Members of the Federal House of Representatives have passed a bill to amend the Pension Reform Act, 2014, to exclude the National Assembly Service from the Contributory Pension Scheme (CPS) and establish the National Assembly Service Pension Board. This is not necessarily news. What is news however is how the bill was passed with flagrant disregard to due process.
Typically, bills are subjected to public hearings, engagement with stakeholders, deliberations by the concerned committee in the House before passage. However, this particular bill did not go through any of the rigours that it takes to pass bills, obviously because the interested parties passing the bills are the ones that will benefit from its passage. This kind of behaviour will not augur well for our democracy or the fiscal position of the country.
When this bill was first mentioned on the floor of the House of Representatives by Olododo Cook, it should have been passed to be the relevant committee in the House, which is the Committee on Pensions. The committee would have called for papers and organised a public hearing and engaged stakeholders, got feedback and analysis on what would be the effect of passing or not passing the bill, but none of this was done.
The bill was passed on the floor of the House on November 24, 2022, with Ahmed Idris Wase, deputy speaker of the House, presiding. When the Speaker returned, there was a mild drama on the floor of the House as members of the Pension Committee in the House protested that this bill was passed without input from them and without proper procedures, as should be the case.
The Speaker of the House at that proceeding rightly asked for the bill to be stepped down and go through the right channels. However, on December 9, just two days later, the same bill was represented and passed.
It begs the question why the hurried passage of the bill? Who wants the bill passed quickly without resorting to due process? Why is this bill being rushed when other bills to amend the pension Act have been pending for years without any action? Who is the passage of the bill meant to serve when they have not got the input of labour, the employers, the regulators or the civil service?
Another important aspect of the bill is that it seeks to change the number of years of service from 35 years to 40 years, in addition to moving the retirement age for staff of the National Assembly from 65 years to 60 years. In addition, the bill seeks to make pension and gratuity payments for the National Assembly staff directly from the Consolidated Revenue Fund of the Federation.
Surely, a bill as far-reaching with many changes as this should be subjected to debate and buy-in from stakeholders. In addition, this bill does not take into account whether the funds to make these payments are available or not. It also deviates from the contributory pension model, which the whole world is moving to, where pensions are fully funded. This model being proposed is archaic and not sustainable as it will be dependent on if the funds are budgeted for and released.
Furthermore, this bill flies in the face of what the central government of the day stands for. Earlier this year, the secretary to the government had written to the Inspector General of Police when the police were agitating to leave the CPS – just like the National Assembly staff are angling to leave now – that the Nigerian Police force and all other government agencies should be covered under the CPS.
This directive was in line with the white paper of the Federal Government on the rationalisation and restructuring of the Federal Government parastatals, commissions and agencies. In that paper, the government stated that no agency should be allowed to leave the CPS as the government does not have funds to sustain payments under the previous defined benefit model.
At a time when the central government is trying to rationalise agencies and cut down unnecessary spending, some are making laws to create new agencies that will place extra financial burden on the central government, when those costs have already been taken care of through the CPS.
A number of questions also come to mind here. Who will manage the proposed National Assembly Pensions Board? Will they create their own pension fund administrators? Are there competent investment professionals to manage and invest the funds? Why create another agency when there is currently a system to manage pensions? These questions beg for answers and show the whole process was not thought through, and consultations were not held.
Read also: 50% pension contributors may qualify for residential mortgage
During the Obasanjo era, prior to the pension reform Act in 2004, there were several committees to determine the best pension model for Nigeria. Many countries were studied, cross-cutting committees including labour, employers of labour, civil society groups, investment professionals and regulators were consulted to come up with the current system that we have now.
Because of the foresight and the boldness of the reforms then, the pension industry in Nigeria grew from a negative position of about N2 trillion to where we are now. We can boast of pension assets of N14.6 trillion spread across more than nine million Retirement Savings Accounts (RSA). These are monies that are funded and are in people’s retirement accounts.
One would have thought that lawmakers would build upon this and see how the funds could be used to accelerate the development of the economy rather than pulling down years of reform as a form of last-minute gift for themselves. Lawmakers are meant to make laws in the interest of the general populace and not just themselves or narrow interests.
This rather hurried passage of bill also puts into question who the bill is supposed to serve as there are a number of recommended amendments to the Pension Act 2014 that have been left unattended to for years, only for this bill to be passed twice on the floor of the House in the space of one month.
Clearly, this is a breach of due process and speaks of self-serving interests. This also flies directly in the face of the gains of the 9th Assembly that the Speaker recently espoused. The legislative agenda and bills flowing from the House should be bills that move the generality of Nigerians forward, that help to save Nigeria from going across the fiscal cliff and that seek to be more efficient with our resources while enabling a private sector-led administration of things like pension, infrastructure development, SME financing, youth unemployment, etc – moving Nigeria towards a modern economy.
The final passage of this bill could tarnish all the hard work the Speaker of the House of Representatives, Femi Gbajabiamila, has put into bringing decorum and strategic leadership into the 9th Assembly go to waste.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
