Thirteen years after the commencement of the Contributory Pension Scheme, Ebere Nwoji writes that despite the agitation by contributors, both the National Pension Commission and sector operators continue to give excuses for delaying the commencement of the window transfer mechanism enshrined in the law establishing the scheme
The contributory Pension Scheme (CPS) regime, introduced in Nigeria in 2004 by former President Olusegun Obasanjo administration is said to be the best thing that has happened to Nigerian workers and pensioners in the history of pension scheme operation and payment of retirement benefits in the country.
But 13 years down the line, Nigerian workers and pensioners, said they have one major grievance against the scheme operators and that is what they described as ‘tactical delay’ in commencement of the window Transfer mechanism, which will enable them migrate from one Pension Fund Administrator (PFA) to another.
Section 13 of the 2014 Pension Act, gives express approval to contributors into the scheme to once in a year migrate from one PFA to another if they so wish.
But since the commencement of the scheme in 2004, contributors have been agitating to be allowed to exercise this freedom, but the regulator and the operators have not granted this because of single reason of biometrics which they started pointing out as their problem since the inception of the scheme.
This is despite several promises on commencement of the mechanism given by both past and present administrations in PenCom.
The window transfer, is a mechanism that allows a contributor into the Retirement Savings account (RSA) to choose a new PFA if he or she is dissatisfied with the services of his or her former PFA.
Agitations for the commencement of the window transfer by workers dates back to the regime of pioneer Director General of PenCom, Muhammad Ahmad, who had in 2012, promised that contributors who were not satisfied with the performance of their PFAs especially in the area of management of their contributed funds, would by December that year, be provided with the opportunity to transfer their funds to a new PFA of their choice through the open window transfer .
This by interpretation means that PenCom had assured of commencement of the transfer window in that particular year.
Ahmad, had given the impression that the commission had put all the necessary arrangements in place to ensure a seamless exercise.
When the exercise failed to kick off, enquiries into why it failed, revealed that the commission had some biometric issues it needed to sort out to ensure a perfect exercise.
According to findings, although the commission, in 2011 said that it had drafted the regulation that will guide the exercise, both the commission and the PFAs were yet to put finishing touches to all the issues that would lead to smooth exercise.
In September 2015, the commission, promised to release the guideline for the take-off of the window transfer, adding that it had cleaned the corrupt RSA data base and done with the biometrics of RSA holders, but till date, the exercise is yet to take off while it has been observed that the commission and PFAs ceased to talk about it.
From the operators side, the last heard about the exercise, was from the immediate past chairman Pension Operators Association of Nigeria ( PenOp) Misbahu Yola, who said both PenCom and the sector operators have been working hard to clean contributors’ data from multiple registration problem.
Though Yola promised that the exercise would have been completed by October that year, presently, nothing has happened while at the media retreat organised by the commission late last year, its officials still pointed at biometric issue as the cause of the delay.
From the operator’s side, Mrs. Ronke Adedeji, Managing Director Leadway Pensions said a lot of work is being done on that to date but that a lot still need to be done.
“The transfer window is quite a complex exercise, on the face, it always appears very simple. People always say, ‘I want to change my PFA and move from A to B,’ but its complex from the perspective that when you are moving an account from one PFA to another, certain processes need to take place and the major one is the identification process. We want to make sure that when you are transferring account from one entity to the other, you are transferring correctly and that you are not transferring somebody else’s account simply because they have common names.
According to her, the issue of biometrics is the key; as such, the identification process to ensure that the transfer is secured and correct has to take place.
According to her, in Nigeria, we really haven’t sorted out identification, but in more developed parts of the world, identification is quite simple and straightforward.
She said for the open window transfer to take off, a major criterion is biometrics.
Speaking on plans being made to that effect, she said there are various initiatives going on regarding biometrics, adding that the federal government has an initiative, the banking sector has an initiative, and that the PFAs are also looking at it and at the end of the day, operators will want to come out with a process that will ensure that the transfer window exercise is comprehensive, effective and cost effective.
Summerising her explanations, on this, the Leadway Pensions boss stated: “So it’s a large exercise in terms of getting the biometrics right, but that is even a part of the whole thing. There is also the software and the data bank process from the National Pension Commission, So there are still a lot of issues that we are trying to sort out. We are working hard on the biometrics, to sort out software, databank issues. We may end up doing collaboration between the PFAs; we may look at other stakeholders such as federal government and the banks to work with so that the process can be complete and effective”, she explained.
One had thought that the BVN exercise carried out by banks, would have facilitated the exercise as it would have gone a long way to help the sector solve the data bank problem but this has not happened.
While the PFAs seem to be battling with the biometrics issue 13 years after the implementation of the Contributory Pension Scheme, contributors into the scheme said the delay has spelt untold hardship on them.
According to them, the take- off of the mechanism will improve on the quality of service rendered by PFAs.
The contributors said currently, some PFAs, are very complacent at their service delivery because the competition is not stiff and contributors are caged to remain with the initial PFAs they have chosen irrespective of poor quality of their services.
They argued that if the window transfer commences and such PFAs begin to loose contributors, they will sit up and improve on their service delivery.
Some workers said the situation is now denying them the chances of having their deducted money and those contributed by their employers remitted into their Retirement Savings Account.
According to some contributors, who are victims of this, the problem, is worst with private sector contributors who left their former employer to secure job with another employer only to discover that the name of the Pension Fund Administrator(PFA) they were using while in their former employment was not in the list of PFAs chosen by their present employer.
For such a contributor, the problem is that the present employer, cannot accept the Personal Identification Number (PIN) of his or her former PFA to commence the remittance of his RSA to his account since it is not in their new employer’s list.
