Recently, President Muhammadu Buhari approved the appointment of Aliyu Abdurrahman Dikko as the new Director General of the National Pension Commission (PenCom).
Though the appointment was with immediate effect, it is still subject to the approval of the Senate, which has not hard a cordial relationship with the executive and has blocked recent appointment sent to it for confirmation as they demand the ouster of the Economic and Financial Commission acting boss, Ibrahim Magu.
But before faces the senators for commission, where he would hope to escape the troubles Magu faced there, he will have to show his dexterity handling some of the challenges awaiting him at PenCom, many of these challenges he would inherit from his predecessor, Chinelo Anohu-Amazu.
Over the years, PenCom has garnered a reputation as an elitist commission distant from pensioners and Anohu-Amazu ran the affairs of the commission with a top-bottom approach instead of bottom-top approach, thereby alienating pensioners and retirees in general, Eze Duru, who identified himself as the Vice Chairman of First Guarantee Pension Limited.
In an exclusive interview, Duru said unprofessionalism slipped into the management of the pension industry, a development Dikko is expected to correct under his stewardship.
“Many things were wrong in the management of the industry during the tenure of Chinelo Anohu. The industry was not managed professionally and properly. There were no industry feedback and support. It was a top-down leadership approach instead of bottom-up approach, which was very regrettable,” Duru said.
Unhappy, suffering pensioners
Recently, the League of Federal Public Service Contributory Pension Retirees in a petition that the Contributory Pension Scheme (CPS) has caused its members misery as they are broke after retirement.
The Coordinator of the League, Chike Ogbechie, lamented that retirees who left public service since January 2010 are suffering as their pension benefits are yet to be paid.
The retirees said the anticipated benefits of the contributory pension scheme have turned into a mirage.
After the petition, the Sokoto branch of the Forum of Federal Government Retirees under PenCom also complained of delays in the payment of their pension and gratuities as well as other irregularities.
“To our dismay, some of us who retired in the last quarter of the year 2015 are yet to get either pension or gratuity. Above all, nobody is paid from January 2016 to date. Those who died in active service or waiting for their dependents find it extremely difficult to redeem their claims,” Chairman of the forum, Malam Yahaya Attahiru said in Sokoto.
This is just a fraction of the frustration of many pensioners, a development Dikko must correct.
A commission with battered rule of law
Recently, the commission has also been criticized for violating the rule of law and disregarding court orders under its previous boss.
“Rather than obey court orders, we had a situation where a regulator descended into the arena, in a very unprofessional way, corned the benefits of investors in First Guarantee Pension for her benefits. I believe that with the orders of the court that was secured in 2012, that will be a thing of the past,” Duru said.
He expressed optimism that Dikko will obey the rule of law and obey court orders.
“I know he won’t be disobeying orders of the court and he will carry his industry stakeholders along. I believe he will obey court orders especially with respect to First Guarantee Pension that has become a cesspool of corruption in the industry,” he said.
He said Anohu-Amazu started on the wrong footing as the Pension Reform Law was tinkered to lower the age requirement from 20 to 15 in order to accommodate her as the head of the Commission.
Slow adoption of CPS by states
Fewer than 10 states have completed all processes for the implementation of the Contributory Pension Scheme (CPS) at the state level.
Investigation revealed that states have continued to have challenges with paying retirees their benefits because 10 years after the introduction of the CPS in Nigeria, 28 states are yet to start remitting pension contributions. Further inquiry revealed that only Lagos, Osun, Ogun, Kaduna, Zamfara, Niger, Delta and Rivers states have commenced remittance of pension contributions of their workers under the scheme. The apathy by states in keying into the Pension Reform Act, 2014 (PRA 2014) which has made it compulsory for the states and local governments in Nigeria to join the CPS, unlike the repealed Pension Reform Act, 2004 (PRA 2004), could spell doom for pensioners as the delays in pension payments might persist as government revenues continue to dwindle.
The apathy could partly be due to inadequate awareness of the operation of the scheme, lethargy in compliance by states, associated costs of migration to the CPS, low wages resulting in so low accumulation of benefits in the Retirement Savings Accounts (RSA), resistance by labour and fears by top level civil servants who are exploiting the compromised Defined Benefit Scheme (DBS).
