PENCOM and Challenges of Motley Ghosts

By Suleiman Tajudeen

Anyone who has ever headed an organisation or association of people knows the peril of fighting corruption and those who profit from it. It is a hazardous venture undertaken only by persons with strong character, conviction and determination. Such individuals often come out of the struggle bruised or battered, but nevertheless contented and comforted for putting themselves on the firing line to protect public trust.

This is the situation with the National Pension Commission, PenCom, which is the regulatory body mandated to regulate, supervise and ensure the effective administration of pension matters in Nigeria. The management of the agency is currently facing challenges from what one may describe as ghosts of varied types.

Those at the helm of affairs at PenCom today have no doubt experienced what it means to fight institutional corruption. Mrs. Aisha Umar, the Acting Director General of PenCom and her team are certainly not finding it funny regulating the pension industry.

Recently, they have found themselves having to refute spurious allegations, one after the other, from largely faceless individuals and groups who cannot bear the pain of seeing the rugs being pulled away from their filthy feet and the long arm of the law catching up with them. These are people who see their stake in the industry only in terms of undue benefits to themselves and their organisations to the detriment of the common good.

It would be recalled that following the enactment of the Pension Reform Act 2004, which was later repealed and re-enacted in 2014, it became mandatory for employers to deduct at source, the monthly contribution of the employee from the employee’s salary in addition to the employer’s contribution and remit it to the Pension Fund Custodian (PFC) specified by the employee’s Pension Fund Administrator (PFA). It is one of the fundamental functions of PenCom to ensure that this process is strictly complied with, in order to achieve the cardinal objective of pension payment as and when due. PenCom has fairly succeeded in discharging this responsibly since its establishment in 2004 due to sustained commitment and performance.

The Nigerian pension industry is today worth over eight trillion of assets investment in various segments of the economy.

However, a group that calls itself the Centre for Public Accountability (CPA) has, since 2016 engaged in an insurgency against PenCom, barely twelve years after the take-off of the Contributory Pension Scheme (CPS). The group, and other faceless groups fronting for fraudulent employers and pension administrators, waged a relentless battle of attrition against PenCom, using half-truths and outright lies as weapons.

The struggle to sanitise the industry has pre-dated the current management of PenCom but intensified under the current Ag. DIrector General, Mrs Umar. This posture opened the regulator to campaigns of calumny by faceless groups claiming to expose corruption but actually fighting to protect themselves against the regulator’s hammer.

Under the CPS, a worker opens a Retirement Savings Account (RSA) into which his/her pension contributions were paid. The accruals can be regularly tracked through a regular RSA account statement from the Pension Fund Administrator (PFA), thus enabling a contributor plan for life in retirement with some measures of certainty.

Unfortunately, many employers of labour have found ways of circumventing the law and short-changing contributors. Although by the provisions of Section 11 (6) and (7) as well as Section 24(d) of the PRA 2014, it is an offence for an employer not to remit contributions, this has not deterred many employers from holding back pension contributions of their employees. This has caused undue delays to such contributors’ pension payment, thereby defeating the purpose of the CPS.

It is on record that by March 2016, whereas a total of 7,006,734 employees were registered, only the pension deductions of 6,879,179 workers were remitted, leaving a deficit of 127,555. PenCom has reacted to this threat by the engagement of Recovery Agents, instituting law suits and forging inter-agency collaboration with the Economic and Financial Crimes Commission (EFCC) to crackdown on remitters and violators of other provisions of PRA 2014.

While it is not a complete success yet, the efforts have substantially helped to sanitise the industry. Dubious employers and PFA who may wish to circumvent the law now know what awaits them when they are caught.

PenCom has also recently gone further to improve the integrity of the pension administration process by making it mandatory for all Retirement Savings Account (RSA) holders to provide their National Identity Number (NIN) and Bank Verification Number (BVN) to the PFAs. PenCom, in a recent circular said the new development affects both active and retired RSA holders and conforms with the policy of the Federal Government of Nigeria. All of these efforts would no doubt enhance transparency and efficiency in the pension industry, and by extension, a happy life for retirees, which has been the goal of the current management of PenCom led by Mrs. Umar.

Indeed, anyone familiar with the current regime of pension administration in the country knows that any allegation of fraud against the management of PenCom is both ridiculous and mischievous.

In the first place, the allegation is baseless because the CPS supervised by PenCom is structured in such a way that it is self-insured and difficult for fraud to be perpetrated. Every kobo of the trillions of the pension fund belongs to a named individual and can be tracked by both the individual contributors and the regulator. That is why to date, there has not been any complaint from contributors of stolen money. Secondly, the allegation is ridiculous because PenCom itself is currently headed by an empathetic administrator whose only motivation is better life for retirees.

Interestingly, the Ag. Director -General of the agency, Mrs. Umar, recently took a swipe at critics of the CPS at the agency’s fourth quarter forum for states held in Port Harcourt, Rivers State.  She said those making fraud allegations against the scheme were ignorant of its operation. Mrs. Umar, who was represented by the Head, States Operations Department, PenCom, Dr. Dan Ndackson, said the scheme has been structured and insured from fraud. She insisted that the current challenges of benefits payment were not with the contributory pension scheme, but problems inherited from the legacy Defined Benefits Scheme.

Truly, it is the challenges of motley ghosts from previous years that are still haunting the current management of PenCom. However, in all fairness, the current regime at the agency does not deserve any such suggestion or insinuation of corruption or inefficiency. The management has not only operated with an unprecedented transparency, but it has worked efficiently with stakeholders in the industry to take the CPS to new levels.

Recent developments have indicated that the management has been able to get the federal government to improve the funding and timely release of funds for the payment of outstanding accrued pension rights of its retired employees, thereby substantially clearing the backlog of unpaid retirees under the CPS. Furthermore, PenCom has ensured that contributors are now more knowledgeable and enlightened about the process of accessing their benefits as a result of the annual pre-retirement workshops for prospective retirees being conducted by the agency.

The above and many other laudable programmes initiated by the current management of PenCom are certainly having positive impact on the pension industry. This is why they need the support and encouragement of stakeholders and well-meaning Nigerians to enable them do more. Those motley ghosts trying to run down the agency on baseless allegations do not mean well for the pension industry and Nigeria. The government must fish out them and deal with them as appropriate.

Suleiman wrote in from Abuja

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