The Book Pension Law and Practice in Nigeria is an attempt to illuminate our understanding of a very important aspect of the changing social security system in Nigeria. This attempt is anchored on the frame work of the new Pension Law – The Pension Reform Act 2004. The simple objective of the PRA is to establish for Nigeria, a sustainable pension system that will end the misery that has become concomitant with retiring from our Public service. We believe it is a brilliant work of legal draughtsmanship. We are probably all aware of how bad things had become for both governments and the workers in Nigeria when it came to pension.

At some point in time, Federal government pension liability was estimated at over Three Trillion Naira, spread across departments and parastatals. Pension overhang even became a major disincentive to those wishing to buy public enterprises, thereby frustrating the privatization programme. Attempts to address the problem and at the same time evolve a modern pension scheme led to the enactment of the Pension Reform Act 2004, which brought about the landmark changes in our pension practices. In particular, it replaced the mostly unfunded Direct Benefit Plan system with fully funded Direct Contribution Plan. The National Pension Commission is doing a great job setting the rules and evolving mass participation. This book seeks to further an understanding of the Act and thereby contribute to the success of the scheme.

Pension Law and Practice in Nigeria.

This book is in seven chapters; written in clear and lucid prose. It is arranged in chapters that practically mirror the structure of the PRA. The author has ensured that the book makes an easy read, both for lawyers and more particularly, non-lawyers, by avoiding legal jargons and legalese, generally and by presenting it attractively both in terms of font and packaging. The result is a properly organized book that reads well and is devoid of legal technicalities.

CHAPTER ONE,titled the Pension Reform Act, 2004, is historical in nature. It examines the objectives of the PRA and reviews all the laws on Pension practice in Nigeria before the Pension Reform Act, 2004. Some of the legal instruments examined include the Pension Act, 1974, The Trustee Investment Act, 1962, Investment and Securities Act, 1999, the Nigerian Social Insurance Trust Fund Decree (now Act) 1990, amongst others. Furthermore, it examines the constitutional question of who, between the States and the Federal Government, has the competence to legislate on pension matters in the private sector of the economy. It came to the fitting conclusion, after critically examining relevant sections of the constitution, that the federal government, through the National Assembly, has the competence and has exercised this competence by enacting the Pension Reform Act, 2004.

In CHAPTER TWO, the author did a comprehensive review of the changes and modifications, which the PRA has introduced into our pension system. It also documents the shift from a wholly Government funded scheme to a contributory scheme that mirrors the Chilean example introduced in that country in 1981. Additionally, this chapter highlights some of the significant features of both public and private sector pension schemes in some parts of the world, including Europe and America, identifying their key defects. While highlighting the Chilean experience, this section draws attention to the positive impacts a viable pension system could have on the financial markets of a nation.

CHAPTER THREE focuses on the employee, his legal nature and place in the scheme. It looks at the efforts of the various government committees and agencies to improve the pension system over time. Efforts were also made here to simplify certain complications that attend the word "employee". This is sure to benefit, not only labour law enthusiasts, but also workers and employers of labour in general. The book went further to consider the meaning of contract of service and who qualifies as an employee under the contributory pension scheme. It concludes that in determining who is an employee, the PRA envisages a worker in salaried employment. Such employee is either in the public service or in a private organization that employs 5 or more persons, who receive some form of fixed or ascertainable salary at periodic intervals. While noting that the private sector had been much neglected in Pension matters before now, the author affirms that the first comprehensive attempt to provide a safety net for those employed in the private sector was the establishment of the Nigerian Social Insurance Trust Fund, which succeeded the National Provident Fund and, for reasons advanced and documented in this Chapter, did not work as planned.

CHAPTER FOUR looks at the NSITF in relation to the PRA, noting the efforts of those who drafted it to avoid any disruption to the core business of the NSITF – pension administration, even though it be divested of that function. The book went on to do a comprehensive review of the National Pension Commission which is the regulatory authority created by the PRA to oversee and enforce the new scheme and ensure its workability. It makes valuable suggestions on certain provisions in the PRA relating to the powers of the commission, especially as it relates to special examination embarked upon at the instance of individuals.

CHAPTER FIVE deals with service providers and makes an in-depth examination of the PFA's and PFC's, which are the core service providers for purposes of the private management of pension funds. It examines the licensing requirements and the duties and obligations of the PFA's and PFC's. The author proactively took a look at some issues that are likely to arise from the operation of the new scheme by new institutions that would naturally require some time to get abreast with their responsibilities. In particular, this section looks at the issue of coverage and the seeming lacuna created by limiting participation to companies employing 5 or more people. Readers will find this chapter very interesting because it is futuristic.

CHAPTER SIX deals with the investment of pension funds. I would say that this chapter mirrors the mind of the regulator – the mind of a diligent servant intent on avoiding mistakes. This intent is reflected in what some may call restrictive investment criteria, for the limits placed on eligible investment and the high standards required for instruments to qualify. The PFA's and PFC's are to invest and hold pension funds only in prescribed instruments. These provisions are primarily designed to ensure that the funds are not lost or frittered away by either incompetent fund administrators or bad investment decisions. The book, in this chapter, considers this provision at great length and makes necessary suggestions to enhance the objectives of the PRA.

Finally, the book in CHAPTER SEVEN considers the offences and penalties created and provided for in the PRA and the Enforcement powers of the National Pension Commission. It also considers the provisions for complaints by aggrieved persons and dispute resolution, the likely efficacy of the provisions, especially as it relates to judicial intervention and the consequent redress it affords an aggrieved person. This book examines extensively the Pension Reform Act (PRA) not from the legal perspective.

Reviewed by: Mr Emeka Osuji
The Managing Director/CEO
Diamond Pension Fund Custodian Limited


This article is part of a workshop series of Continuing Legal Education and is on equipment leasing. The article was published on Alphajuris Continuing Education Series- Materials of 15th – 17th workshops.