The Senate on Tuesday began the reform of the Contributory Pensions Scheme by reading for the second time a bill to repeal the Pensions Reform Act, 2004 and enact the Pension Reform Act, 2013.
The President of the Senate, David Mark, while presiding over the debate on the bill, noted that the administration of pension fund was superintended over by people without the requisite experiences.
Mark said, “I think the problem we have is that we have all sorts of rookies, people who have no idea about managing funds, not to talk of very huge pensions fund going to manage our pension fund; and I think it is a very specialised area where you cannot just wake up tomorrow morning and be appointed to manage the pension fund, you will mismanage it.
“That is what I suspect has happened. The national budget is N4.9tn; and we have money in the pension fund up to N2.9tn; so you can imagine the amount of money at the disposal of few individuals who are not properly supervised, who have no training in the management, and who dip their hands into it as and when they feel like.
“I think the essence of this reform is to make sure that people who are properly trained are put in charge of the pension fund and are properly managed. There is hardly any pensioner in this country who is not going through hell.
“He makes all his contributions and when it is time for him to receive his pensions, they don’t recognise him anymore. When he making the contributions, he is a very lovely boy or girl, he is a welcome person, everybody is petting him until he retires, and when he should now enjoy his pension, the nation forgets him.”
Mark also noted that withdrawing funds from the Consolidated Revenue Fund of the Federation and the inclusion of states would require an amendment of the Constitution, since the National Assembly did not make laws for the states.
He also said that the issue of whether employees should pay more should be left to experts in economic matters and could be addressed at the public hearing.
The Senate is also considering a proposal to increase the contribution to the CPS from the current 15 per cent of the worker’s salary to 20 per cent, but with the employer making 12 per cent contribution.
Presently, the employer and employee contribute 7.5 per cent each to the worker’s Retirement Savings Account.
In the new law, employees’ contribution will be reviewed upwards, while the Federal Government and the Federal Capital Territory’s contribution will be charged on the Consolidated Revenue Fund of the Federation and that of the FCT, respectively.
He said money accruing to the pension fund had totalled N2.94tn, but was not yielding any direct benefit to the nation’s economy due to poor management.
While leading the debate, the Leader of the Senate, Senator Victor Ndoma-Egba, said there were inadequacies in the extant law such as non-remittances of pension contributions to the Pension Fund Administrators by ministries, departments and agencies; delayed payment and sometimes non-payment of gratuities and pensions to retirees; under payment of retirement benefits; and withdrawal of some security agencies from the CPS.
According to Ndoma-Egba, the new law will cover employees in the public service of the federation, the FCT, states, local governments and private sector organisations with as little as three employees or less.
He said, “The contribution rates of the scheme have been reviewed upwards. The minimum monthly contribution to the retirement savings account is now 20 per cent of the employee’s monthly income, the employer to contribute a minimum of 12 per cent, while the employee will contribute a minimum of eight per cent.
“Also, the law gives the employer the discretion to pay additional benefits to the employee upon retirement.”
He noted that apart from judicial officers exempted from the scheme in the extant law under Section 291 of the Constitution, the bill had now included members of the Armed Forces, but the intelligence and secret services of the federation were exempted.
The bill prohibits the chairman and members of the board of National Pensions Commission from owning or controlling any financial equity or interest in any PFA or Pension Fund Custodian during their tenure of office, and forbids them from being directors or shareholders in any PFA and PFC within three years after ceasing to be members of the board.
Ndoma-Egba further said the bill prescribed stiffer penalties for offences under the bill, adding, “Offenders will not only be sentenced or fined, but shall be made to refund money misappropriated, and forfeiture of any asset obtained from the proceeds of any unlawful activity under the bill.”
He said the trial of offences under the bill would be conducted in a court of competent jurisdiction and not restricted to the Federal High Court as provided for in the extant law.
Ndoma-Egba said, “Pension funds are designed not just to secure the future of retirees but are meant to boost economies by improving their financial markets, accumulate re-investible savings and contribute to the Gross Domestic Product.
