STATE PENCOMS VIS-À-VIS PENCOM UNDER THE PENSION REFORM ACT 2014 AND THE 1999 CONSTITUTION (AS AMENDED)[1]

THIS CAPTURES THE AIM OF THIS BI-MONTHLY WRITING.

A short background is necessary for a better understanding of the purport of this write-up. Nigeria made a major institutional reform in the administration of the pension of its retired workers in 2004 via the Pension Reform Act №2 of 2004; changing thereby from the Defined Benefit System to the Contributory Pension Scheme System. Its long title declared its goal in these words: An Act to establish a Contributory Pension Scheme for employees in the Public Service of the Federation, Federal Capital Territory and Private Sectors in the Federal Republic of Nigeria. As a result of the gap created in this law, Lagos State in 2007 established the Lagos State Pension Commission to provide for Contributory Pension Scheme for the Public Service of the State. Item 44 of Part 1 of the Second Schedule to the 1999 Constitution (as amended) however put: Pensions, gratuities and other-like benefit payable out of the Consolidated Revenue Fund or any other public funds of the Federation under the Exclusive Legislative List. Perhaps, suddenly awaken to its “wide powers” over the administration of pensions in Nigeria, the National Assembly enacted the Pension Reform Act №4 of 2014. Its long title said the Act was aimed at repealing: The Pension Reform Act №2, 2004 and enact the Pension Reform Act, 2014 to make provision for the uniform contributory pension scheme for public and private sectors in Nigeria; and for related matters. However, State Pension Commissions still exist. Indeed, in 2017, Ekiti State created its own Pension Commission.

Certain question which this instant instalment of Pension Matters will aim to answer include: do States of Nigeria need their own Pension Commissions? More importantly, what roles will such commissions have to play in the Pension market in the light of the Item 44 of Part 1 of the Second Schedule to the 1999 Constitution (as amended)? Can the National Assembly regulate Pensions paid out of the revenues of States?

The first point that needs some clarification is the division of legislative powers in Nigeria. Nigeria being a federation has its legislative powers divided into Exclusive (the exclusive preserve of the National Assembly[2]), Concurrent (jointly held by both the National and States’ Houses of Assemblies[3]) and “an undefined” Residual Lists (reserved for the States’ Houses of Assemblies and traditionally includes any other legislative power not provided for in either the Exclusive or Concurrent Lists[4]). So each level of the legislative arm knows the limit of its powers and if a conflict occurs as to the limit of these powers, the courts of law are empowered to adjudicate[5].

Secondly, the powers of the National Assembly to legislate on Pensions is limited to such payable out of the Consolidated Revenue Fund or any other public funds of the Federation and no more. Thus, to the extent that the National Assembly attempted by its 2014 Act to legislate on how the Pensions, gratuities and other-like benefit payable out of the Consolidated Revenue Fund or any other public funds of the States**[6]**¸ the National Assembly acted ultra vires.

Furthermore, this ultra vires act cannot be preserved by a reliance on the doctrine of covering the field. The doctrine only applies in relation to matters in the concurrent legislative list and not those in the Exclusive and Residual lists. Section 4(5) of the 1999 Constitution (as amended) which is the constitutional foundation for the doctrine provides that: If any Law enacted by the House of Assembly of a State is inconsistent with any law validly made by the National Assembly, the law made by the National Assembly shall prevail, and that other Law shall, to the extent of the inconsistency, be void. Ogundare JSC expounding on this doctrine in AG Abia State v. AGF[7] observed that: “Eso, JSC at page 35 (referring to the case of AG Ogun State v. AGF (1982) 1–2 SC 13) commented thus: The last point I would like to comment upon in this case is the doctrine of covering the field. The learned Chief Justice has in this judgement referred to the authorities which I accept are applicable. However, I take the view that when one considers this doctrine, the phrase ‘covering the field’ means precisely what it says. Where a matter legislated upon in the concurrent list[8] and the Federal Government has enacted a legislation in respect thereof, where the legislation enacted by the State is inconsistent with the legislation of the Federal Government it is indeed void and of no effect for inconsistency. Where however, the legislation enacted by the State is the same as the one enacted by the Federal Government, where the two legislations are in pari material, I respectfully take the view that the State Legislation is in abeyance and becomes inoperative for the period the Federal legislation is in force. I will not say it is void. If for any reason the Federal legislation is repealed, it is my humble view that the State legislation, which is in abeyance, is revived and becomes operative until there is another Federal legislation that covers the field.” Earlier, the Learned Law Jurist had commented that: It was exhaustively discussed and again applied by this court in AG Ogun State & Ors. V. AGF & Ors (1982) 1–2 SC 13; (1982) 13 NSCC 1. The doctrine is usually applied between a law enacted by the federal legislature and that enacted by a state legislature on the same subject. The doctrine was expounded by Fatayi-Williams, CJN at p. 11 of the 2nd Report as follows: “… where identical legislations on the same subject matter are validly passed by virtue of their constitutional powers to make laws by the National Assembly and a State House of Assembly, it would be more appropriate to invalidate the identical law passed by the State House of Assembly on the ground that the law passed by the National Assembly has covered the whole field of that particular subject matter.”

