Pension Policy in Osun State: No to Compulsory Retirement
CDWR Press Statement:
Pension Policy in Osun State: No to Compulsory Retirement
The Campaign for Democratic and Workers’ Rights (CDWR), Osun State condemns, in strong terms, the ridiculous, illegal and clearly unjustified compulsory contributory pension policy being imposed on workers by the Osun State government. We call for immediate reversal of this obviously obnoxious policy. We also call on the labour unions’ leadership to convene immediately a congress of workers to reject any attempt to force a pension system on them.
The Osun State government under the immediate past regime of Olagunsoye Oyinlola/PDP in 2009 made a policy that compelled workers in the state employ to subscribe to the exploitative Contributory Pension Scheme. Workers who still had, as at 2009, more than three (3) active years in the Public Service were directed to either enroll in the Contributory Pension Scheme or compulsorily retire latest by December, 2012. By this act, the government aimed to force workers to retire or join the private pension scheme, with a view to reducing the government’s financial commitment to workers.
Based on this policy, many workers, especially those who have fewer years left in service, retired forcefully when they realized the exploitative nature of the contributory pension scheme. Several others, out of fear of being forced out of service, immediately enrolled in the contributory pension, even when they knew very little about it. Worse still, the leadership of various workers’ unions, including the central labour unions â€“ NLC and TUC â€“ not only maintained questionable silence but also encouraged workers to accept the policy â€“ join the contributory pension or resign.
This policy is clearly illegal and anti-worker. Inasmuch as the government (public) guaranteed pension scheme has not been abolished; it is illegal for the state government to force the Contributory Pension Scheme on workers. Furthermore, joining a private pension system was never a condition for employment; therefore, it could not have been a condition to retire workers compulsorily as this is tantamount to retrenchment.
The Rauf Aregbesola/ACN government that has been in power for close to two years has not deemed it fit to stop this illegal and clearly backward policy. On the contrary, it has pushed on with the policy, even when many workers are beginning to question the rationale behind forcing them to join an exploitative pension scheme. This is a government, which campaigned for vote with the mantra of change from the rot of the Oyinlola administration.
Contributory Pension: Profits for the investors, Bleak future for workers
This policy is like asking workers to choose between death and body paralysis. This is because the Contributory Pension Scheme has been revealed as a sheer fraud. It is an attempt by the government to shirk its responsibility of providing living and adequate pension to retired workers, who have committed their active and productive lives to the society. This policy, on the other hand, gives big financial capitalists easy opportunity to profit from the misery of workers, who are frustrated daily with the mismanagement of the government-guaranteed pension scheme.
The anti-poor politicians in various political shades and at all levels, having looted and misappropriated the pension allocations of hapless retirees is now pushing them into the hands of private profiteers. If politicians and big bureaucrats at the federal level could officially loot N34 billion ($212.5 million), one could hazard a guess on what will be operating at the state level. It will therefore not be surprising hearing that some politicians are investors and shareholders in various private Pension Fund companies.
According to the Contributory Pension Scheme, workers and employers are to pay 7.5 percent of workers’ salaries each, into the pool managed by the private Pension Fund Administrators (PFAs). When workers retire, the contributions and the gratuity of workers are handed over to the PFAs, who then pay workers on pro rata basis. However, the PFAs, are given free access to gamble and make profits on workers’ pension savings even when workers do not know where their pension fund is being invested.
If the businesses the PFAs invested in go bankrupt, and the PFAs subsequently go bankrupt, who will pay retirees their life savings? Currently, more than 70 percent of the over N2 trillion pension contributions have been invested in governments’ bonds and debt issuances. What of situation in which governments default in redeeming the bonds or the debt issues; as already governments across the country owe over N16 trillion in domestic debts â€“ debts that are clearly unsustainable. What of the situation when governments’ revenues collapse as witnessed between 2007 and 2009 at the peak of the global economic meltdown when crude oil price fell to its all time low? What if governments refuse to pay up workers’ gratuity to the PFAs? Already many private employers are defaulting in paying their contributions to the PFAs while many state governments are not even committed to paying any gratuity. These scenarios will throw workers back to the same old problem â€“ unpaid pension and gratuity â€“ albeit with more complications of who is responsible for what.