“Such funds can be channelled into financing infrastructural projects and creating employment opportunities. As of September 2012, the estimated accumulated pension fund stood at about N2.94tn.”
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Mark said, “I think the problem we have is that we have all sorts of rookies, people who have no idea about managing funds, not to talk of very huge pensions fund going to manage our pension fund; and I think it is a very specialised area where you cannot just wake up tomorrow morning and be appointed to manage the pension fund, you will mismanage it.
“That is what I suspect has happened. The national budget is N4.9tn; and we have money in the pension fund up to N2.9tn; so you can imagine the amount of money at the disposal of few individuals who are not properly supervised, who have no training in the management, and who dip their hands into it as and when they feel like.
“I think the essence of this reform is to make sure that people who are properly trained are put in charge of the pension fund and are properly managed. There is hardly any pensioner in this country who is not going through hell.
“He makes all his contributions and when it is time for him to receive his pensions, they don’t recognise him anymore. When he making the contributions, he is a very lovely boy or girl, he is a welcome person, everybody is petting him until he retires, and when he should now enjoy his pension, the nation forgets him.”
Mark also noted that withdrawing funds from the Consolidated Revenue Fund of the Federation and the inclusion of states would require an amendment of the Constitution, since the National Assembly did not make laws for the states.
He also said that the issue of whether employees should pay more should be left to experts in economic matters and could be addressed at the public hearing.
The Senate is also considering a proposal to increase the contribution to the CPS from the current 15 per cent of the worker’s salary to 20 per cent, but with the employer making 12 per cent contribution.
Presently, the employer and employee contribute 7.5 per cent each to the worker’s Retirement Savings Account.
In the new law, employees’ contribution will be reviewed upwards, while the Federal Government and the Federal Capital Territory’s contribution will be charged on the Consolidated Revenue Fund of the Federation and that of the FCT, respectively.
He said money accruing to the pension fund had totalled N2.94tn, but was not yielding any direct benefit to the nation’s economy due to poor management.
While leading the debate, the Leader of the Senate, Senator Victor Ndoma-Egba, said there were inadequacies in the extant law such as non-remittances of pension contributions to the Pension Fund Administrators by ministries, departments and agencies; delayed payment and sometimes non-payment of gratuities and pensions to retirees; under payment of retirement benefits; and withdrawal of some security agencies from the CPS.
According to Ndoma-Egba, the new law will cover employees in the public service of the federation, the FCT, states, local governments and private sector organisations with as little as three employees or less.
He said, “The contribution rates of the scheme have been reviewed upwards. The minimum monthly contribution to the retirement savings account is now 20 per cent of the employee’s monthly income, the employer to contribute a minimum of 12 per cent, while the employee will contribute a minimum of eight per cent.
“Also, the law gives the employer the discretion to pay additional benefits to the employee upon retirement.”
He noted that apart from judicial officers exempted from the scheme in the extant law under Section 291 of the Constitution, the bill had now included members of the Armed Forces, but the intelligence and secret services of the federation were exempted.
The bill prohibits the chairman and members of the board of National Pensions Commission from owning or controlling any financial equity or interest in any PFA or Pension Fund Custodian during their tenure of office, and forbids them from being directors or shareholders in any PFA and PFC within three years after ceasing to be members of the board.
Ndoma-Egba further said the bill prescribed stiffer penalties for offences under the bill, adding, “Offenders will not only be sentenced or fined, but shall be made to refund money misappropriated, and forfeiture of any asset obtained from the proceeds of any unlawful activity under the bill.”
He said the trial of offences under the bill would be conducted in a court of competent jurisdiction and not restricted to the Federal High Court as provided for in the extant law.
Ndoma-Egba said, “Pension funds are designed not just to secure the future of retirees but are meant to boost economies by improving their financial markets, accumulate re-investible savings and contribute to the Gross Domestic Product.
“Such funds can be channelled into financing infrastructural projects and creating employment opportunities. As of September 2012, the estimated accumulated pension fund stood at about N2.94tn.”
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