IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA

IN THE LAGOS JUDICIAL DIVISION

           HOLDEN AT LAGOS

BEFORE HIS LORDSHIP HON. JUSTICE (PROF) ELIZABETH A. OJI

 

DATE:  THURSDAY 2ND JULY 2026                              

SUIT NO: NICN/LA/18/2025

BETWEEN:

DR. EZEKIEL OLUWATOYIN ADELEYE                               CLAIMANT

AND

STANBIC IBTC PENSION MANAGERS LIMITED                DEFENDANT

 

Representation:

O.O. Iranloye for the Claimant

Olusegun Olaiya for the Defendant

 

JUDGMENT

1.   The Claimant commenced this suit on the 4th day of February 20225, via originating summons before the Federal High Court.   The suit was transferred to this court, as the Court with the requisite jurisdiction to hear the subject matter of the suit.  The Claimant, pursuant to order of Court of 18th March 2025, re-filed his originating processes dated 25th July 2025, on 11th August 2025.  The Summons is brought pursuant to:

 

1.Order 3 Rules 3 National industrial Court (Civil Procedure Rules) 2009

2. Section 6, 251 & 254 of the 1999 Constitution

3.Section 10 Pension Reform Act 2014

4. Personal Income Tax Act (PITA) 2011

5.Section 251 of the 1999 Constitution of the Federal Republic of Nigeria and the

Inherent Powers of the Honourable Court.

 

The Claimant seeks for the determination of the following questions:

 

 

 

 

If the answer to the aforementioned are in the negative, then the Applicant seeks the following reliefs:

 

 

 

 

 

 

 

 

 

2.  In support of the originating summons, the Claimant filed an affidavit deposed to by the Claimant himself.  The Claimant is a Fellow of the Chartered Institute of Accountants (FCA No. 3079), Fellow of the Chartered Institute of Taxation (FCTI No. 504), and a Minister in the Evangelical Church Winning All (ECWA).   He enrolled in the Defendant's Voluntary Retirement Savings Scheme as a sole entrepreneur on 1st January 2018 and was registered on 7th February 2018 with RSA PIN: PEN 100872998022. He made mandatory contributions and additional voluntary contributions of ?200,000 per month from January 2018 to 31st March 2021, with no withdrawals during this period.   On 20th April 2021, upon attaining the retirement age of 60, the Claimant notified the Defendant. After approval by the National Pension Commission, the Defendant credited the Claimant’s GTBank account on 20th July 2023 with ?12,033,819.05.  The Claimant’s RSA statement showed a balance of ?14,581,213.40 as at 13th July 2023. The amount credited was ?12,033,819.05, leaving a shortfall of ?2,547,414.35. The Defendant explained that ?2,566,971.72 was deducted as tax. The Claimant objected, contending the deduction was unlawful.   The legal basis of the objection are:

• Section 10(1) – (3) of the Pension Reform Act 2014 exempts pension contributions, all interest, dividends, profits, and investment income accruing to pension funds, and any amount payable as retirement benefit, from tax.
• Section 10(4) PRA 2014 only subjects income earned on voluntary contributions to tax where withdrawal is made before the end of 5 years from the date of contribution. The Climant's withdrawal was made after 5 years and 6 months.
• Paragraph 14(1) of the Third Schedule to PITA (as amended by the Personal Income Tax (Amendment) Act 2011) exempts pension granted to any person pursuant to any enactment from tax.
• The Claimant also contends that the Defendant's calculation of Consolidated Relief Allowance was inadequate (?199,315.39 instead of ?3,120,158.15 per Section 33(1) PITA).

Multiple letters and emails were exchanged between the parties (Exhibits EA1–EA4). The Defendant maintained the deduction was lawful tax. The Claimant demanded a refund, which the Defendant refused leading to this suit.

3. In his written address in support of the originating summons, Counsel, on behalf of Claimant contends that the Defendant (Stanbic IBTC Pension Managers Limited) unlawfully deducted the sum of N2,566,971.72 from the Applicant's pension entitlements under the guise of taxation, when the Applicant's voluntary contributions were not withdrawn within five (5) years of retirement, thereby rendering such contributions exempt from tax under the law.  The Claimant raised two issues for determination:

1. Whether or not the Respondent can lawfully deduct and or withhold the sum of N2,566,971.72 on the ground that the said amount is taxable albeit Applicant did not withdraw from his contribution within a period of 5 (Five) years after retirement?
2. Whether Applicant is entitled to the relieves(sic) sought?

