Court affirms that Pension Reform Act 2014 Supersedes any Employee – Employer Pension Agreements
National Industrial Court of Nigeria, Kaduna Judicial Division, has affirmed that the Pension Reform Act 2014 (PRA 2014) supersedes the terms and conditions of employee-employer Pension Agreements.
Delivering judgment on June 2, 2022 in Suit No. NICN/KD/06/2019 filed by one Ijoma Paulinus (the Claimant) against Union Bank of Nigeria Plc, the National Pension Commission and Premium Pension Limited (the Defendants), Hon. Justice Sinmisola O. Adeniyi, held that a prior pension agreement entered into by an employee and an employer became determined upon the enactment of the Pension Reform Act 2004 and remains ineffective and/or unenforceable.
The Judge ruled that “Section 1 of the PRA (supra) makes it mandatory for any employment in the Federal Republic of Nigeria to establish a Contributory Pension Scheme for payment of retirement benefits of employees to whom the Scheme applies under the Act, that is, all employees in the Public Service of the Federation, Federal Capital Territory and the Private Sector. The categories of employees exempted from the provision of Section 1 (supra) are listed in Section 8 of the Act.”
Justice Adeniyi upheld the above provision of the PRA in the judgment in the Suit which was predicated on a Union Bank of Nigeria Plc Staff Pension Fund – Deed of Variation of Trust Deed (the Trust Deed).
The claimant had argued that, in line with his status as a former employee of Union Bank of Nigeria Plc, he was entitled to an upward review of his pension based on the Trust Deed between Union Bank of Nigeria Plc, Union Trustees Limited and William Street Trustees Limited. The Court declared that the Trust Deed had become determined and was no longer binding following the enactment of the PRA 2004. Accordingly, the Trust Deed was ineffective and unenforceable.
The purport of the decision is that, without prejudice to all existing pension schemes, the provision of the PRA 2014 supersedes the provisions of such pension schemes which preceded enactment of the PRA.
Furthermore, Section 1 of the PRA 2004 (now PRA 2014) has amongst its objectives, the establishment of a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for pensioners under the Contributory Pension Scheme.
The PRA 2014 also provides that the Act shall apply to all categories of employments, subject to certain exemptions for members of the Armed Forces, the Intelligence and Secret Services of the Federation and anyone who is entitled to retirement benefits under any pension scheme existing before the 25th day of June, 2004, being the commencement of the Act and for those who as at that date, had three or less years to retire.
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