Expert Highlights Rights of Nigerian Workers, Retirees in CPS

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Ivor Takor
Director, Centre for Pension Right Advocacy, Ivor Takor

Ebere Nwoji

The Director, Centre for Pension Right Advocacy, Ivor Takor, has called for the implementation and recognition of various rights accorded to Nigerian workers and retirees in the Contributory Pension Scheme(CPS)

Takor, one of the lawyers that contributed in the drafting of the Pension Reform Act (PRA), that gave birth to the CPS, stated this in a paper he delivered at the Annual General Meeting of the Centre in Lagos.

He noted that most workers and pensioners were ignorant of their rights in the scheme.

“Each of these rights, carry regimes of sanctions ranging from letters of advice, caution, warning, monetary sanctions, naming and shaming and litigation for violations and non-compliance by either the employer or the Pension Fund Administrator since the rights are derived from a duty imposed on them by provisions in the Act,” he explained.
Outlining these rights Takor recalled that on July 1, 2014 the Pension Reform Act 2014 or “the Act” was enacted into law.

According to him, the first right, is the right to pension. Quoting Section 3 of the Pension Reform Act, 2014, Takor said this established CPS for all employees of Public Services of the Federation, the Federal Capital Territory, states, local government and the private sector.

He enumerated the rights of the Nigerian workers in the Act, saying “the worker also has a right to the employer’s contribution towards his/her pension.

“Section 4(1) of the Act provides that the rate of contribution to the Scheme shall be a minimum of ten percent of monthly total emolument of the employee by the employer, while the employee shall contribute a minimum of eight per cent.

“The next right is the right to life insurance. Section 4(5) provides that in addition to the rates of contributions, every employer shall maintain a Group Life Insurance Policy in Favour of each employee for a minimum of three times the annual total emolument of the employee and that premium shall be paid not later than the date of commencement of the cover.

“For the enforcement of this right, the Act in Section 4(6) provides that where the employer failed, refused or omitted to make payment as and when due, the employer shall make arrangement to effect the payment of claims arising from the death of any staff in its employment during such period.”

He identified the next right of workers as right to determine how to access retirement benefits under the Act.

He noted that Section 7(1) provides that a holder of a retirement savings account shall, upon retirement or attaining the age of 50 years, whichever is later, utilise the amount credited to his retirement savings account for the following benefits: withdraw a lump sum from the total amount credited to his retirement savings account provided that the amount left after the lump sum withdrawals shall be sufficient to procure a programmed monthly or quarterly withdrawals calculated on the basis of an expected life span or annuity for life purchased from a Life Insurance Company licensed by the National Insurance Commission with monthly or quarterly payment.
The decision to access benefits either through programmed withdrawal or annuity is the sole right of the employee.

He said another right of Nigerian workers is the right to contributions to the Scheme forming part of tax deductible expenses in computation of tax payment as well as retirement benefits being exempted from taxation. He quoted section 10 of the Act, adding that it provides that notwithstanding the provisions of any other law, contributions to the Scheme under the Act shall form part of tax deductible expenses in the computation of tax payable by an employer and employee under the relevant Income Tax Law.

According to him, all interests, dividends, profits, investment and other income accruable to pension funds and assets under the Act, as well as any amount payable as a retirement benefit under this Act shall not be taxable.

“The other right, is the right to choose a Pension Fund Administrator (PFA). Section 11(2) provides that an employee to whom the Act applies shall notify his employer of the Pension Fund Administrator chosen by him.

“This means that the worker, has the sole right to choose a PFA, with no interference by the employer.”