Contributory Pension is Sheer Exploitation of Workers
Clearly, the Contributory Pension Scheme cannot be a better alternative to bureaucratically run and poorly managed government-guaranteed pension scheme. Indeed, it is more of a sheer exploitation of workers. As unorganized and mismanaged as the government-guaranteed pension scheme is, workers’ pension is guaranteed for life. Under the contributory pension, PFA collapse will mean total doom for retirees.
Meanwhile, the PFA bosses and fat cats would have made easy profits and collected huge salaries and allowances from workers’ pensions. Aside this is the fact that, what retirees are paid as pension under the contributory pension scheme is mere pittance compared to what is paid directly by governments to retirees.
While governments, without any deduction from workers’ salaries, pay at least 60 percent of retirees’ last salaries as pension with gratuity also fully paid, contributory pensioners will collect around one third of the same amount as pension especially for workers having less than ten years in the service. Indeed, contributory pensioners only collect half of their gratuity, while the remaining half is added to the 15 percent contributions, and paid on pro rata basis as pension.
The implication of this for instance in Osun State, is that while workers having less than ten years in the civil service will collect between N15, 000 and N35, 000 as monthly pensions, their colleagues under the government-guaranteed pension scheme will collect more than double of this amount. Yet, the government (and unfortunately, the labour leaders) wants to compel workers to subscribe to the fraudulent contributory pension.
Clearly, the aim of the government is to reduce its contribution to retired workers’ welfare. It also aims to make big business profiteers gain from workers’ misery. It is ridiculous that the same government that cannot ensure prompt payment of pensions and gratuities to retirees is devoting enormous resources and energy in ensuring the implementation of the Contributory Pension Scheme, even if workers will have to be bullied and threatened. The argument of government that public pension scheme is ineffectual is mere hypocrisy. In reality, the same set of politicians and their big bureaucrat colleagues who are looting workers’ pensions are the ones using the excuse of their failure to hand workers over to capitalist buccaneers. This is the same way public education and other social services are ruined by capitalist politicians, who then encourage the poor people to patronize the private sector, where they have invested the looted public funds meant for these services in the first place.
Workers Must Act now!!
Workers must demand an immediate end to this fraudulent contributory pension scheme. They must demand for a fully guaranteed living pension tied to the cost of living and rate of inflation, by all employers â€“ both private and public. As against the fraudulent and bureaucratic manner of running the government pension scheme, workers must demand that governments at all levels, pay monthly allocation of retired and active workers to a fund to be run and managed by elected representatives of workers and retirees, at all levels. Such fund will ensure that there is proper planning for all workers on a long-term basis. This will also ensure that government is not burdened with pension arrears, as regular payments to the fund will prevent this. However, rank-and-file workers and retirees must have open access to scrutinize the fund’s account. In addition, workers and pensioners must have the right to democratically elect and recall representatives to manage the fund at all levels.
This is what the leadership of the labour movement should defend, and not to be partners of governments and big business in the exploitation of their members. It is clearly unjustified that there is membership of trade union movement in the National Pension Commission (PENCOM), which coordinates this exploitative pension scheme, while the labour leadership closes their eyes to the plight of thousands of retired workers dying of unpaid pensions and gratuities by government. It is more disturbing that the labour centres are themselves investors in the private pension scheme e.g. NLC owns a PFA.
We call for immediate reversal of the clearly bizarre attempt of the Osun State government to force the contributory pension on workers. We call on workers in Osun State to demand a congress to reject this clearly anti-worker and illegal policy.
The fact that the ruling elite cannot guarantee a living pension for its workers reflects the bankruptcy of the neo-colonial capitalist arrangement in the country. It also underscores the need for working people to build their own political alternative to the rotten politics of the capitalist politicians and their big business partners.