In a significant ruling, Justice Maureen N. Esowe of the Lagos division of the National Industrial Court of Nigeria has declared Union Bank of Nigeria Plc’s failure to pay pension allowances to a former staff member, Mr Odebunmi Odeniyi Taiwo, a violation of the bank’s Pension Scheme Rule 7(a).
The court deemed the bank’s actions wrongful and ordered it to compensate Mr Taiwo for the hardship caused by the delayed transfer of his retirement funds.
The court directed Union Bank to pay Mr Taiwo N2,000,000.00 (Two Million Naira) as compensation, along with 10% annual interest on the judgment sum until full payment is made.
Mr Taiwo, represented by his counsel, C. M. Ohamuo, filed a lawsuit against Union Bank in a case marked NICN/LA/550/2012.
He joined the bank as a clerk on June 22, 1982, and served in various capacities for nearly 23 years before his employment was terminated on January 26, 2006.
In his suit, Taiwo alleged that the bank failed to give him a fair hearing before his termination and ignored his appeals for reconsideration.
He further claimed that Union Bank violated its Trust Deed of 1996 and its Pension and Gratuity Scheme Rules of 1979 by deferring his pension payments and altering the payment plan.
This, he argued, caused significant financial distress for him and his family. The bank, however, denied these allegations.
Represented by its counsel, S. A. Obadojin, Union Bank asserted that Taiwo’s termination adhered to its staff handbook and was necessitated by the bank’s operational requirements.
It also maintained that Taiwo’s pension funds were transferred to a Retirement Savings Account (RSA) in compliance with the Pension Reform Act of 2004, which introduced a mandatory pension scheme for all employees.
After reviewing the evidence presented by both parties, Justice Esowe ruled that Mr Taiwo had sufficiently substantiated his claims.
The judge noted that it was undisputed that Taiwo had served the bank for 23 years and was over 45 years old at the time of his termination, making him eligible for pension under the bank’s 1979 Pension and Gratuity Rules.
“Rule 9 of the Defendant’s Pension and Gratuity Rules of 1979 allows an employee to receive pension upon retirement or withdrawal from service once they are 45 years old,” Justice Esowe stated.
She emphasized that the bank’s pension rules must be interpreted holistically rather than in isolation.
Union Bank argued that the 2004 Pension Reform Act overrode its earlier pension rules.
However, the court found that Taiwo was entitled to benefits under the old rules, which were still applicable to his case.
While the court rejected Taiwo’s claim for pre-judgment interest due to insufficient evidence, it awarded a 10% annual interest on the judgment sum until full payment is made.
Justice Esowe also declared that Union Bank’s refusal to pay Mr Taiwo’s pension allowance was a violation of its pension scheme, rendering the action wrongful.
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