PENSION REFORM AND THE FATE OF NIGERIAN WORKERS
PENSION REFORM AND THE FATE OF NIGERIAN WORKERS
Labour Should Lead Fight for a Living Pension and Working People Political Alternative
Demola Yaya, Lagos
In 2004, General Olusegun Obasanjo regime enacted a law to decentralise and privatise pension administration in Nigeria through the Pension Reform Act 2004. By this Act, the National Pension Commission (PENCOM) was constituted as a regulatory authority to oversee and check the activities of 25 registered Pension Fund Administrators (PFAs). This new pension scheme is in line with the regime’s neo-liberal policies in all areas of life.
Before the 2004 new scheme, there had been in existence the Nigeria Social Insurance Trust Fund (NSITF) and in 1962 the creation of National Provident Fund as compulsory savings for workers in both public and private sectors. This old pension scheme was inherited from British colonialism, which purposely designed it for expatriates. It later accommodated local public sector workers and was in operation until the 2004 decentralised and privatised scheme. Although, in 1974, a little amendment was made which retained the private sector within the National Provident Fund, the public sector was withdrawn from it. And in 1993, another amendment was made with NSITF re-established and converted from a Provident Fund into a Limited Social Insurance Scheme. The old pension scheme of 1962, as amended in 1974 and 1993, was very relatively favourable to workers. It was a non-contributory benefit scheme that allowed government to allocate specific resources to the consolidated revenue meant to pay pensioners. This, of course made, at least, public sector attractive to workers since their old age could be guaranteed after quitting service, especially in a country where there is no social benefit for the unemployed and senior citizens.
WHY THE COLLAPSE OF OLD PENSION SCHEME?
The eventual collapse of the non-contributory old pension scheme is a cumulative effect of vicious neo-liberal attacks on working people and the poor by successive Nigerian governments over the years, the peak being President Obasanjo regime between 1999 and 2007. The policies of Structural Adjustment Programme (SAP), hikes in fuel price, devaluation of naira, just to mention but a few, have made inconsequential not only to old pension scheme but produced generally worsening living conditions for the working masses and poor.
For instance, between 1980s and early 1990s, when average GDP per capital was about $300, the minimum pension was worth about $200. However, between early the 1990’s and 2005, the minimum pension was about N4,000 (by then worth $30). This implies that, compared to 1980s and early 1990s, the pensioners are worse off now as their pension has significantly depreciated by about $170. Again, inflation, which has remained in double digits as a result of neo-liberal policies of successive governments, has undermined and made nonsense of the pension, and also the minimum wage. Apart from the fact that pensions are not paid as at when due, when they are eventually paid their real values have been eaten up by inflation.
In its rabid selfish calculation to steal public resources and convert collective assets to private hands, successive Nigerian ruling class governments have abused resources meant for development and payment of pensioners. Hence, pensions were not being paid as at when due. To say the least, the ruling class does not have the interest of working people at heart. They are not even serious about developing the country they govern. This explains the fabulous stealing from every corner by the ruling class with impunity.
The reason for the collapse of old pension scheme is same illogical explanation by the ruling elite for privatisation and commercialisation of social services and public utilities. Quality public education, which is cheap or almost free, is being destroyed. Affordable but quality public healthcare is gone. As President Yar’Adua travels out for medical treatment every now and then, so the members of the ruling class and the rich jet out for treatment every day. Why? They have destroyed the public hospital through their policies and the poor people who do not have access to loot public resources are made to die like chickens of curable ailments. Affordable portable public water is gone. We are being told that “government has no business in business”, hence, privatisation and commercialisation of all these utilities. Before the eventual handing over to private individuals, all these utilities, the ruling elite had systematically destroyed them slowly and steadily through corruption as a fig leaf to show that nothing public or controlled by government can work. Nigerian Airways, NITEL, Refineries, are just few examples of public assets which were wrecked and then sold to members of the ruling class and their international collaborators under the guise that public assets are not viable. Meanwhile, the public assets are only public in name, there is no democratic control by the workers or the rest of society. The ruling class appoints commissioners; ministers; chairmen etc to control and manage these public utilities which gave room for mismanagement, corruption and destruction of the assets over the years.
Sequel to its policy of irresponsibility to its citizens, especially the poor, the Nigerian ruling class has, over the years, refused to pay pensioners as at when due. In this circumstance, pensioners are owed between two and four years in arrears under the guise of paucity of funds. When they are eventually paid, there had been reported cases of pensioners dropping dead on the queue. Meanwhile, Nigeria has been raking in millions of dollars everyday from the sales of crude oil alone. As we write, a barrel of crude oil is at a record high of $117 and Nigeria sells 2.2 million barrels per day officially. Instead of utilising these resources to improving the condition of the people, these monies are being stolen while collective assets are sold at give away prices.