 

4.   On issue one, the Claimant submits that section 10 (1) of the PRA exempts pension contributions from tax;  Section 10(2) exempts all interest, dividends, profits, and investment income accruing to pension funds;  Section 10(3) extends the exemption to any amount payable as retirement benefit, and that Section 10(4), the only provision subjecting voluntary contributions to tax applies only where withdrawal is made before the expiration of five (5) years from the date of voluntary contribution.   The Claimant submits that since he withdrew after five years and six months, this taxing provision does not apply.  The Claimant also cites the paragraph 14(1) of the Personal Income Tax Act (Third Schedule) 2011 as amended as exempting pensions granted pursuant to any enactment from tax.  Counsel invokes the literal rule of interpretation, urging the court to give the clear and unambiguous words of Sections 10(1)–(4) of the PRA 2014 their ordinary and natural meaning. He relies on INEC v. Yusuf (2021) ALL FWLR (Pt. 1085) 746, Obi v. INEC (2007) 11 NWLR (Pt. 1046) 56 Dantiye v. Adamu (2011) ALL FWLR (Pt. 1090) 1603 and Enilolobo v. NPDC Ltd (2021) ALL FWLR (Pt. 1084) 572.  Counsel seeks N10,000,000 in general damages for the unlawful withholding of the Applicant's entitlements, relying on the principles of restitutio in integrum. He cites Miss Promise Mekwunye v. Emirates Airline (2020) ALL FWLR (Pt. 1029) and that general damages do not require specific proof.  

 

5.   In response, the Defendant filed a counter affidavit and a written address.  The deponent is Adebusola Ajayi-Bembe, Client Service Manager of the Defendant, a licensed Pension Fund Administrator.  The Defendant admits it is the Claimant’s Pension Fund Administrator and that the Claimant operated a Retirement Savings Account [RSA] No. PEN 100872998022 with contributions from January 2018 to February 2022.  The Defendant states it acted under the Pension Reform Act 2014 and PenCom’s Guidelines on Voluntary Contributions, which require voluntary contributions to be held in the RSA for at least 5 years from each contribution date to be exempt from tax.  In determining the five-year period for contributions in a Retirement Savings Account, the date on which each individual contribution is remitted is considered. This date determines which portion of the total voluntary contributions is subject to tax. Therefore, the date of the first contribution does not apply to the entire contribution when determining tax applicability.  The Defendant states that the reason for the tax deduction is because contributions from January to June 2018, totalling ?2,199,055.42, had been held for over 5 years as at July 2023, so no tax was applied.   Contributions from July 2018 to February 2022, totalling ?12,343,063.15, had been held for less than 5 years. These were taxed.  Tax deducted was ?2,566,971.72, as explained in letters to the Claimant dated 8 Feb 2024 and 19 April 2024.  The Defendant denies that it acted illegally or caused loss/hardship. It states the tax deduction was correct and the Claimant was informed via the withdrawal form and correspondence. Therefore, the claims of the Defendant should be dismissed as lacking merit.  

 

6.  In its Written Address in opposition to the Originating Summons, the Defendant set down a sole issue for determination as;

The Defendant argues that section 10(4) PRA 2014 and PenCom Guidelines clearly state that income and principal on voluntary contributions are taxable if withdrawn before 5 years from the date of that specific contribution. Tax exemption only applies to contributions held for 5 years or more.  The Defendant submits that only contributions made from Jan–June 2018 (?2,199,055.42) had been in the RSA for over 5 years at the time of withdrawal, and no tax was deducted on them. Contributions from July 2018 to Feb 2022 (?12,343,063.15) had been held for 16–59 months, i.e., less than 5 years, and were therefore taxable. The Defendant argues that the 5-year period is calculated per contribution, not from the date of the first contribution. The Defendant’s letter of 19 April 2024 and Exhibit 4 show the breakdown. The Defendant argues that where statutory provisions are clear and unambiguous, the Court must apply the literal meaning. The Defendant points out that the Claimant is seeking to apply the 5-year rule to all contributions based on the first deposit date, which is not supported by the Act or Guidelines.   The Defendant submits that it complied fully with the law by deducting tax only on the portion held for less than 5 years.5.

