Is Amosun right about non-remittance of pensions/cooperatives deductions?

Ganiu Taofik, Adebisi Sanda

• Adebisi Sanda (A partner with Ernst and Young)

Pension is usually a very critical form of savings in the economy. As every economy is involved in production and consumption, savings must not also be underemphasised.

Before the 2004 pension reforms, we had mostly a non-contributory pensions scheme, which turned faulty and inadequate. It created a lot of problems and at the point of workers’ exit, they would realise that there was a big hole or mismanagement in their pensions.

So, the contributory pension scheme was brought. This has been a solution that is available globally. It not only became contributory but also externally funded. The money has to be taken out of the organisation and then put into institutions mandated to manage the funds.

When the money is not remitted, the same problem we are trying to avoid comes back.

As of the last count, we had N6tn in the scheme since 2004. The money is still even a drop in the ocean because less than 40 per cent of retired workers have been paid at the moment.

The second infringement of non-remittances of pensions is the betrayal of the workers’ trust. There are penalties for this and they include jail term.

It is a fraud against the workers. You should not deduct their money and not remit it. The law is against that. You must rather remit it to an approved pension fund administrator. The employer that refuses to do that has betrayed the trust of the employees. This is very unfair as the workers deserve their pensions.

• Sola Lawal (Publicity Secretary, All Progressives Congress, Ogun State)

Workers are known to go on strike over salaries. But incidentally, this is not about salaries, but eight-month deductions.

The administration is not denying the deductions but what the government is saying is that workers should consider that the administration inherited deductions from the past government and paid all.

What does the deduction mean?

Deduction means what the workers voluntarily contribute to the pool of cooperative societies and draw financial assistance as and when needed.

Now, what is causing the face-off is not about salaries. Nigerian workers quite often go on strike on the basis of non-payment of salaries. But the Ogun State Government led by Governor Ibikunle Amosun has paid the salaries of workers up till the last month.

When the government came on board in 2011, it inherited 11 months of unpaid deductions by the past administration. The Amosun administration has spent 65 months in government and it has acted truthfully to the payment of deductions as required, until the recession.

So, if an administration inherited 11 months of deductions and the same administration paid it and was also faithful for about 65 months until the recession, it should be commended.

Simple understanding of the workings of the government and the enormous responsibilities of the administration demand that the government should be praised.

However, the government is not saying it will not pay the deductions. It has offered to pay the deductions every two months. So, this is the stand of the government.

• Ganiu Taofik (Publicity Secretary, Peoples Democratic Party, Lagos State)

The deduction is fundamentally wrong. It is very unfair and ungodly for a governor to withhold money meant for the people who have laboured for the state. No matter what the government does today, everything must be measured by the treatment it gave the workers.

The common denominator in all this rancour is arrogance. The governor arrogantly abuses the rights of workers and tries to rationalise it. Unfortunately, part of the rationalisation is to sack the labour leaders and this is very upsetting.

Sometime in Lagos State too, a labour leader, Mr. Ayodele Akele, was sacked by the then governor. Nigerians must begin to look at the trampling on the rights of citizens by the governor, who still wants the people to think he is doing their wishes.

We cannot accept recession as an excuse because this will only amount to eulogising the incompetence of the government. For once, the Chairman of the All Progressives Congress Governors’ Forum said that the recession was caused by the policies of the APC.

Specifically, what Amosun needs to do is to cut the irrelevant expenditures of the state to make up quickly for these deductions. There is a lot of wastage in government. Ogun State, by natural endowment, is a resource area but the way the governor is attempting to develop the state in an elitist fashion to the detriment of fundamental issues, is not proper.

 Some elitist projects being done are far outside what the ordinary Ogun State residents want.

• John Chukwu (An economist and Chief Executive Officer, Cowry Assets Nigeria Limited)

Basically, the reason for the contributory pension scheme is to allow the individual employee to have a successful retirement. By the time the employee retires, he would have built a lot of savings from the contributions.

The retiree will then have some level of economic comfort. But when remittances are deducted and not paid in, it then means that the objective of the contributory pension scheme has been defeated.

One, the action of the contributory pension requires that there is a pension fund administrator who manages and grows the funds. In case of non-remittances, the income that would have accrued overtime for the workers will not be there.

The money is to be paid from the workers’ earnings, not the government’s purse. So, there is no excuse for non-remittances in the first place. When the pension is in this state, the employee is in a sort of jeopardy.

Ordinarily, I think for the private sector employees, there is a severe sanction for non-remittance of pensions. I believe the law should be further stepped up, so that it can be extended by the Pension Commission to the public sector employers.

The government has to pay the penalty to compensate for the forgone income that would have accrued from the remittances.

• Peter Ozo-Eson (General Secretary, Nigeria Labour Congress, Lagos State)

As far back as March, a Memorandum of Understanding was entered into in which the governor was asked to respond to the issues of deductions from Ogun workers’ salaries and non-remittance of deductions to pension fund administrators but the governor never responded.

The organised labour in the state, thereafter, gave the government an ultimatum. Before the new strike started, I wrote a letter to the state governor, pleading that the matter should not be allowed to degenerate. I said if he wanted an intervention, we were ready to offer our service. The letter was sent by courier.

But it was rejected and returned to me, unopened. So, when the ultimatum issued by the state congress expired and the workers embarked on a strike action, the government came up with all manner of accusations and said the workers had politicised the strike.

The issue of pensions and cooperatives deductions was done from the workers’ salaries and this is not the government’s money. Actually, under the 2004 Pension Act, it is an offence for an employer to deduct and not remit.

The deductions are the legitimate monies of the workers. It is required that the deductions should be remitted to the appropriate quarters. Instead, the government has been harassing the workers and threatening them with sacking. This has only complicated the matter.

As organised labour, the action of the state government is not going to be allowed to stand. We do not want this action by the Ogun State Government to become contagious. We are going to take a stand.

It is an issue for the national organised labour. We do not want this practice by the state to contaminate other states.