Justice Nelson Ogbuanya of the National Industrial Court in Port Harcourt has directed the National Pension Commission (PENCOM) to issue guidelines for reintegration of retired/disengaged persons who secured another employment.
It held that there are anomalous lacunas in pension fund administration due to the absence of requisite guidelines and unclarified practice by the commission.
He stated this in a suit by Sotonye Boyle.
Just Ogbuanya held that Boyle was not qualified for another withdrawal of a 25 per cent lump sum from his Retirement Savings Account (RSA) having withdrawn such sum earlier during his early disengagement from his first employment.
The judge declared that the claimant, having attained the statutory age of 50 years as of August 31, 2022, is entitled to access and undertake a withdrawal of the remaining credit sum in his RSA with the Arm Pension Managers, in line with the programmed fund withdrawals or annuity for life pursuant to Section 7(1) (a)-(c) of the Pension Reform Act 2014.
Justice Ogbuanya ordered PENCOM to issue and publish, within two months of the Judgment, the guidelines pursuant to Section 16(3) of the Pension Reform Act 2014, for re-integrating of persons who retired/disengaged from their employment but later secured second employment, which it has not issued in that respect.
The court further directed PENCOM to also issue clarifications for implementation by the Pension Fund Administrators (PFAs) with respect to payment of benefits pursuant to Section 5(2) of the Act, for persons who participated in the Contributory Pension Scheme prior to taking up an appointment that falls under the category of persons exempted from the scheme, pursuant to Section 5(1) (a) of the Act.
He added that evidence of such compliances shall be filed in the case file by the learned counsel for PenCom, for record purposes.
Boyle sued his Pension Fund Administrator (Arms Pension Managers) and PENCOM for refusal to process his 25 per cent statutory lump sum payment after he had accessed the said statutory payment when he disengaged from his first employment.
He contended that having accessed the statutory lump sum portion of RSA for his first employer when he voluntarily retired, he is also entitled to collect the same statutory portion when he disengaged from the second employer even when he has not attained 50 years.
Boyle argued that he is entitled to access a 25 per cent statutory lump sum payment from the contribution of his second employer, as it is a separate contribution though paid in the same RSA with his Pension Fund Administrator.
He urged the court to make necessary orders to remedy the lacuna presented in the Pension Reforms Act 2014, pointing out that there is no provision restricting having several RSAs by same employee in different PFAs.
Arm Pension Managers and PENCOM disagreed, contending that Mr Sotonye was not entitled to further lump sum payment of 25 per cent or access to withdrawal from the RSA on the ground that he has not attained the age of 50 years and that he cannot be paid the lump sum twice from the same RSA.
PENCOM urged the court to strike out its name on the ground that the case discloses no reasonable cause of action.
It added that the fact of Mr. Sotonye attaining the age of 50 years at the pendency of the suit would not affect the outcome of the suit, as he did not attain the age at the commencement of the suit.
Sotonye’s counsel, Isa Seidu, urged the court to discountenance the defendant’s submission, and hold that having attained the age of the requisite 50 years prior to the determination of the matter, he is entitled to access the pension fund, and urged the court to grant the reliefs sought in the interest of justice.
Justice Ogbuanya held that there is no provision in the Pension Reform Act 2014 entitling an RSA holder to access twice the 25 per cent lump sum withdrawal from a single RSA maintained by a PFA.
He affirmed that the case disclosed a reasonable cause of action against PENCOM.
The court noted that it is PenCom’s failure to issue the required Guidelines pursuant to S.16(3) of the Pension Reform Act 2014, that led to the claimant’s belief that he can assess lump sum payment twice, for contributions made in the same RSA under his second employment.
Justice Ogbuanya held that Mr. Boyle is not entitled to access and make withdrawals from his RSA up to 25 per cent of his total savings domiciled with the Arm Pension Managers, having so accessed and withdrawn such sum earlier during his early disengagement from his first employment.
He also held that even though Mr. Sotonye is no longer eligible for another lump sum payment, he is eligible for programmed fund withdrawals or annuity for life having attained the age of 50 years, and therefore is entitled to access and undertake a withdrawal of the remaining credit sum in his said RSA with the Arm Pension Managers.
Justice Ogbuanya added that the current practice of payment of only ‘Employee Portion’ of the total contributions in the RSA to such a person who later takes up appointment is exempted from the contributory pension scheme under S.5 (1) (a) of the Act, is borne out of the unclarified legal foundation, and ought to be clarified by PenCom