The management of Nigerian National Petroleum Corporation, NNPC, and workers have agreed on a way forward in the Pension dispute that led to a five day strike that crippled the corporation and its subsidiaries.
In a seven paragraph resolution between the Minister of Petroleum Resources and leaders of corporation branch of Nigeria Union of Petroleum and Natural Gas Workers, NUPENG and their Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, among others, immediate injection of lump sum into the staff pension fund.
It was agreed that the Group Managing Director, GMD, of NNPC, “in consultation with the in-house Unions shall determine the amount to be paid as lump sum to the pension fund within the approval already granted by the Minister of Petroleum Resources.”
According to the resolution, after exhaustive deliberations, the Minister informed the unions that the National Pension Commission, PenCom “letter withdrawing the temporary license granted to NNPC to run Defined Benefit Scheme had been reversed.”
Similarly, “the Minister affirmed that anticipatory approval has been given to the measures and timelines proposed by the NNPC Management to close the existing N86.5 billion Pension Fund gap on or before August, 2015.
The Minister emphasized the need to embrace an International standard pension fund structure and framework so that after the Pension gap is closed, the framework will ensure that the pension fund is invested and managed to guarantee sustainability.”
“It was agreed that a Committee comprising members drawn from NNPC Management PENGASSAN. NUPENG, DPR, RSA, and CSLD will be estab1ished to work out the modalities and framework for sustaining the NNPC Pension Scheme, along the Oil and Gas Private Sector lines.
The GMD in consultation with the in-house Unions shall determine the amount to be paid as lump sum to the pension fund within the approval already granted by the Minister of Petroleum Resources.”
The workers had begun an indefinite industrial action following a deadlock of the meeting between the NNPC management and leaders of the two unions; NUPENG, and PENGASSAN, over the revocation of the corporation’s closed Pension Scheme licence by PenCom, among others.
The workers through the two unions are demanded adequate funding of the corporation’s pension scheme which PenCom had revoked the operating licence over deficit funding.
It was gathered PenCom revoked the licence granted to NNPC Pension Fund over failure to meet its requirements.
A letter dated September 8th 2014, addressed to the Group Managing Director NNPC, by the Acting Director General, PenCom Mrs. Chinelo Anohu-Amazu, said that the commission came to the conclusion of the unwillingness of NNPC to comply with the provisions of the Pension Reform Act, PRA, 2014 and the conditions attached to the approval granted it to continue with the existing scheme.
In 2006, PenCom granted temporary approval for NNPC Pension Fund to operate as a Closed Pension Fund Administrator, CPFA, pending compliance of guidelines issued by the commission and the provision of the PRA.
But out of the five pending provisions, NNPC could not meet up with anyone.
In the letter, PenCom said; Section 50 (1) (g) of the PRA, 2014 and clause b) (i) of the approval conditions provide that the scheme shall be fully funded at all times and that any shortfall shall be made up within 90 days.
“NNPC has breached this condition considering that the scheme has remained in deficits since inception in 2006. NNPC made an undertaking to transfer additional assets to address the deficit.
“Despite several commitments, NNPC has failed to provide the additional assets. As at December 31st 2012, the deficit in the scheme was N133.56bn (inclusive of the N182.26bn receivable from NNPC). The commission is concerned that eight years after the grant of approval to continue with the existing scheme, NNPC has failed to honour its promises to fund the deficit despite several commitments.”
Mr. Emeka Onuora, Head of PenCom’s Information Unit, told Vanguard that the commission had actually revoked the operating licence of the corporation following breach of the PRA 2014 act.
He however, said he could not confirm the exact amount that the corporation failed to remit.
NNPC Moves to Avert Industrial Action over Its Pension Scheme
Reacting to the development, NNPC management through Mr. Ohi Alegbe, Corporation’s Group General Manager, Group Public Affairs Division
PENCOM had earlier directed the Corporation to “immediately take all necessary steps to transit to the Contributory Pension Scheme under the PRA”.
In a fresh directive dated 15 September, 2014, PENCOM stated: “In order to accommodate your concerns, the Commission hereby grants the NNPC a transition period of 12 (12) months within which to ensure full compliance with the provisions of the PRA 2014”.
The Corporation appealed to the leadership of NUPENG and PENGASSAN to exercise restraint while it embarked on extensive engagement with PENCOM to resolve the issues.
The NNPC noted that since the commencement of the scheme in 2006, the Management and its staff had made a lot of sacrifice to maintain the existing Scheme and any premature cancellation of the Scheme may lead to avoidable labour disaffection across board.
While acknowledging the existence of some funding gaps in the scheme, the Corporation informed stakeholders that measures had since been put in place to steadily bridge the funding deficit which stood at N298 billion in 2010 and has now been provisionally reduced to N85 billion as at June, 2014.
It stated that NNPC was in the process of transferring additional real estate property valued at several billions of naira to the scheme currently before the NNPC board for approval.
It noted that NNPC Pension Fund Limited had complied with the provisions of the PRA 2014, by transferring assets in equities, bonds, Certificates of Deposits and other marketable securities to the custody of Pension Funds Administrators for management as directed by PENCOM since 2006.
The statement added “The NNPC Pension Fund has demonstrated its capacity to manage the Scheme successfully by managing pension assets of over N250 billion for over eight years and maintaining an excellent record of administering and paying over 9000 retirees as and when due”.
