News Column

National Assembly Identifies Gap in Pension Reform Act, 2014

July 15, 2014

The National Assembly has identified gap in the 2014 Pension Reform Act, which was recently endorsed by President Goodluck Jonathan, saying excluding employers, political office holders and government appointees from contributory pension scheme (CPS) was an aberration.

The Chairman of the National Assembly Joint Committee on Pensions, Senator Aloysius Etok, pointed this out at the World Pension Summit, "Africa Special" which took place in Abuja recently.

He also assured pension stakeholders that lawmakers would hasten action on any bill they propose to correct the identified anomalies.

Section 2 of the Pension Reform Act, 2014 states that "the provisions of this Act shall apply to any employment in the public service of the federation, the public service of the Federal Capital Territory, the public service of the states, the public service of the Local Government and the private sector."

Sub-sections two and three of Section II states that "in the case of private sector, the scheme shall apply to employees who are in the employment of any organisation in which there are 15 or more employees."

"Notwithstanding the provisions of subsection (2) of this section, employees of organisations with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by the commission."

The law however, did not make any provisions to capture employers themselves or political office holders and government appointees in the scheme.

Reacting to the above, Etok said there was an oversight in the making of the pension law, particularly the exclusion of employers of labour who are required under the law to contribute 10 per cent of their wage bills to boost the balance in their respective employers retirement savings accounts (RSAs).

He reasoned that the employer who is making provision for his employees retirement benefit would need pension too when he finally retires from active service, saying they too need to set aside some money to take care of their needs in retirement.

Why leave out employers, they too need protection against old age poverty, he queried.

He also observed that some public servants including political office holders and government appointees were also not part of the scheme. Etok said that lawmakers realised this after they have passed the bill into law and forwarded it for presidential assent.

He harped on the need for political office holders including the President, Governors, and legislators as well as government appointees to set aside part of their salaries and wages to take care of their needs when they leave office.

He said these classes of Nigerians are in positions to make extra contributions to boost the balance in their RSAs, saying this would reduce the level hopelessness at the end of their tenures and reduce fraud in government.

Public servants, government and political appointees too should be part of the scheme so that they can contribute to enable them have something to fall back on at the end of their tenures. This will reduce fraud in government circles, he stressed.

Etok also identified another anomaly in the law saying the reference to some sectors in the economy as informal is not only derogatory but also 'abusive'.

He suggested that in subsequent legislations, they could be referred to as 'Other Sectors' and not informal sector as this insinuates that what they are doing for living is not serious business.

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Source: AllAfrica

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