Documents which contained series of official discussions and meetings between the National Pension Commission (PenCom) and top management of the Power Holding Company of Nigeria (PHCN) have disclosed that PenCom’s frustrating efforts to bring PHCN to abide by provisions of the Pension Reform Act (PFA) 2004 in administering pensions of its employees.
Parts of the 32-page correspondence which spanned from August 7, 2007 to June 5, 2012 and obtained by THISDAY at the weekend in Abuja, suggests that PenCom had consistently engaged PHCN management in trying to resolve PHCN’s lingering challenges with its in-house operated pension scheme; its efforts however failed to yield results.
Accordingly, the commission had out of frustration, resorted to instituting legal actions against PHCN for its failure to commit to provisions of the PFA 2004 which PHCN’s superannuation pension scheme ran contrary to. PenCom had also in a letter dated December 23, 2010, sort the advice of the Attorney General of the Federation (AGF) and Minister of Justice in prosecuting PHCN.
The ongoing reform of the country’s power sector which includes the privatisation of PHCN successor companies has received stiff resistance from PHCN workers majorly on issues relating to settlement of their pension and severance package which they claim through their unions; National Union of Electricity Employees (NUEE), Senior Staff Association of Electricity and Allied Companies (SSAEAC) and Nigerian Union of Pensioners (NUP), is been mismanaged by the Federal Government.
The unions have vehemently disagreed with government’s proposal to offset their severance benefits on the basis of the 15 per cent contributory pension scheme of PFA 2004. This followed discovery by the government that the PHCN superannuation pension fund was been underfunded and has accumulated huge deficits and would not be able to meet the 25 per cent payment demands of the unions.
For instance, in one of the minutes of the meeting on issues of compliance to PRA 2004 between PenCom and PHCN on January 21, 2010, the Executive Director, Finance and Administration of PHCN, Mr. Pius Apuye, informed the party that PHCN was haphazardly setting aside N900 million monthly to meet the pension liabilities of its employees, adding that the company was operating at a loss due to crisis in the Niger Delta and the unions agitation for salary increase.
But the Director-General of PenCom, Mr. Mohammad Ahmed, in his response at the meeting, explained that PHCN was the only agency of government that was yet to comply with PRA 2004, adding that the last actuarial valuation of PHCN existing pension scheme revealed a funding deficit of N116 billion.
Ahmed also stated that PHCN was advised at its last meeting with the commission to present a memorandum to the Federal Government through the ministry of power, outlining all challenges relating to its inability to fund the pension deficit but PHCN was yet to comply with such directive.
He decried PHCN’s lack of commitment to transit to the PFA 2004, adding that such was a clear breach of extant pension laws of the country.
Although, PenCom severally complained of PHCN’s refusal to comply by its directives, the correspondence suggests that the commission had as far back as 2007 got wind of the PHCN pension fund predicament but failed to initiate strict punitive measures against the company, it rather resorted to holding meetings with PHCN officials to the detriment of the employees of PHCN and the Federal Government’s pension reform efforts.
For instance, in one of its letters to the Managing Director of PHCN dated June 18, 2008, the commission had in acceptance of a request for a meeting with it, asked PHCN to submit to it evidence of opening and funding of Retirement Savings Accounts (RSA) for its existing employees with Pension Fund Administrators (PFAs) of their choice, as well as evidence of transfer of pre 2005 pension assets to licensed operators within four weeks, failure of which will attract appropriate sanctions.
PenCom never sanctioned PHCN after the expiration of the four-week ultimatum but went on to initiate a process of prosecuting the company in 2010, and even at an expected advise which it sort from the office of the Attorney General of the Federation (AGF) and Minister of Justice.
Also, a top official of PHCN who spoke on anonymity to THISDAY clarified that the company had within these periods made efforts to comply with the PFA 2004, at the same time close up deficits in the superannuation fund but for the resistance of the unions who had insisted on it continuing with the in-house scheme.