PENGASSAN PRESENTATION

1. Employees’ Challenges with the Scheme under the Pension Reform Act 2004 and Employees' Compensation Act 2010 PENGASSAN PRESENTATION by Chris Biriowu FCIPM

2. Agenda • Introduction • The Range of Indirect Compensation or Benefits • The Nigerian Pension Reform Act • Objectives of the Scheme under the Act • The Employees' Compensation Act • Objectives of the Scheme under the Act • Some of the Challenges faced by Employees • Conclusion Chris biriowu FCIPM

3. 1. Introduction • Compensation at the workplace is a term used to cover payments (both direct or indirect) made to employees for work done at the corporation. • Direct compensation refers to wages and salaries, and indeed the usual allowances earned daily or monthly by employees in accordance with their terms and conditions of employment. • Indirect compensation is generally referred to as benefits package used by the corporation to complement the base compensation and pay-incentive component of the total compensation of employees

4. 2.THE RANGE OF INDIRECT COMPENSATION OR BENEFITS • Various benefit types exist according to a country’s legislation and Corporate compensation policy of employers. The most common ones are: • Health Insurance: The new thinking now is the National Health Insurance Plan where employers register their employees with a Health Management Organization ((HMO). • Insurance Plans: This includes life insurance, long-term disability plans, Employee’s compensation plans for injuries at work as provided for by the Employees’ Compensation Act. • Time-off Plans: These are the paid vacations, paid holiday plans and paid sick leave. • Deferred Benefits Plans: These include Gratuity, redundancy and Retirement plans paid to employees according to their mode of exit. These benefits are designed to provide for accumulated amount of money payable to employees depending on their mode of exit. Benefit provisions under the Nigerian Pension Reform Act is one of such indirect Benefits.

5. 3. The Nigerian Pension Reform Act • Pension plans are financial programs that provide income to individuals in their retirement. • Pension plans can be classified in three basic ways : • Contributory (employees also contribute) versus Non -Contributory (Employer contributes all) plans • Qualified(better tax treatment) versus Non -Qualified (less favorable tax treatment) plans • Defined Benefit (employees knowing benefits ahead of time either by formulae or amount) versus Defined Contribution (specifying what contribution will be made by employer and employee to the plan) plans. • The plan under the Nigerian Pension Reform Act is a Defined Contribution plan.

6. 4. Objectives of the Scheme under the Act • To ensure that every person who worked in either the public service of the Federation, Federal Capital Territory or private sector receives his benefits as and when due. • To assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. • To ensure transparent and efficient management of pension funds. • To promote wider coverage of pension scheme in Nigeria.

7. 5. Some of the Challenges faced by Employees • The contribution formulae has increased Employees burden in the face of a multiplicity of statutory deductions on salaries. • Some employees are confused with the definition of Monthly emoluments – Some Employers pay consolidated salary that is not split into Base, Housing and Transport. • Data/information paucity in the National pension Commission – Employers that have remitted still receive threat letters for non remittance which creates fear of fund insecurity on employees. • Employees transfer aggression ignited by the sins of PFAs on the Employer. • The sins of NSITF is visited on the Employer • Non decentralization of PENCOM offices stands on the way of reaching them when needed. • Challenges faced by Retirees are shifted to PENCOM by PFAs. And as would be expected, Retirees bounce back at the Employer.

8. 6. The Employees’ Compensation Act • The Act repeals the Workmen’s Compensation Act 2004 and makes comprehensive provisions for the payment of compensation to employees who suffer from occupational diseases or sustain injuries arising from accident at workplace or in the course of employment. • Its provisions apply to employers and employees in both the Public and Private Sectors of the economy, irrespective of the number of employees an employer may have. • The Scheme offers cash and non-cash benefits. The cash benefits include: • Compensation for injuries occurring in the normal workplace: • Compensation for mental stress; • Compensation for occupational disease; • Compensation for hearing impairment • Compensation for injuries occurring outside the normal workplace • In fatal cases (death) as much as 90% of the total remuneration of the deceased employee is paid to the dependents of the deceased (widow/widower/children etc.); until the occurrence of certain events specified by the Act

9. The Employees’ Compensation Act Cont’d • Non-cash Benefits include: • Provision of artificial appliances including artificial limbs where necessary; • Vocational, rehabilitation and counseling services to injured employee with a view to bringing the employee back to work. • The scale of compensation has been actuarially determined for claims on partial disability, permanent disability, temporary disability and death.

10. 7. Objectives of the Scheme under the Act • Provision of an open and fair system of guaranteed and adequate compensation for all employees or their dependants for any death, injury, disease or disability arising out of or in the course of employment • Provision of rehabilitation to employees with work-related disabilities as provided in the Act • Establishment and maintenance of a solvent compensation fund managed in the interest of employees and employers • Provision of fair and adequate assessments for employers • Provision of an appeal procedure that is simple, fair and accessible, with minimal delays • Combination of efforts and resources of relevant stakeholders for the prevention of workplace disabilities, including the enforcement of occupational safety and health standards

11. 8. Some of the Challenges faced by Employees • Enforcement Officers of the scheme are not on ground to enforce the provisions of the Act in the interest of employees • Employees are having apprehension on the Solvent fund that a Government Agency will be managing in their behalf, having regard to past failures associated with similar Funds. • Though this Act is a great improvement on the Workmen’s Compensation Act (broader definition of workplace injury), it leaves the management of the injury/occupational disease and death at the workplace in the hands of the employer who is to back-bill the NSITF Board. What if the employer who had remitted 1% of his payroll, is insolvent at the time of the injury?

12. 9. Conclusion • In this presentation, we did an overview of benefit schemes of which pension and employees’ compensation plans are parts. • We highlighted the key objectives of the Nigeria Pension Reform Act and the Employees’ Compensation Act. • We also highlighted challenges facing Employees with multiplicity of statutory deductions and helplessness with the inadequate enforcement of the provisions of the Employees’ Compensation Act . • Let us conclude by saying that, in all, the soured grape eaten by the Institutional actors(PFAs, PENCOM and NSITF Board) is often setting the teeth of Employees on edge.