Court rules: Pension reform act supersedes employee-employer pension agreements

June 15

15:23 2022

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The national industrial court in Kaduna has affirmed the superiority of the pension reform act over employee-employer pension agreements.

The Pension Reform Act (PRA) of 2004, which governs and regulates the administration of the contributory pension scheme for the public and private sectors in Nigeria, was amended and replaced with the PRA 2014.

In the suit marked NICN/KD/06/2019, Ijoma Paulinus (the claimant) dragged Union Bank of Nigeria Plc, the National Pension Commission and Premium Pension Limited (the defendants) to court over his pension entitlements.

Paulinus 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.

Delivering judgement on June 2, S.O. Adeniyi, the judge, ruled in favour of the defendants.

The judge 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 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”.

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 the trust deed.

She declared that the trust deed was no longer binding following the PRA 2004.

The court’s decision implies that without prejudice to all existing pension schemes, the PRA 2014 supersedes other pension schemes which preceded the PRA.