By Ivor Takor
JAMES Shott, writing in the America’s New Digest: The Patriot Post of 24th June, 2014, stated that, “A principal element that has separated the United States of America from virtually every other nation in history is the concept of it being a nation of laws not of a nation of men.”
He clarified this by stating that a nation of laws means that laws, not people, rule nations. Everyone is to be governed by the same laws, regardless of their situation; whether it is the most common American or members of Congress, high-ranking bureaucrats or the president of the United States; all must be held to the just laws of America. No one is or can be allowed to be above the law.
In Nigeria, some members of the unregistered ‘National Union of Nigerian States Governors’ have decided that Nigeria must be a nation of men and not a nation of laws. It doesn’t matter if Nigeria’s system of government and her constitution is fashioned after that of the United States of America. Nothing points more succinctly to this trajectory than the issue of pension for states’ public servants.
Constitutional Guarantee of Pension for States Public Servant
The 1999 Nigerian Constitution (as amended) guarantees the right to pension for employees of state governments. Section 210 (1) of the constitution provides that “subject to the provisions of subsection (2) of this section, the right of a person in the public service of the state to receive pension or gratuity shall be regulated by law”. Subsection (2) provides that “any benefits to which a person is entitled in accordance with or under such law as is referred to in subsection (1) of this section shall not be withheld or altered to his disadvantage except to such extent as is permissible under any law including code of conduct”.
“In the case of Benue State, it remits employees and employers’ pension contributions for only three of its agencies, namely: Benue State University, Benue State Teaching Hospital and College of Health Science. As for the core civil service of the state, the state government has not remitted employer pension contributions since the commencement of the scheme. It is, however, remitting employees’ contributions. In respect of local governments, employees’ contributions are being remitted while employers contributions were stopped in November, 2020.”
National Pension Commission (PenCom) Second-Quarter 2022 Report
Information provided by the National Pension Commission (PenCom) in its Second-Quarter 2022 Report states that as at June 2022, of the thirty-six states and the FCT, twenty-five states and the FCT have enacted laws on Contributory Pension Scheme (CPS). The states are Lagos, FCT, Benue, Kebbi, Niger, Rivers, Ogun, Bayelsa, Kogi, Anambra, Abia, Taraba, Imo, Sokoto, Adamawa, Ebonyi, Nasarawa, Enugu, Edo, Osun, Kaduna, Delta, Ekiti, Ondo and Oyo. Five states have enacted laws on Contributory Defined Benefits Scheme (CDBS). They are Jigawa, Kano, Yobe, Gombe and Zamfara. This leaves eight states, namely Kwara, Plateau, Cross River, Borno, Awka Ibom, Bauchi, Katsina and Yobe without any pension law for the states’ public servants since pension reform was carried out in the country in 2004.
States That Are Paying Pension Based on the Pension Laws They Have Enacted
PenCom Report under reference indicates that out of the twenty-five states that have enacted laws on the CPS, only five states and the FCT are paying pension based on their states enacted pension laws. The states are Lagos, Osun, Kaduna, Delta and FCT.
The same report states that out of the five states that enacted laws on Contributory Defined Benefits Scheme (CDBS), only Jigawa and Kano are paying pension based on their enacted laws.
The question begging for answers from governors of states that are not paying pension to their public servants is why are they not paying pensions to their public servants and if they are paying, under which law? This is necessary because the pension law that was of universal application for all public services of the federation: federal, states and local governments was repealed by Section 99(1)(a) of Pension Reform Act (PRA) 2004 and again by Section 117(2) a) of PRA 2014. These repeals left employees of states and local governments without laws to protect their pension rights.
Pooling of Funds Under the Contributory Pension Scheme
Under the CPS, in order to create a sufficient pool of fund to pay retirement benefits, the employer and employee contribute certain percentages of employees’ monthly emoluments to build a retirement fund from which benefits are paid at retirement. The employer is required by law to deduct the amount stated in the law from the employee’s monthly salary, adds the employer’s contribution and pays into the employees’ Retirement Savings Account (RSA).
For employees of the public service of the federation and the FCT, Section 4(1) of the PRA 2014 provides that, “The contribution of any employee to which this Act applies shall be made in the following rates relating to his monthly emoluments: (a) a minimum of ten per cent by the employer; and (b) a minimum of eight per cent for the employee.
“A majority of states’ public servants today see the administration of their states by the governors in the mode of the defunct Roman Empire. In the days of the Roman Empire, the emperor was considered not only the ruler of the state, but its supreme legal authority, fulfilling the roles of supreme court, legislator, and administrator.”