ARGUMENT FOR PRIVATISED PENSION SCHEME
In its commitment to neo-liberalism and relinquishing its responsibility to pensioners, the Nigerian ruling class passed into law a privatised and decentralised new pension scheme in 2004. It adopts a Chilean-style pension scheme. Under this new scheme, a compulsory contribution of 7.5% of workers’ basic salary and 7.5% of same from employers of labour will now become pension of workers after retirement. The scheme accommodates workers in both public and private sectors with minimum of five employees. Under the new scheme, only pensioners and those with 3 years to retirement as from 2004 are exempted. The new scheme, therefore applies only to the workers from 2008
The new pension scheme is not uniform to all categories of workers. While 7.5% of every worker salary is deducted as his/her contribution to pension with the employers remitting 7.5%, totalling 15%, only 2.5% is deducted from armed forces workers while their employer â€“ government â€“ remits 12.5%, totalling 15%. Again, judiciary workers under Section 8 (2) of the 2004 Pension Reform Act are exempted from the new scheme entirely. The Chilean pension scheme was similar, except that it was originally put in place by a military regime; in Nigeria it is a civilian government which has given special privileges to the military.
According to the advocates of the new pension scheme, accumulated pension debt will be no more with a modern standardised pension scheme. They argue that budgetary allocation to pension has been very inadequate and erratic to the extent that pensioners, in some cases, slump on queue waiting for collection of their pension in 2/3 years arrears. They also argue that the old pension scheme lacks adequate record keeping and procedure that gives room for corruption and prolong period of non-payment of pension as at when due. They also posit that the inflation rate has eaten deep to the pension to the extent that when it is eventually paid, its real value has drastically gone. While all these arguments may look genuine on the surface, the ruling class has systematically made these arguments possible by its successive neo-liberal policies in the last two decades.
Deductions from workers salaries and their employers totalling over N800 billion which is expected to reach one trillion at the end of this year are now concentrated in the hands of 25 PFAs, regulated by National Pension Commission (PENCON). According to Section 73 of Pension Reform Act 2004, PFAs could invest workers pension fund on Real Estate Investment, bonds, and other debt securities as may be listed by the Act.
LIMITATION OF THE NEW SCHEME
The new scheme was borrowed from Chile where life expectancy is 76 to a country, Nigeria, where life expectancy is 43, where majority of people will need their pension at earlier stages of their lives to take care of their financial needs like children’s school fees, illness and other essential socials services which used to be taken care by government but have been relinquished by the present ruling elite, courtesy of neo-liberal policies of privatisation and commercialisation of everything except air we breath.
Again, in a country where corruption has eaten deep to public and private sectors, it is false to think that one regulatory body like PENCON could check fraud by PFAs. To this extent, hundreds of millions being raked in on a monthly basis could be devoured by these private individuals managing pension and or in collaboration with PENCON officials. Moreover, in a country where businesses are dying as a result of collapsed infrastructure, it will not be easy for PFAs to invest these monies and may therefore run into overheads cost as a result of administrative and other costs, which may eventually collapse the scheme.
Under the present capitalist economy, recession and financial disaster are inevitable. For instance, the epitome of capitalism internationally, the United States is almost in recession and deepening financial disaster with its fifth largest investment bank, Bear Stearns, collapsing. A similar scenario occurred last year with Northern Rock, one of the major banks in Britain, with about Å24 billion wiped off. Now internationally practically all of the big banks are declaring huge losses as a result of financial speculation, and many are demanding state aid. So, if the global financial system is unstable, in a country ravaged by corruption, where virtually nothing works, it will be a miracle to expect PFAs to perform wonders. All the problems mitigating against businesses are here and growing on daily basis. They will obviously consume PFAs investments one way or the other. It is only a matter of time before the workers start crying out for their future in drain. Under the new scheme, workers are to choose their own PFAs but in reality, employers choose PFAs for workers on the one hand and PFAs have been complaining of non-remittance of 7.5% employers’ portion to them on the other hand.
There is absolutely nothing wrong with the old pension scheme. It is the ruling class that has rubbished its efficacy. As presently constituted, the present ruinous capitalist ruling class cannot fix anything right in Nigeria. Unfortunately, the labour leaders have accepted this privatised new scheme without deeply examining what went wrong with the old scheme. This should, however not be surprising to every keen follower of their orientation in the last period. It is the same way they have accepted privatisation in principle but have reservation to the ways and manners with which privatisation is being carried out. Privatisation and commercialisation is a wild wind that will blow off the necks of the poor working people at all times. What is therefore required is a system and regime that will expend collective resources for the benefit of all. A regime that will invest on its people; that will invest on social services; education; health; electricity; roads, etc and social security for unemployed, disabled and the old people.. It is this type of regime that can make Nigeria a better place for every citizen, old, young and pensioners.
To enthrone this kind of regime, there is need for a platform, a mass working people political party that can serve as a rallying point for the masses and viable enough to wrest power from the present thieving capitalist ruling class who has continued to impose itself on Nigerians via massive rigging and manipulation of at election periods. This manipulation is made easier in the absence of a viable working class alternative from national to local government level. The only seeming exception was the candidature of Adams Oshiomhole in Edo State in the 2007 electoral farce. The massive support for Adams and the Election Tribunal verdicts despite PDP rigging machine show that, with a working class political platform and candidates, power could be wrested from the political vampires. Labour leaders should therefore wake up, jettison their support for neo-liberalism in all ramification and kick start the agenda for formation of such a platform. Otherwise, the 2011 general elections will come and meet the masses without their own platform and candidates. This will definitely imply continuation of suffering in the midst of plenty and our hard labour in vain while those who don’t work will continue to reap our fruits. If we fight we may win, if we don’t, we have lost.