Pension Benefits: The Construction Worker’s Ordeal

Certain things do not cross the mind until one encounters them. This is not because they do not exist, but one scarcely gives them a thought. I want to make a case for the teeming construction workers in Nigeria who are dying daily under the chokehold of the laws governing pension administration in the country.

Before the Pension Reform Act 2004 under ex-President   Olusegun Obasanjo, the pension system in practice in Nigeria was the Defined Benefits scheme in the public service, which was scantily funded through annual budgetary allocations, late release of funds for pension rights and the prevalent humongous pension funds mismanagement/embezzlement between pension managers and the trustees of pension funds. The pension system scarcely covered the private sector, the construction workers inclusive.

Pained by the foregoing, the pension administration in Nigeria considered it necessary to eliminate the problems related to pension. That was when the Pension Reform Act 2004 came into being.

Among the lofty and laudable objectives of the PRA 2004 were:  To ensure that every person who worked in either the public service of the federation, Federal capital territory or private sector receives his retirement benefits as and when due; To ensure that pensioners are not subjected to untold suffering due to inefficient and cumbersome process of pension payment: etc.

In order that the objectives of the PRA are met, the National Pension Commission (Pencom) was established under the Act empowered with supervisory authority over the licensed Pension Fund Administrator PFA’s. It would be 10 years later before the 2004 PRA was repealed to be replaced by the PRA 2014 signed by President Goodluck Ebele Jonathan on July 1, 2014.

As laudable as the Pension Reform Act objectives appear, we in the construction industry are negatively affected by the stronghold of the pension laws.

Let me establish that people suffer so much on account of job hazards, it has to be noted too, that more than 90% of construction workers do not have formal education and lastly, that the job security in the industry is so fragile that more than half of the workforce scarcely exceed three years in continuous service.

With the foregoing challenges, there always arise situations that throw the construction worker/pensioners into deep pains of frustration, desperation when they seek to collect their pension benefits after work.
There abound situations whereby a construction pensioner with a name like Adamu Isah similar to another Isah Adamu is forced to swear to numerous affidavits to ascertain the identity.
There are many construction workers who are not aware that they have a Retirement Savings Account [RSA]. Upon severance, they just retire to their villages and their contributions remain a lost fund with the PFA’s.
In the construction industry, no body enjoys gratuity since sections 20,21 and 22 of the National Joint Industrial Council agreement (a law that regulates the conditions of service in the construction industry) are expunged in 2012. The 25% initial lump sum withdrawal is abysmally too meagre for someone who has suffered hazards at work and attained the age of 50 years with large sum in savings only to be a paid trifle, while rest are kept in the name of programmed withdrawal for a period spanning 18 years or more after retirement.

A programmed withdrawal is a method by which the employee collects his/her retirement benefits in a periodic sums spread through the length of an estimated life span. These withdrawals are shamefully too small for a person who had been on a good salary during his working days. Some are paid only N5, 000 per month.

There are frequent verifications leading to pensioners dying during the exercise. In order that the construction retirees could get a let-off from the ordeals, we in the industry demand that our employers be empowered to be the custodians of our pension deductions.

Among other benefits: The companies are direct employers of the workers and they have a day to day interaction so the issues of confusion in identify will never arise at the time of claiming benefits.

Benefits would be calculated together with severance pay and lump sums paid to retirees to enable them start small-scale businesses as opposed to the pittance paid in programmed withdrawals.

There will not be any concern over verification of pensioners as not all workers on the employers’ payrolls are alien to them and they will have no qualms paying their benefits.
The employer companies can hold the contributions as collateral to give salary advances and loans to the workers unlike what obtains now with the PFA’s whereby a retiree who has up to N500, 000 in his RSA and his child dies of common malaria because he could not pay N20, 000 hospital bills.

It is instructive that any law meant for the people that offers more burden than benefits need to be re-examined. The National Assembly will certainly do lot of good if they amend the Pension Reform Act with the construction worker in mind.

Comrade Jatau Monday Ali is Union Chairman at S.C.C Nigeria Limited.