Lagos State, the state I call the flagship of CPS among states, is remitting both employer and employees’ contributions into employees’ RSAs and same for Kaduna and Edo states. Osun, Delta, Ekiti and Ondo states are also remitting both contributions but have backlogs of remittances. FCT, on its part, has backlogs for employees of Area Councils. Anambra State on its part made only a one-off payment of N300 million in 2019 as contributions for employees of local governments.
In the case of Benue State, it remits employees and employers’ pension contributions for only three of its agencies, namely: Benue State University, Benue State Teaching Hospital and College of Health Science. As for the core civil service of the state, the state government has not remitted employer pension contributions since the commencement of the scheme. It is, however, remitting employees contributions. In respect of local governments, employees’ contributions are being remitted while employers contributions were stopped in November, 2020.
Kebbi and Rivers states that have enacted laws on CPS are remitting only employees’ contributions into their employees RSAs. The question begging for answer from the two states’ governors is: what happened to the contributions of the state governments?
Accrued Pension Rights of Employees in Service Prior to CPS
States were last created in Nigeria on 27th August, 1991.Therefore, all employees of state governments have accrued pension rights guaranteed under Section 210 of the 1999 Constitution (as amended). Employees of states and local governments who worked before the commencement of the CPS would have their pension and gratuity, which accrued under the Defined Benefits Scheme (DBS) computed and remitted to their respective RSAs at retirement.
Under Section 39 of PRA 2014, accrued pension and gratuity of eligible employees of federal government treasury-funded MDAs are paid from the Retirement Benefit Bond Redemption Fund (RBBRF), which was established and is maintained by the Central Bank of Nigeria (CBN). The federal government pays an amount not less than 5% of the monthly wage bill payable to employees in the public service of the federation into the RBBRF for the payment of this liability.
States that have enacted laws on CPS have provisions in their laws similar to the provisions of Section 39 of PRA 2014. Unfortunately, only the four states (Lagos, Osun, Kaduna, Delta and the FCT) that are paying pension in line with their own laws on the CPS are funding the accrued pension rights of their employees’.
It is a combination of contributions made by both the employer and employee into the RSA of an employee, the returns on investment of the funds in the RSA and the remitted accrued pension under the old Defined Benefits Scheme that is used to pay retirement benefits to employees on retirement. The non-contribution by the employers (state governments) and non-setting aside moneys for the payment of accrued rights is the reason why a majority of states are not paying pensions to their retired employees.
What Happens When an Employer Fails to Remit its Employees’ Pension Contribution?
For the public services of the federation, the FCT and the private sector covered by the Pension Reform Act 2014, PenCom as the regulator would mandate such employers to make the remittance already due, in addition to paying penalty, which would be at least 2 percent of the total unpaid contributions. Both the outstanding contribution and penalty would be paid into the employee’s RSAs. The penalty is meant to compensate employees for income that would have been earned through investment if their contributions were remitted as and when due.
Many employers in the private sector who failed to comply with the provisions of the Act have been prosecuted in court. This has motivated private sector employers to comply and this is the reason why non-payment of pension in the private sector is now almost a thing of the past.
“Until someone or a group that has the legal right to do so, like trade unions, decide to challenge the actions of these governors in court and obtain judicial redress, some of these governors will continue to rule like emperors. We are entering electioneering campaigns period. The labour movement and their allies in civil society should wake up and get governorship candidates of all the political parties to tell them and the citizens of the states they intend to govern, what is in their manifestos, that will redeem state workers and retirees from old age poverty and destitution.”
Unfortunately, PenCom, whose principal objects as provided in Section 18 of PRA 2014 are “(a) enforce and administer the provisions of the Act; (b) co-ordinate and enforce all other laws on pension and retirement benefits; and (c) regulate, supervise and ensure effective administration of pension matters and retirement benefits in Nigeria” has been handicapped in enforcing compliance by state governors.
The critical question is how can state governors be made to comply with their state laws, especially those they are compelled to enact by the provisions of the constitution like pension laws for states public servants?
A majority of state public servants today see the administration of their states by the governors in the mode of the defunct Roman Empire. In the days of the Roman Empire, the emperor was considered not only the ruler of the state, but its supreme legal authority, fulfilling the roles of supreme court, legislator, and administrator.
The good news is that our states’ judiciaries are independent. Unfortunately, the same cannot be said of the legislators. We are living witnesses to how most states’ houses of assembly have been behaving as if they are departments of governors’ offices. Some of them have passed pension laws for their state governors and deputy governors within days of the bills being placed before them. These states’ houses of assembly have not been able to pass laws for pension of their states’ public servants and where they have passed them, they have not been able to exercise their oversight power to ensure that the laws are being complied with by the executive arm of government.
Section 188 of the constitution empowers states’ houses of assembly to be a check on the executive arm of government. Unfortunately, that section of the constitution has seldom been used in the overriding interest of any state and its people. Where it has been used, it has always been based on political considerations.