 

7.  The Claimant filed a Reply on Point of Law to the Defendant’s address.  The Claimant’s Reply addresses the Defendant’s reliance on PenCom’s Guidelines to justify taxing his voluntary pension contributions.  The Claimant submits that PenCom’s Guidelines on Voluntary Contributions are subsidiary legislation and cannot override, contradict, or amend the Pension Reform Act 2014, which is an Act of the National Assembly.  That where there is a conflict, the Pension Reform Act 2014 prevails; and any guideline that does so is ultra vires, null, and unenforceable; following the constitutional hierarchy.  The Claimant refers to section 1(3) of the 1999 Constitution and the principle in FRN v. Osahon (2006), and A-G Lagos v. Eko Hotels (2006).   The Claimant argues that section 23(1) of the PRA 2014 only empowers PenCom to make regulations/guidelines to implement the Act, not to alter or contradict it.  Citing A-G Bendel State v. A-G Federation (1982) 3 NCLR 1, and Minister of Internal Affairs v. Shugaba (1982) 3 NCLR 915, the Claimant argues that acting beyond statutory authority renders the action void.  The Claimant argues that under Section 10(1) PRA 2014, pension contributions and income are generally tax exempt and that Section 10(4) only subjects income earned on voluntary contributions to tax where withdrawal is made within 5 years of that contribution. It does not authorize tax on the principal amount of voluntary contributions.  If withdrawal is made after 5 years, there is no legal basis to tax either the principal or the income.  Section 16 of the PRA deals with withdrawal conditions but does not override Section 10(4) or make all early withdrawals taxable.  The Claimant maintains that the Defendant wrongly relied on PenCom’s Guidelines to tax both principal and income. Since the Guidelines conflict with the PRA 2014, they are invalid to that extent. The Claimant urges the Court to hold that the tax deduction was unlawful.  

COURT’S DECISION

 

 

9.   The matter proceeded entirely on affidavit evidence and written addresses of counsel, without oral testimony. Documentary exhibits EA1 through EA4, comprising correspondence between the parties, were relied on:

EA1     - Applicant’s email to Respondent dated 8th May 2023 

EA2     - Respondent’s email of 8th August 2023 (stating the deduction was tax) 

EA3     - Applicant's letter of objection dated 10th August 2023 

EOA4 - Applicant & Respondent correspondence and Solicitor's letters 

These exhibits are uncontested as to authenticity and establish the fact of the deduction, the Claimant's demand for a refund, and the Defendant's refusal.   The central legal controversy distils to the proper construction of Section 10(4) of the Pension Reform Act 2014 — specifically, whether the five-year period after which voluntary contributions become exempt from tax runs from the date of each individual contribution (as the Defendant contends) or operates more broadly such that no tax is payable where no withdrawal is made within five years of retirement (as the Claimant contends).   A subsidiary but important question is whether PenCom's Guidelines, which the Defendant says mandate the contribution-by-contribution approach, can validly impose a methodology that the Claimant argues is not supported by, and indeed contradicts, the parent statute. The resolution of these questions determines the lawfulness of the deduction and, consequently, the Claimant's entitlement to the declaratory reliefs, the refund, and the claim for general damages.  I set the following issues for determination:

 

Issue one

10.    The resolution of issue one requires a careful examination of the statutory framework governing the taxation of pension contributions and benefits in Nigeria.  The following provisions call for consideration:

• Section 4(3) Pension Reform Act 2014( PRA)
• Section 10 (1-4) of the Pension Reform Act 2014 (PRA)
• Section 33(1) Personal Income Tax Act (PITA)
• Paragraph 14(1), Third Schedule, PITA 2011(as amended)

Section 4(3) PRA provides as follows:

(3)       Any employee to whom this Act applies may, in addition to the total contributions being made by him and his employer, make voluntary contributions to his retirement savings account.

 

Section 10 (1-4) PRA

10.(1)  Notwithstanding the provisions of any other law, contributions to the Scheme under this Bill shall form part of tax deductible expensed in the computation of tax payable by an employer or employee under the relevant income tax law.

