ARE WE REALLY SURE 2020 IS WHEN THE FIRST BATCH OF RETIREMENT BENEFITS ARE TO BE PAID UNDER THE PENSIONS ACT, 2008 (ACT 766)?

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 INTRODUCTION

I just hope I am not going to play mischief because if what I am thinking is right then I am going to cause a systemic disruption in the interpretation of the Pensions Act, 2008 (Act 766) with its amendment of Act 883. I have a feeling we have all missed the boat with respect to when the first batch of retirees are expected and its related issues. Is it a matter of legal interpretation? I will try to explain why.

The pension reforms started with the enactment of Act 766 which introduced a contributory three-tier pension scheme consisting of a mandatory basic national social security scheme (SSNIT),  a mandatory fully funded and privately managed occupational pensions scheme, and a voluntary fully funded and privately managed provident fund and personal pensions scheme as the third tier.

An age exemption of 55 years or above was given in Act 766 when it was made operational in 2010, which was later reduced to 50 years or above in Act 883 in 2014. The issues I intend to raise, relate to the interpretation and calculation of the relevant time periods for the first batch of retirees under the Pensions Act and some related issues. The general notion is that the first batch of benefits are to be paid this year in 2020 for which I hold a different opinion. I think it should be in 2021. I intend to raise certain issues to provoke thought but not give answers since I do not even see myself as a pensions expert. I could be wrong but if I am not, then what do we do. Now let me take a deep breath and explain.

SECTION 60 OF ACT 766 (AGE EXEMPTION)

The above states that:

 “ A worker who is entitled to retirement benefits under a pension scheme in existence before the commencement of this act and is aged fifty-five or above is exempt from the scheme” (emphasis mine).

My literal interpretation and understanding of the above is that from age 55 years one is exempt from the new pensions scheme.  Is this inclusive of anyone aged 55 years or not?

This was later in 2014 under section 2 of Act 883 amended as follows :

 “A worker who is entitled to retirement benefits under a pension scheme in existence before the commencement of this act and is aged fifty or above is exempt from the scheme” (emphasis mine)

My literal interpretation and understanding of the above again is that from age 50 years one is exempt from the new pensions scheme.  Is this inclusive of anyone aged 50 years or not?

The issue is “whether or not it is only people aged 49 years and below before the commencement of the Pensions Act that are eligible by the amendment”. If that is the case then the first batch of retirees are due in 2021, Or Aren't they? This sounds so simplistic or I am not as they say “thinking far”. May be I should just stop. On the other hand, I am just sharing my thoughts.

What does “aged fifty or above” mean? If it includes age 50 years then the first batch are not due in 2020 simpliciter.

PREAMBLE OF NATIONAL PENSIONS (AMENDMENT) ACT, 2014

The preamble of Act 883 reads: “AN ACT to amend the National Pensions Act, 2008 (Act766) to reduce the age for exemption from the first-tier Scheme and to provide for related matters” (emphasis mine).

What is meant by first-tier Scheme? Did it intend to say three-tier pension scheme? Does it mean anyone aged 50 years or above can join the second-tier and third-tier Schemes? I cannot tell. A literal interpretation will bring challenges so I guess we need to adopt a purposive approach as to the intent of the legislature. It looks like we all seem to know what was intended so ignoring what has been written. Will not rock the boat with this but just asking. Sleeping dogs should lie quietly. The experts can explain.

CONCLUSION

I asked myself and so what? My response was and so nothing. Who asked you to even bring this up? So many experts on pensions and you think they can be wrong that 2020 is the first batch of retirees? Do you know the implications if you are right, that the benefit payment for the first retirees actually takes effect in 2021 and not 2020?

May be I have taken a literal interpretation of the Act and a purposive approach is needed. I pray so and indeed sleeping dogs should lie.

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