The Backlash over Executive Pension

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The Appeal Court judgement, which voided the provision of pension for political office holders across the states of the federation may have settled the dust and tends to strengthen confidence in an industry regularly smeared with financial impropriety, writes James Emejo

Allegations of financial misappropriation and delayed payments of pension arrears among other misgivings are not totally strange to pension administration in the country.
The country has had a troubled history of pension administration, often riddled with corruption, diversion of funds and in some cases, non-payment of arrears for more than a decade, often resulting in avoidable death of pensioners while awaiting to be paid their benefits as well as cases of outright denial of persons of their pension especially under the Defined Benefit Scheme.

Bello…will he survive minefield.

Nonetheless, there had been reforms targeted at sanitising pension management in the country, particularly the passage of the 2004 Pensions Act, which was amended in 2014.
This gave birth to the Contributory Pension Scheme (CPS), which requires employees at both federal and state level to contribute a minimum of 8 per cent of their monthly pay while the employers also contribute 10 per cent.
Without much ado, the CPS appeared to have returned some measure of confidence in the pension sector with minimal cases of infraction since it came into operation.

However, the enactment of laws, which empowers former political office holders of state governments to receive huge amounts as pension, gratuity and severance allowances had again raised concerns about pension administration particularly considering the current economic reality.
The fact that many workers are being owed pension for several months as well as the realisation that governments are currently confronted with serious revenue challenges, had further raised eyebrows over the outrageous allocations to state governors and their deputies as pensions, gratuity and severance allowance.

Even against public outcry over the legality of such personal enrichments, some of the beneficiaries had justified the practice while other former governors condemned it.
The pension law, which had been in operation in Lagos, Kwara, Rivers, Edo, Gombe and Zamfara states stipulates a 100 per basic salary as well as Oyo which put it at 300 per cent.
Even though President Muhammadu Buhari had also expressed disgust over the payment of pension to executive cabinet members in the states, the practice still continued.

Worried by the fiscal conditions in which the states find themselves, particularly in the face of mounting debt profiles and poverty, Buhari had urged the states to abolish the laws on executive pension in the states.
The president was reported to have described the pension as being wrong and morally unconscionable.
Only last year, a former governor of Ogun State, Olusegun Osoba, also demonised the payment of benefits, claiming he never benefited from the outrageous pension packages for former governors and their deputies across states in the country.

This was contrary to the position of former Governor of Akwa Ibom State, Senator Godswill Akpabio, who reportedly justified the payment.
However, the recent Appeal Court Abuja judgement which overruled the payment of pension, gratuity and severance allowance to political officeholders appeared to have brought some calm to the troubled pension industry as many believe the monies which would have ended up in individual pockets can now be used to meet the financial needs of the states including settling of backlog of pension arrears owed workers.

Godswill-Akpabio

The appellate court, in its judgement delivered by Justice Emmanuel Akomaye Agim, while ruling on an appeal filed by the Governor of Kogi State and three others, had faulted the payment of either severance allowance, pension or gratuity to political office holders and political appointees, declaring that the practice was “morally wrong.”

A three-member panel of the court held that it was unjustifiable, in the face of the nation’s socio-economic reality, for some few politicians, who held office for not more than eight-years, to allocate huge public funds to themselves in the name of pension and severance packages.

The panel particularly wondered why the politicians should enjoy such packages while civil servants, who committed most of their active years to the service of the nation, were still denied their retirement benefits.
The Court of Appeal had made the pronouncement while ruling on an appeal filed by the Governor of Kogi State and three others.

The court declared that it was “wicked and morally wrong for political office holders and political appointees, who helped themselves to public funds while in office, to claim entitlement to pension and severance allowances”.
Justice Agim declared: “I must state here that the claim for payment of severance allowance by those whose tenure has come to an end, is as unfounded as is morally wrong.”

Continuing, the court ruled that going by Nigeria’s democratic constitution,” It vests the sovereignty of the country in the people of Nigeria from whom all authority of government is derived and for whose welfare and security such authority is exercised.
“Such a constitution that promotes social justice and existence of an egalitarian society should not contain features of feudalism like the provision of pension and gratuity for the holders of the offices of president, vice president, governor and deputy governor of state.”

In 2017, the liabilities of the federal government to pensioners came to the fore again when the former Ministers of Finance, Mrs. Kemi Adeosun, and her Budget and National Planning counterpart, Senator Udoma Udo Udoma, appeared before the House of Representatives in plenary.
Their appearance was sequel to the recent House of Representatives’ resolution summoned them to explain what the executive arm was doing about the over N285 billion liability to pensioners under the Contributory Pension Scheme (CPS) and over N174 billion owed those who retired under the Defined scheme.
The lawmaker expressed worry that despite the noted challenges, there was no adequate provision in the 2017 budget to defray pension liabilities.

Among other things, one of the major constraints to regular payment of pension and benefits were the deteriorating fiscal condition of government, particularly amid the global financial crisis, especially the drop in oil prices.
Today, most states can barely survive without monthly allocations from the federation account while most of them have also been regularly supported through bailout funds from the federal government.

Babatunde Raji Fashola

It was within this context that the collection of pension by former governor had increasingly been demonised by Nigerians.
The timely intervention of the Appeal Court will not only provide financial resources to states to meet their obligations but also restore sanity and confidence in pension administration in the country which had been in the spotlight for the wrong reasons.
In what would perhaps be regarded as a huge succour to Nigerians, Justice Agim, in his lead judgement on the matter, further noted that the letters of appointments of political office holders do not stipulate their entitlements to such payments.”

He said:”They did not produce any law or any document or instrument that entitles them to such payment.”
According to reports, the Lagos State Governor and Deputy Governor Pensions Law of 2007 provides that “a former governor and family (spouse and children both married and unmarried) are entitled to free medical treatment which is not capped.

Other benefits annual basic salary which is 100 per cent of annual basic salaries of the incumbent governor and deputy. It also includes one residential house in Lagos and another in FCT for the former governor; one residential house in Lagos for the deputy among others.

Although, the National Pension Commission (PenCom) is empowered to regulate civil service pension and to a border perspective, private sector compliance, there is need for more regulatory and legal framework to guard against exploitation and personal aggrandisement through the pension system.
According to Justice Agim:”These kinds of provisions should not be contained in the constitution of a moral society in which the primary objective of governance is the welfare and equal treatment of people.”