 (2)      All interests, dividends profits, investment and other income accruable         to pension funds and assets under this act shall not be taxable

(3)       Any amount payable as a retirement benefit under this Act shall not be taxable

(4)        Without prejudice to the provisions of subsection (2) of this section any income earned on any voluntary contribution made under section 4 (3) of this act shall be subject to tax at the point of withdrawal where the withdrawal is made before the end of 5years from the date the voluntary contribution was made.

 

Section 19 of PITA provides for incomes exempted from taxation:

 19.   Income exempted

(1)  There shall be exempt from the tax all that income specified in the Third Schedule to this Act.

(2)  The Minister may by notice include in the Third Schedule to this Act all or any person or class of persons chargeable to tax by virtue of this Act, so as to exempt the income of that person or class of persons from tax in pursuance of—

Section 33 (1) of the PITA (as amended) amends the above provision and adds to the above provision of section 19 of PITA, by inserting a new paragraph 14, as follows:

The Third Schedule to the Principal act is amended by 

a.         ………..;

b.         …………

“7. ‘……..

(a)       … 

(b)       …;

( c)       by substituting for paragraph 14 a new paragraph “14”

                        

“14 (1) pension granted to any person pursuant to any enactment or law for the time being in force.

(2)       ….”

(d)       in paragraph 15, by substituting the words “Pensions Act” the words “Pensions Reform Act, 2004”

 

11.  The above provisions of statute are what the Claimant relies on to seek the reliefs he seeks.  It is section 4(3) PRA that enabled the Claimant to, in addition to the statutory contribution, make voluntary contributions to his retirement savings account.  Section 10 of the Pension Reform Act 2014 is the central provision. Section 10(1) provides that any amount of contribution paid by an employee or employer shall not be subject to tax. Section 10(2) provides that all interest, dividends, profits, investment income, and other income accruable to pension funds and assets held in respect of any pension fund shall not be taxable. Section 10(3) provides that any amount payable as a retirement benefit under the Act shall not be taxable. These three subsections establish a broad and generous tax exemption regime for pension contributions, pension fund income, and retirement benefits. They reflect the clear legislative policy of encouraging pension savings by shielding such savings and their returns from the burden of taxation.

12.  Section 10(4) of the PRA 2014 is the sole provision that introduces a qualification to this exemption. It provides, in substance, that where a holder of a retirement savings account makes voluntary contributions and withdraws such contributions before the expiration of five years from the date the voluntary contributions were made, the income earned on the voluntary contributions shall be subject to tax at the point of withdrawal. The critical question before this Court is the proper interpretation of the phrase "five years from the date the voluntary contributions were made" — specifically, whether the five-year period is to be computed from the date of the first voluntary contribution into the account, from the date of each individual contribution, or from some other reference point.

13.  The Defendant's case is that the five-year period runs from the date each individual voluntary contribution is remitted into the Retirement Savings Account. On this basis, the Defendant divided the Claimant's voluntary contributions into two tranches: contributions from January to June 2018, totalling ?2,199,055.42, which had been held for over five years at the point of withdrawal and were accordingly exempted from tax; and contributions from July 2018 to February 2022, totalling approximately ?12,343,063.00, which had not individually been held for five years at the date of withdrawal and were therefore subjected to tax. The Defendant asserts that this approach was mandated by PenCom's Guidelines on Voluntary Contributions.  The Claimant's case is that he commenced voluntary contributions in January 2018, that he did not withdraw any voluntary contributions within five years of retirement, and that the entirety of his voluntary contributions and the income accruing thereto are therefore exempt from tax under Section 10(4) of the PRA 2014.