Under this circumstance, the option left for the contributor would have been to open new account with one of the PFAs in the list of his or her new employer but PenCom, cannot issue two PINs to a single contributor.
What this means is that the deducted money from such contributor’s salary, will remain with the employer until the PenCom’s transfer window kicks off.
Alternatively an employee of Leadway Pensions, who spoke to THISDAY on anonymous ground, advised such contributors to collect the window transfer form from any of the PFAs of their choice, fill it and submit same and continue to wait for the take-off of the PenCom’s transfer window so that as soon as it takes off, it will be the duty of penCom to effect the transfer.
This, according to findings, is just but one aspect of problems faced by contributors on account of delay in the commencement of the transfer window.
THISDay, recalls that PenCom, under Ahmad, had in 2012, informed contributors that the commission, was at the verge of introducing a software application window that would enable seamless transfer of RSAs from one Pension Fund Administrator (PFA) to another by savers who may wish to explore the window.
The then PenCom management had said that the estimated date for the opening of the transfer window was December 2012.
Having waited for this long, the delay in the transfer window commencement is making some group of workers to regret contributing to the scheme and is seriously eroding their confidence in the scheme.
Some contributors said if there is an alternative scheme, they would have pulled out completely from the contributory scheme and join the alternative scheme.
This, according to them is because some PFAs in their recordings of contributors’ savings commit unforgivable errors.
For instance, the Academic Staff Union of Universities (ASUU), some years back threatened to pull out of the CPS to form its own pension body called University Pension Commission.
This was because the chairman of its University of Lagos branch Dr. Oghenekaro Ogbinaka said that he and other members of the union were dissatisfied with the way their pension fund managers were managing their RSA account. They also said they were dissatisfied with investment pattern of their contributed fund by the Pension fund custodians.
Ogbinaka specifically said there is big gap between what the university deducts from his salary as pension and what his PFA records in the alert sent to him every month.
According to him, every effort made to reconcile this proved abortive, a situation which made him to get fed up and wanted to pursue the establishment of the university pension body.
On its part, penCom had explained that one of the reasons the transfer window has not taken off is that it was yet to conclude works on the supporting information and Technology (IT) applications of the transfer window which will enable pension contributors change their administrators.
Head, Research and Corporate Strategy PenCom, Dr. Farouk Aminu, said the Commission is still working on the transfer window issues.
He noted that the framework has been issued to operators for implementation, adding that however, work is still ongoing on the supporting information and technology application that would drive the initiative. Presently, it is not certain whether the commission has finished working on the application as in the past one year, nothing has been heard about the transfer window either from PenCom or from the PFAs.
To ensure seamless operation of the initiative, penCom had mandated the PFAs and Pension Fund Custodians (PFCs) to deploy IT infrastructure for the transfer process.
It noted that such IT infrastructure must have adequate storage and retrieval capability for a period of 10 years.
PenCom said: “Every PFA / PFC shall be required to achieve and maintain an IT infrastructural level as prescribed by the Commission in section 3.0 of the guidelines for the operations of Pension Fund Administrators.
“In addition to the IT requirements, operators must have automated fingerprint capturing equipment for capturing fingerprints (PFAs).
“Automated Document Management System for the transfer of RSA holder’s documents, between the PFAs and the RSA Transfer Clearing System (PFAs & PFCs).
“Every PFA / PFC official shall abide by the Code of Ethics and Business Practices issued by the Commission and respect the confidentiality of sensitive information relating to the transfer process”, the commission directed.
While PenCom and PFAs are taking this long time in their preparation for the exercise, industry watchers said the commission seems not to be concerned about the plight of the contributors especially as some workers’ contributions are no longer being remitted into their account mainly because of issue of change of job and their new employers’ choice of PFAs different from those former employers were using.
Describing this as act of unseriousness on the part of the commission, Mr. Eugene Obi , an employee with one of the printing firms at IIupeju, Lagos, said if the commission is serious about the transfer window, within this space of 13years, it would have concluded its own part of the process of the transfer and would have given the PFAs a dead line to meet their biometrics activities .
He said if the commission had done this, by now the window transfer process would have commenced.
Another contributor Mrs. Jane Iwuchukwu, who also works with an Ikeja based plastic producing firm, said her own feelings about the issue is that PenCom is afraid that if the transfer window is opened, many PFAs will lose all their clients as many contributors have a lot of grudges against their PFAs .According to her, if the exercise commences now, there may be only two or three PFAs still in business as contributors would want to patronise only those few.
Observers, have said that Whatever is the reason for the delay, PenCom, should realise that Nigerians, have not experimented on the contributory Pension Scheme before 2004.
They have not had deals with any PFA before .It is therefore obvious that most workers choose their PFAs by chance ,therefore having tried them and felt dissatisfied with their operations, such workers should be allowed to make a move by choosing other PFAs to whom they will transfer their hard earned and much needed money to PenCom should remember that justice delayed is justice denied therefore since the law allows change of PFA by contributors, the commission, should have started from the commencement date of the contributory pension scheme to put gadgets in place and use its regulatory powers to compel PFAs to get ready for the transfer for contributors to do so at will.
13 years is enough time for any serious minded organisation to put its house in order for such exercise.
Contributors who have problems that warrant change of PFA are much more worried that since last year, the commission has not said anything on the level of preparation or level of work done in the transfer window project.
According to the workers, they have neither read from the media nor from any other means what the commission is doing in that regard.
From indications, the earlier the commission and the sector operators kick off the transfer window the better. This is because the more they delay the more complex it becomes to address the biometrics problems.
Currently, the number of contributors into the scheme is about seven million. There are fears that when the micro pension scheme comes on stream, the number of contributors will double and the complexity of addressing the biometrics issue increases. Therefore the earlier the commission and the operators address whatever problem that is delaying the window transfer rake off the better.
