Justice (Dr.) Isaac J. Essien of a Lagos division of the National Industrial Court of Nigeria (NICN) has dismissed a suit filed by Union Bank of Nigeria Plc against over 30 retirees/pensioners challenging the legality and continued operation of its 1996 Defined Benefit Pension Scheme (DBPS).
The court ruled that the Trust Deed establishing the scheme remains valid under the Pension Reform Act 2014. While also held that the Deed of Variation of Trust Deed 1996, which created the Union Bank Defined Benefit Scheme (DBS), was not rendered unlawful by the enactment of the Pension Reform Act 2014.
The judge also dismissed the bank’s request to revoke or terminate the Trust Deed.
Respondents in the suit are: Union Trustees Limited, Williams Street Trustees Limited, Cletus Okeke, Abraham Philip, Bamidele Olushile, Olusegun Jonah, Ormane Lily Uyor, Orobosa David Uwoghiren, Adedeji Taiwo, Eyuiche Jude Chiedozie, Omokhuale Sunny Ojarie Festus Osaje-Osemebor, Rose InenemohUnuigbe, Sir Amos Aigbokhaevbo and Olukoju Adebisi Aladefa
Others are: Odubonojo Esther, Asenime Ojuzo, Peter Omojiade, Peter Ighegu, Susanah Orekoya, Fredrick Amuka, Aliogo Peter, Awala Alero, Abiwo Abayomi, Kemjika Mercy A., Dare-Ojo Deborah Kikelomo, Jideonwo Charles, Omojiade Christiana, Afubero Charles and Chief Ovuakporie Owho.
Union Bank through its lawyers, O. Omotoye, A. Adu and M. Fagbohunghe, had approached the court in suit marked NICN/LA/412/2021, seeking declarations that the Trust Deed had become illegal by operation of law and that the payment of pensions outside the provisions of the Pension Reform Act was unlawful.
The bank had argued that the coming into force of the contributory pension regime had overtaken the original objectives of the trust deed established in 1972 and amended in 1996.
Union Bank also contended that maintaining the pension trust had become impracticable, excessively expensive, and inconsistent with Sections 50, 54, and 99 of the Pension Reform Act 2014. It therefore sought orders revoking the trust deed and terminating the pension arrangement.
But the defendants, who represented the bank’s retirees and beneficiaries of the scheme through their lawyer, Paul omojiade, opposed the suit, argued that their accrued pension and gratuity rights remained protected under the trust deed and the Pension Reform Act.
They also argued that several related cases concerning unpaid gratuities and pension entitlements were already pending before appellate courts.
The retirees maintained that revoking the Trust Deed would prejudice existing judgments and pending claims tied to the pension arrangement.
Delivering judgment in the suit, Justice Essien, after carefully considered all the arguments canvased by the parties, rejected the core arguments advanced by the bank and held that “the Pension Reform Act did not abolish pre-existing defined benefit schemes, rather, the law preserved such schemes, provided they complied with stipulated conditions, including adequate funding and regulatory oversight”.
“The Trust Deed of 1996 is not rendered unlawful or illegal by reason of the coming into effect of the Pension Reform Act 2014,” the judge ruled.
The judge noted that Section 50(3) of the Pension Reform Act specifically protects retirees already benefiting from private sector pension schemes before the commencement of the Act.
Justice Essien further ruled that the legislation expressly allows such retirees to continue receiving pensions “as and when due” under the provisions of existing trust deeds and pension rules.
The judge also held that Union Bank failed to establish that the primary purpose of the trust deed was solely the payment of pensions. The court found that gratuity payments were equally fundamental to the scheme and not merely ancillary, as argued by the claimant.
Relying on documentary evidence, including collective agreements and internal pension transition arrangements, the court stated that Union Bank itself had acknowledged the continuing relevance of gratuity obligations through the introduction of a “Gratuity Supplement Scheme.”
Justice Essien agreed with that position, warning that declaring the trust deed illegal could jeopardize rights already pronounced upon in earlier litigation arising from the same pension scheme.
The court also considered the Revised Guidance Note issued after meetings involving Union Bank, pensioners’ associations, labour unions, and the National Pension Commission, which he ruled that “the guidance note outlined transitional arrangements for categories of retirees affected by the migration from the defined benefit scheme to the Contributory Pension Regime’.
Under the arrangements, the judge ruled that Union Bank was directed to continue paying pensions to retirees already under the DBS “until the last person dies,” while ensuring actuarial valuations and adequate funding of the pension liabilities.
The judge also ruled that the Revised Guidance Note and the Gratuity Supplement Scheme had effectively become the governing framework for administering the pension obligations previously regulated solely by the 1996 trust deed.
“The Revised Guidance Note has become the guide for which the administration of the DBS is to be regulated,” the court held.
Justice Essien added that the trust deed could only be deemed fully revoked after complete implementation of all transitional arrangements contained in the guidance note and the gratuity supplement structure.
In its final analysis, the judge dismissed Union Bank’s requests seeking declarations that the ‘Trust Deed’ was illegal or impracticable. While It also declined prayers asking for the immediate revocation or termination of the deed.
The judge further declared that “the administration of the pension scheme would be guided primarily by the Revised Guidance Note and the Gratuity Supplement procedures agreed upon by the bank, retirees, and labour unions”.
