructure and real estate development. This is provided without compromising the paramount principle of ensuring the safety of pension fund assets.
“Enhanced Coverage of the CPS and Informal Sector Participation: The Act expanded the coverage of the Contributory Pension Scheme (CPS) in the private sector organizations with three (3) employees and above, in line with the drive towards informal sector participation.
“Upward Review of Rate of Pension Contribution: The Pension Reform Act 2014 reviewed upwards, the minimum rate of Pension Contribution from 15% to 18% of monthly emolument, where 8% will be contributed by employee and 10% by the employer. This will provide additional benefits to workers’ Retirement Savings Accounts and thereby enhance their monthly pension benefits at retirement.
“Access to Benefits in Event of Loss of Job: The Pension Reform Act 2014 has reduced the waiting period for accessing benefits in the event of loss of job by employees from six (6) months to four (4) months. This is done in order to identify with the yearning of contributors and labour.
“Opening of Temporary RSA for Employees that Failed to do so: The Pension Reform Act 2014 makes provision that would compel an employer to open a Temporary Retirement Savings Account (TRSA) on behalf of an employee that failed to open an RSA within three (3) months of assumption of duty. This was not required under 2004 Act.
“Consolidation of Previous Legislations Amending the PRA 2004: The Pension Reform Act 2014 has consolidated earlier amendments to the 2004 Act, which were passed by the National Assembly. These include the Pension Reform (Amendment) Act 2011 which exempts the personnel of the Military and the Security Agencies from the CPS as well as the Universities (Miscellaneous) Provisions Act 2012, which reviewed the retirement age and benefits of University Professors. Furthermore, the 2014 Act has incorporated the Third Alteration Act, which amended the 1999 Constitution by vesting jurisdiction on pension matters in the National Industrial Court”.
The passage of the bill by the National Assembly (Senate June 3rd and House of Representatives May 27, 2014) and assented by the President automatically repealed the Pension Reform Act. no. 2, 2004.