14.  I turn now to the proper construction of Section 10(4). The cardinal rule of statutory interpretation is that where the words of a statute are clear and unambiguous, they must be given their ordinary and natural meaning; both parties are agreed on this and have called the Court to apply the literal rule of interpretation in construing the statutes presented for construction.  Section 10(4) speaks of " any voluntary contribution" in the singular. It refers to the income earned on "any voluntary contribution" and subjects that income to tax "at the point of withdrawal" where the withdrawal occurs "before the expiration of five years from the date the voluntary contribution was made." The use of the singular "contribution" and the definite article "the" suggests that the provision contemplates the voluntary contributions as individual contributions, and not as a class or pool. The provision does not say "five years from the commencement of ‘the contributions’.  My view is that, had the legislature intended that the five years will count from the date the Contributor began the voluntary contribution, irrespective of when each contribution was made, it would have been a simple matter to say so expressly.  It makes more sense that the five years term will be a contribution-by-contribution computation; otherwise, the aim of having the contribution fallow for five years, will be defeated.  It would imply exemption to contributions made even a day before five years of the Contributors commencement of the scheme.  Clearly, the structure of Section 10(4) is that of an exception to the general exemption established by Sections 10(1) through 10(3). The general rule under Sections 10(1) to 10(3) is that pension contributions, pension fund income, and retirement benefits are exempt from tax. Section 10(4) carves out a limited exception: income earned on voluntary contributions is taxable only where withdrawal is made before five years.   The intention is clearly to discourage withdrawal before five years of ‘any contribution’.  Each monthly remittance needs to be treated as a separate voluntary contribution with its own independent five-year maturation period. This has the practical effect of encouraging long-term pension savings.

15.  The Claimant has not challenged the application of section 10(4) PRA with respect to what was taxed; rather, the period of the taxation.  The Defendant’s exhibit 1 is the Claimant’s statement of account.  The various communications exchanged between the parties places the bone of contention very narrowly on the taxation of the contributions made (according to the Defendant) less than five years before the withdrawal.  The Defendant also relied on the PenCom's Guidelines on Voluntary Contributions. The Defendant asserts that these Guidelines mandate the contribution-by-contribution approach. I have considered the PenCom Guidelines (Defendant’s exhibit 2).  Its provision is consistent with the provision of section 10(4) of the PRA.   Section 3.28 Guidelines on Voluntary Contribution Under the Contributory Pension Scheme issued by the National Pension Commission (PenCom) states as follows:

As provided in Section 10(4) of the PRA 2014, any income accrued on Voluntary Contribution shall be taxable in accordance with relevant tax laws, where the withdrawal is made before the end of five (5) years from the date the voluntary contribution was made.

Section 3.29:

   The tax deductions shall be based on both income earned and principal amount when withdrawal is less than five (5) years for the exempted, foreign, retirees under the defunct DBS and retirees under CPS.

16.  The above provision is consistent with section 10(4) of the PRA, and still used the term ‘voluntary contribution’, implying each contribution as made.  The Claimant also referred to the provisions of the Personal Income Tax Act (PITA) 2011.  The Claimant does not state what the PITA adds to his case.  The Claimant referred to paragraph 14(1) of the Third Schedule to the PITA 2011 (as amended) in his written address in support of the originating summons (paragraph 4.2(2), and submits that “paragraph 14 (1) of The Schedule of Personal Income Tax Act as amended in 2011 clearly states that the pension granted to any person pursuant to any enactment or law for the time being in force is exempted from tax. This law is in line with Section 14 (1-4) of the Pension Reform Act 2014.” Section 14 (1-4) is however on employees’ transfer from one employment to another.  If the Claimant meant section 10(1-4), then the Claimant has not added anything to his case, by that submission.  

17.  How does paragraph 14(1) of the 3rd Schedule to the PITA’s provision affect this case?  Section 19 of PITA provides for incomes exempted from taxation as follows:

 19.   Income exempted

(1)  There shall be exempt from the tax all that income specified in the Third Schedule to this Act.

(2)  The Minister may by notice include in the Third Schedule to this Act all or any person or class of persons chargeable to tax by virtue of this Act, so as to exempt the income of that person or class of persons from tax in pursuance of—

Section 33 (1) of the PITA (as amended) amends the above provision and adds to the above provision of section 19 of PITA, by inserting a new paragraph 14, as follows:

The Third Schedule to the Principal Act is amended by 

a.         ………..;

b.         …………

“7. ‘……..

(a)       … 

(b)       …;

( c)       by substituting for paragraph 14 a new paragraph “14”

                        “14 (1) pension granted to any person pursuant to any enactment or law for the time being in force.

(2)       ….”

