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HOW PHCN DEFIED PENCOM?S ADVICE ON STAFF PENSIONS

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How PHCN Defied PenCom?s Advice On Staff Pensions
Tue, 28/08/2012 ? 1:11am | JULIET ALOHAN Cover Stories News

The current crisis over the payment of Power Holding Company of Nigeria?s (PHCN) staff pension may have been avoided if its management had heeded the advice of the National Pension Commission (PenCom).

Documents obtained by LEADERSHIP showed how PenCom repeatedly advised the PHCN management on the need to migrate from its in-house pensions scheme known as Superannuation Fund, to comply with the 2004 Pension Reform Act (PRA), and warned of future consequences should it fail to comply.

But the advice was never heeded, a situation which has now resulted in chaos as there is no fund for severance pay following the mass sack of the workers occasioned by the unbundling of the PHCN. In a memo by PenCom to the managing director of PHCN, dated March 3, 2009, and entitled ??non-compliance with the provisions of the Pensions Reform Act (PRA 2004), the Commission referred to previous meetings held with the PHCN management in which PHCN was advised to take definite measure to resolve its lingering pension issues.

According to the letter, the PHCN management was advised to ??present a memorandum to the federal government, through its supervisory ministry, outlining all key challenges relating to the pension fund and the inability of the PHCN to fund the pension deficit.??

The PHCN was also advised to ??transfer the existing pension assets to a licenced pension fund custodian pending the resolution of the funding deficit and ensure that employees open Retirement Savings Accounts (RSAs) with Pensions Fund Administrators (PFAs) of their choice.??????????????? Another letter from PenCom to the PHCN managing director, dated May 12, 2010, still on the same subject also noted: ??the Commission is concerned that to date you are yet to avail it with the Actuarial Valuation of your pension scheme.

??Also you have failed to ensure that your employees open RSAs with PFAs of their choice which are to be funded in-line with the provisions of PRA 2004. Once again the Commission would want to reiterate that PHCN is the only federal government agency that has failed to comply with the PRA 2004 which is detrimental to the interest of the employees.??When the PHCN management failed to heed the Commission?s warnings as captured in other correspondences, PenCom, in a letter dated 23, November, 2010, formally wrote the Attorney General of the Federation and Minister of Justice.

The letter read in part: ??As part of efforts to ensure compliance with the provision of the PRA 2004, the Commission engaged the management of PHCN through numerous written correspondences and meetings drawing their attention to the implications of non-compliance with the Act and advising on steps needed to bring the organisation into compliance with the provisions of the Act. Despite these efforts however, the management of PHCN failed or neglected to address the issues to date, a situation which is not only a violation of the PRA 2004 but also detrimental to the interest of the employees of the PHCN.??

While notifying the AGF that it has commenced a process of initiating legal action against the PHCN and its management as provided by section 85 of the PRA Act 2004, PenCom urged the AGF to intervene in the matter since the PHCN was solely government owned.

Consequently, the AGF in a letter dated 23rd December, 2010, wrote the managing director of the PHCN and requested him to urgently furnish his office with a response, but the letter was never responded to as captured in another letter by PenCom, to the Chairman Sub-Committee, Task Force on the Presidential Action Committee on Power, dated 14, June 2011.

However, the General Secretary of the National Union of Electricity Emplyees (NUEE), Joe Ajearo, did not respond to calls and text messages to his phone to confirm these cliams as at press time.

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