NNPC staff pension crisis

The measure is a disciplinary one, and followed alleged failure of the NNPC Pension Fund to comply with provisions of the Pension Reform Act (2014).  In a letter by its Acting Director General Chinelo  Anohu-Amazu, PENCOM cited the ‘unwillingness’ of the NNPC to comply with the provisions of the law, particularly the conditions attached to […]

The measure is a disciplinary one, and followed alleged failure of the NNPC Pension Fund to comply with provisions of the Pension Reform Act (2014).  In a letter by its Acting Director General Chinelo  Anohu-Amazu, PENCOM cited the ‘unwillingness’ of the NNPC to comply with the provisions of the law, particularly the conditions attached to the approval granted it to continue with the scheme. The revocation has unleashed a plethora of responses, including NNPC workers’ strike, and a brief fuel scarcity in parts of the country, including Abuja.
In 2006, PENCOM granted the NNPC a temporary approval to operate as a CPFA, pending compliance with the guidelines prescribed by the 2014 Act. Out the five conditions given to the NNPC, it allegedly failed to comply with none for the past eight years. Most telling was the inability of the NNPC to address the perennial deficit in the funding of the scheme which at the time of revocation stood at N316.82 billion. The PENCOM noted that although the NNPC had on several occasions pledged to address the deficit, it did not match its words with action.
The PENCOM cited Section 50(1) (g) of the PRA 2014, and clause (b) (i) of the approval conditions which provide that the scheme must be fully funded at all times, and any shortfall made up within ninety days. The NNPP breached this condition for the eight years the scheme lasted, even as it repeatedly made undertakings to rectify the situation, without doing anything, according to the PENCOM.
Beyond the deficit, PENCOM also faulted the NNPC for failing to fulfil the condition which provides that the Fund and its assets should be passed on to a licensed Pension Fund Administrator (PFA). Another area in which the NNPC failed to comply with specified conditions include the transfer of real estate to its PFAs based on grounds not recognised by law.
The resulting pension crisis is one more demonstration of the diminished premium which the NNPC leadership has paid to sensitive issues, including a crucial matter as staff welfare. It is instructive that the current issue of non-compliance with PENCOM conditions would have been resolved if the NNPC Board of Directors, which is chaired by the Minister of Petroleum Resources Mrs Diezani Alison-Madueke, had been alive to its responsibilities.
According to reports, the management and the workers’ union had long worked out a plan of action to avoid the crisis and this was submitted the Board for approval. But given that the Board had not met since after its inaugural meeting in 2012, the matter was allowed to degenerate to the present ugly state of affairs. The present crisis is therefore inadmissible, and the blame rests squarely with the NNPC Board.
Over the years, pension matters have been a sore point for the NNPC leadership, especially at the Board level. In March 2013, Justice Maureen Esowe of the National Industrial Court ordered the Corporation to pay N500 million to staff members who had retired before 2004. The claimants had instituted a suit in December 2011 challenging the non-payment of their reviewed pension allowances approved by an earlier Board.
The NNPC Board needs to be more engaged in corporate governance, and responsive to issues that affect its employees. PENCOM took the right step by not shielding a government agency for failure to discharge its responsibilities and by revoking its licence. The Corporation now needs to redeem itself by responding in the light of the provisions of the law.