(d)       in paragraph 15, by substituting the words “Pensions Act” the words “Pensions Reform Act, 2004”

18.  The Pension Reform Act 2014 is an enactment within the meaning of this provision. The Claimant's voluntary contributions, having been made into a Retirement Savings Account established under the PRA 2014, and the income accruing thereto, fall within the ambit of this provision.  By section 119 of the PRA; where any other law or enactment relating to pensions is inconsistent with the provisions of the PRA, the PRA shall prevail. Defendant’s exhibit 1 shows that the Claimant made his first voluntary contribution in January 2018 and made subsequent contributions up to December 2020.  The Defendant's evidence is that the withdrawal occurred in or about July 2023 — a period of approximately five years and six months from the date of the first voluntary contribution.  Part of Claimant’s exhibit EA4 is the Defendant’s letter in reply to the Claimant’s solicitor’s letter dated 19th April 2024.  Appendix 1 is a break down of taxable and non-taxable contributions of the Claimant.  The Defendant indicated the contributions that were less than five years, and taxed them, in accordance with section 10(4) of the PRA.  The Defendant summarised the transaction as follows:

Untaxed contributions

Amount: N 2,199,055.42

Date range of untaxed contributions: 15-03-18 to 06-06-18 (date)

Tenor in Months: 60 – 63

Tenor in Years: Over 5 years

 

Taxed contributions

Amount: N 12,343,063.15

Date range of taxed contributions: 12-07-18 to 07-02-22 (date)

Tenor in Months: 59 – 16

Tenor in Years: Less than 5 years

In all of the Claimant’s communications and his case before this Court, the Claimant’s case is based on the taxation of his contribution.

 

Resolution of the Questions for the determination in this suit:

 

19.  Question 1:   Whether following the provisions of Pension Reform Act 2014 and Personal Income Tax Act, contribution by the Plaintiff/Applicant to Respondent as Applicant Pension Manager into Applicant Retirement Account and Voluntary Contribution when withdrawal were made in Five (5) years after retirement is taxable at the point of withdrawal?  From the analysis made in the preceding parts of this judgment, it is resolved that following the provisions of the PRA 2014, and the PITA, contribution by the Claimant to the Defendant into the Claimant’s retirement account and voluntary contribution when withdrawal were made five years after the contribution is not taxable.  The Act uses the term, five years after the contribution, and not five years after retirement.  My finding is that it is the date of each contribution that will be factored in, in calculating when the five years is due, and not when the account or contribution was commenced.  

 

20.  Question 2:   Whether pursuant to the Pension Reform Act and Personal Income Tax Act interest, profit, dividends, investment and other income accurate to pension fund or asset of the Applicant on retirement are taxable?  The Pension Reform Act at section 10(2) provides that “All interests, dividends profits, investment and other income accruable        to pension funds and assets under this act shall not be taxable”.   This is clear and unequivocal.   However, it must be noted that the case of the Claimant is not that section 10(2) was infringed, as he did not categorise the contribution as interest, dividend, profit or investment.   Section 10(4) is a clear exception to section 10(2), and relates to voluntary contributions, which is the Claimant’s case.

 

21.  Question 3:   Whether the Respondent as Pension Manager of the Plaintiff can validly and legally deduct the sum of N2,566,971.72(Two Million, Five Hundred and Sixty Six Thousand, Nine Hundred and Seventy One Naira and Seventy Two Kobo) from the money/payment due to Plaintiff classifying it as taxable when the withdrawal was made over a period of 5(Five) years after the Applicant retirement?  The provision of section 10(4) under which this suit is brought did not provide for a period of over five years after retirement; rather, a period of five years after ‘the contribution’.   The Defendant cannot validly deduct the said sum if made five years after the contribution.   The provision of the law is such that if the withdrawal of the contribution is before the contribution turned five years, then it can be taxed.

 

22.  Issue two - whether the Claimant is entitled to the reliefs sought in this suit.  The Claimant premised his reliefs on the reception of negative resolution of the questions he brought for the determination of this Court.  The resolution having been made against the Claimant, all the reliefs sought in this suit fail.  This suit fails and is hereby dismissed.

 

Judgment is entered accordingly.  I make no order as to cost.

 

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Hon. Justice (Prof.) Elizabeth A. Oji