Fourthly, the fact that a matter is in the Exclusive Legislative List does not mean that a State House of Assembly cannot legislate on it. As Learned Writer Kehinde M. Mowe[9] observed: In Akwule v. Queen (1963) NNLR 105, the court adopting the views of Lord Atkin in Gallagher v. Lynn (1937) AC 863, concluded that the provision of this subsection that the National Assembly shall have powers to legislate on matters included in the exclusive legislative list to the exclusion of the Houses of Assembly of States does not mean that a state legislature cannot touch on those matters no matter how slightly. The test is to look at the true nature and character of the legislation. It is thus within the residual reserve of the federating units to determine how it will administer pension payable to workers out of the State’s Consolidated Revenue; the National Assembly has no such powers.

However, in determining the legislative powers of the National Assembly vis-à-vis the Pension Reform Act 2014, credence needs to be given to Item 68 of Part 1 of First Schedule to the 1999 Constitution(as amended) which puts within the legislative competence of the National Assemble: Any matter incidental or supplementary to any matter mentioned elsewhere in this list. This provision, it is submitted must be interpreted in the light of the ejusdem generis rule. The Supreme Court in construing the scope of the words: “or any other (tribunal) by the Federal or State Government” in Section 66(1)(h) of the 1999 Constitution (as amended) in Okotie-Eboh v. Manager & Ors[10] observed that: Another recognised canon of interpretation is the ejusdem generis rule which provides that where particular words are followed by general words, the general words are limited to the same kind as the particular words, unless, of course, there be something to show that a wider sense was intended. Thus, item 68 must be interpreted in the light of item 44 of the Exclusive Legislative List and cannot (should not) extend to pension payable by States.

A related question is: can the National Assembly regulate the administration of the pension of employees in the private sector under the constitution? In answering this question, I will distinguish two categories of private sector employees:

1. Those working in the FCT, Abuja;

2. Those working in other States of the Federation.

Section 299(a) of the 1999 Constitution (as amended) provides: “The provisions of this Constitution shall apply to the Federal Capital Territory, Abuja as if it were one of the States of the Federation; and accordingly — all the legislative powers, the executive powers and the judicial powers vested in the House of Assembly, the Governor of a State and in the courts of a State shall, respectively, vest in the National Assembly, the President of the Federation and in the courts which by virtue of the foregoing provisions are courts established for the Federal Capital Territory, Abuja.” By this provision, the National Assembly is the Legislative Arm of the Federal Capital Territory, Abuja. Thus, capable of legislating for the administration of pension within the FCT. However, for employees in the private sector in the 36 States of the Federation, to the extent that as has been argued in this write-up that the National Assembly does not have the legislative competence to regulate pension payable by States, the National Assembly has no power to regulate the administration of pensions in the private sectors doing business in the 36 States of the Federation.

The foregoing would have shown that this writer is of the firm view that in the light of the 1999 Constitution (as amended):

1. PenCom’s administrative control over pension in Nigeria should be limited to employees of the Federal Government and the private sector based in the FCT, Abuja;

2. State PenComs should have administrative control over pension matters within their States (public and private sectors).

However, it needs to be borne in mind that with duplicity of regulating agencies comes the challenge of multiplicity of regulations and even worse contradictory regulations. Thus, if Nigeria’s pension market will be attractive to the Pension Funds Administrators and Custodians, the regulators (PenCom and State PenComs) need to work hand-in-hand in order to avoid a situation where PenCom issues one regulation and StatePenCom issues another. Legal Purists will however agree that until a court of competent jurisdiction declares that the Pension Reform Act 2014 is to the extent that it attempts to regulate pension payable by the States of the Federation and private sector employees/employers in the States is an encroachment into the arena of the States and liable to be declared null and void, the Pension Reform Act 2014 remains the supreme regulating legislation on pensions administration in Nigeria.

In conclusion, the contradictions that the Pension Reform Act 2014 presents in the light of Nigeria’s Federalism is one other reflection of the numerous contradictions that our federalism plays out on a daily basis. This however, should not blind the eyes of the conscientious observer of the gains we have made thus far in developing a pension system that can favour the masses and be a catalyst for inclusive national development.

The author publishes this article for educational purposes only, not to provide specific legal advice. By using this article, you indicate that you understand there is no attorney-client relationship between you and the author. This article should not be used as a substitute for obtaining legal advice from a Legal Practitioner.

[1] The author is an Associate at P O Bajowa Chambers.

[2] Section 4(3) of the 1999 Constitution (as amended)

[3] Section 4(4&7) of the 1999 Constitution (as amended)

[4] Section 4(7) of the 1999 Constitution (as amended)

[5] Section 6(6)(a-b) of the 1999 Constitution (as amended)

[6] See the draft model Pension Reform Law for States via: https://www.pencom.gov.ng/category/publications/general-publications/. Last assessed on the 25th of July, 2018 at 12:42

[7] (2002) LPELR-611

[8] Emphasis are those of the writer

[9] Constitutional Law in Nigeria (2008) at page 58

[10] (2004) LPELR-2502(SC) per Edozie, JSC at page 31. See also Ojukwu v. Obasanjo (2004) LPELR-2400 per Edozie, JSC at page 62.