This is another headache Dikko has to face.
It’s time to dismantle the barrier
At the entrance of PenCom headquarters is a big barricade, stopping visitors from accessing offices and members the Commission.
Dikko owes it a duty to demolish the barrier and make PenCom accessible to the pensioners.
PenCom has no reason to be so fortified against retirees if pensioner issues are proactively addressed and it should remain open at least as feedback mechanism for the retirees.
RSAs data clean-up
PenCom is yet to do the clean-up of contributors’ biometrics to enable Retirement Savings Account (RSA) holders transfer their accounts from one Pension Fund Administrator (PFA) to another. Speaking exclusively on Sunday, the Managing Director and Chief Executive Officer of AIICO Pension Managers Limited, Eguarekhide Longe, said PenCom has not given PFAs the nod to open up the transfer window.
“What PenCom has done is to organise the procedure but the industry has not captured authentic biometric information such that will make the process seamless but all of that is being worked on,” he said. This is one area PenCom must act fast under Dikko.
Target Retirement Income (TRI) should be incorporated in CPS. One of the most obvious shortcomings of the Contributory Pension Scheme (CPS) is the inability of the contributors to define their income at retirement.
Articulating this position, recently, a stakeholder in the pension industry, Dr. Timi Austen-Peters, lamented that “no one knows how much retirement income would be available” at retirement. Austen-Peters decried the practice of shifting to individuals most risks in the scheme, including investment risks, market vicissitudes, labour, longevity and inflation.
He noted the absence of an ultimate pension target, saying the situation has caused a major disconnect between “accumulation and decumulation phases” with further resultant “unfounded expectations.” He lamented that attention was placed on short-term measures such as fees, benchmarks and supervisors’ approaches.
Defined Benefits (DB) to Defined Contributions (DC), he called for a further transition to Defined Ambitions (DA) in order to define the income that would be available to retirees at retirement. “The world has moved swiftly from DB to DC and now the move to DA has started,” he stated.
He explained that DA, if transited to, would avail the pension industry have Target Retirement Income (TRI). He called for the articulation of TRI framework, using long-term ultimate pension result as a means of addressing the problem of undefined income at retirement. He revealed that the essential elements of TRI are long-term targeting, benchmarking, supervision and communication. Continuation of PenCom decentralisation
With the commissioning of its North East regional office in Gombe State recently, the National Pension Commission (PenCom) has completed a cycle of decentralization to the six geopolitical zones, having earlier established zonal offices in Awka, Anambra for South East; Kano for North West; Kwara for North Central; Lagos for South West; and Calabar for South-South. The decentralisation of its services which was conceived in 2013 is not only in line with the penetrative drive to the informal sector but would also assist in the penetration of the Contributory Pension Scheme in states and local governments.
The decentralisation can go further to states to bring services closer to pensioners and this is where Dikko comes in.
End delay in payment of accrued rights
Retirees from the public service who retired in the last one year have not been able to access their retirement benefits due to the inability of the federal government to settle the backlog of accrued rights. Investigation showed that the last time the federal government paid accrued rights was in December 2015, a development that has hindered retirees from accessing their benefits.
Further findings within Pension Fund Administrators (PFAs) revealed that public service workers who retired from January last year are yet to access their retirement benefits while those who retired voluntarily have spent longer period without getting their benefits. For public service workers who migrated to the Contributory Pension Scheme (CPS) in 2004, shortly before they retired, they are entitled to two components of retirement benefits: the contributions accumulated in their Retirement Savings Accounts (RSA) and their accrued rights from the time they joined the service to the time they migrated to the CPS.
Accrued rights are the benefits which the workers who had worked for the government prior to 2004 when the CPS was introduced are entitled to. So, in addition to the retirees’ contributions from 2004 to date, the federal government must pay the retirees their accrued rights before the total benefits can be paid out. In what appears to be a deliberate policy to ensure that the federal government settles the backlog of accrued rights, the National Pension Commission (PenCom) directed PFAs not to allow the retirees access to their retirement savings until the federal government releases the accrued rights component.
This is a big headache awaiting Dikko.
The PenCom is yet to roll out the implementation of micro pension and it is expected that Dikko will carry on from where the former DG stopped.
by Francis Arinze Iloani