All Eyes on Dikko, New PenCom DG

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INSURANCE ANALYSIS

As Aliyu Dikko assumes office as the new PenCom DG, Nigerian workers and pensioners are expectant that the seasoned banker and experienced finance manager would bring his wealth of experience to bear in resolving pending issues in their overall interest, writes Ebere Nwoji

As the new Director General, National Pension Commission (PenCom), Aliyu Dikko, takes over the mantle of leadership from Chinelo Anohu – Amazu, a number of tasks are awaiting his immediate actions.

Some of these are – implementation of the window transfer mechanism, which contributors into the Contributory Pension Scheme ( CPS) have been yearning for, the kick off of the micro pension scheme to capture the informal sector operators into pension net and motivate them to save for old age; checkmating some employers of labour in their current negative attitude of choosing PFAs for their employees instead of allowing their employees to choose the PFAs of their choice to manage their Retirement Savings Account (RSA).

Whereas the CPS law allows employees to choose out of the existing 21 PFAs, the particular manager that will manage their savings, many employers put restriction to this by listing two or three PFAs to manage their employees’ account.

This has created problem for workers who changed their places of work only to discover that their fund managers are not in the list of their new employers.
This is one major issue Dikko should address as he settles down to work. He is expected to ensure that due process is followed to the later in this regard.

The N7 trillion pension assets is everybody’s attraction including government who has been demanding for its release to address infrastructural and other problems.
Dikko, like his predecessors, should insist that the CPS investment guideline is strictly followed in the choice of portfolio of investment for the fund.

The micro pension scheme, which guidelines have been drafted by the previous administration in PenCom, according to the sector operators is expected to increase the number of contributors into the scheme from the current six million to 20 million.

Contributors into CPS, have for the past 13 years the CPS was introduced, awaited the commencement of the window transfer mechanism which will allow them to migrate from one PFA to another but to no effect.
Reason often put forward by both PenCom and PFAs for the delay is biometric problem.

This has restricted contributors’ movement from one PFA to another as enshrined in the CPS law.
This is so despite that one of the demands of modern day business is customer satisfaction and freedom by customers to pinch their tents with service providers who are ready to meet their demands and provide them with the desired quality of service.
While consumers of other goods and services have exercised their rights in this regard, those of the pension fund management services have been denied this freedom because of non implementation of the window transfer mechanism.

What this means is that each contributor into CPS, has been confined to a single service provider for 13 years irrespective of quality of service.
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 right but the regulator and the operators have continued to delay this despite several promises on its commencement by past administrations in PenCom.
The window transfer is a mechanism that allows a contributor into the RSA to choose a new PFA if he or she is dissatisfied with the services of his or her former PFA.

Agitations for its commencement 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 window transfer .
Ahmad, then, gave 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 will lead to smooth exercise.

In September 2015,PenCom 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.
From the operators side, immediate past chairman Pension Operators Association of Nigeria ( PenOp) Misbahu Yola, said both PenCom and the sector operators have been working hard to clean contributors’ data from multiple registration problem.

Though Yola had promised that the exercise would have been completed by October that year, nothing has happened since then as its officials still cited biometric issue as the cause of the delay.
Managing Director, Leadway Pensions, Mr. Ronke Adedeji said though the window transfer has not kicked off, a lot of work has been done on that and 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 window transfer to take off, a major criterion is biometrics.
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, battle with the biometrics issue 13 years into the CPS regime, contributors into the scheme said the delay has spelt untold hardship on them.

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 RSA.
According to some contributors who are victims of this, the problem, is worst with private sector contributors who left their former employers to secure jobs with another employers only to discover that the names of the PFA they were using while in their former employment were not in the list of PFAs chosen by their present employer.

For such contributors, the problem is that the present employer, cannot accept the Personal Identification Number (PIN) of their former PFA to commence the remittance of their money to their account since it is not in their new employers’ list.

Under this circumstance, the option left for the contributors would have been to open new accounts with new PFAs in the list of their new employers but PenCom, cannot issue two PINs to a single contributor.
What this means is that the deducted money from such contributors’ salaries, will remain with the employer until the PenCom’s transfer window kicks off.

On its part, penCom,sometime ago explained that one of the reasons the transfer window has not taken off is that it is 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 or not.
To ensure seamless operation of the initiative, penCom some years back, mandated 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.

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.

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 will increase. Therefore the earlier the commission and the operators address whatever problems delaying the take off of the window transfer, the better.

With Dikko coming into PenCom, hopes are high that with his years of experience in banking industry and pension where he served last before his appointment , he will fast track the commencement of the transfer so that contributors’ demand to change from one PFA to another will be met.
From the background he is coming from, he has all it takes to do this.

Dikko was the pioneer Managing Director/Chief Executive Officer of Premium Pension Limited (PPL) and later became its chairman, a position he held till his recent appointment.
Before becoming the MD/CEO of PPL, Dikko was the Chief Executive Officer of United Bank for Africa Plc (UBA) until May 10th 2005.

While at UBA, Dikko, was rated among the top 20 CEOs in Nigeria by the Vanguard Newspaper in 2004. He was also rated by the News Magazine as one of the top 50 acclaimed business titans in 2004.
He was also one of Business Day newspaper’s 20 CEO’s with high integrity.

He was the Chairman of the Board of UBA Capital and Trust Ltd and UBA Securities Ltd.
He was also the Executive Director Treasury and Consumer Banking, Commercial and Investment Banking and the Deputy Managing Director before he was appointed the Managing Director and CEO of the bank.
He started his banking career with Icon Ltd (Merchant Bankers), a former affiliate of the USA based Morgan Guaranty Trust.