Investment of the N5 trillion accumulated pension fund was highly topical. Some State Governors are already looking at how they can access the fund for infrastructural development of their States. What do you make of this?

There were three states that attended the Governors forum arranged for the Summit namely, Kaduna, Akwa Ibom, and Kebbi State. Out of the three states only Kaduna State has complied with the scheme. We are the leading PFA for Kaduna State. Kebbi State has since inception been talking of complying but has not complied. Akwa-Ibom has also not complied up till now. They have just been promising to join in spite of all the revenues that they have in the state. They just keep postponing the date for implementation. This means that it is only Kaduna State that may be able to meet the requirement for pension asset investment. My advice to the states is that it is in their own interest to comply because once they comply, a lot of opportunities will be opened to them. Otherwise they may not be able to access the funds.

What is the way forward as to how the pension fund should be invested in infrastructure?

This is really the issue and it is not limited to the recent summit. What we have been doing as a nation in the past is to sit down, talk and go. There are always no plan for implementation and another set will come and talk and go and it goes on like that. There will be so many reports and committees but implementation has been zero. My advice is that there has to be timeline for implementation for whatever whoever intends to do. With respect to the pension asset, yes we have about five trillion naira on the ground part of which is not liquid but in asset. But at least 70 per cent of that is liquid asset which is available for investment. But PFAs cannot put in money into infrastructure without a proper framework where the infrastructure will clearly show the revenue they will generate to be able to retire whichever instrument is used to invest in such bond or infrastructure.

There has to be capacity development because in Nigeria we have been talking about infrastructure opportunities and so on and so forth. I think we really need to develop the capacity and this can only be done through training and collaboration with nations that have already gone far in this area because it is not just a question of fund. I need to be able to know how to deploy it into infrastructure. I also need to know how to structure the funding so that as I fund, it will not affect my liquidity as a Pension Fund Administrator or cause problems for me in other areas. It is not just a question of putting money into the infrastructure, electricity, road, rail line but there are other areas where whatever you do, it will be affected. So we have to be able to have that capacity to be able to analyse and say that, yes, based on what we have done and the capacity and training we have had for our professionals, we are ready to go into infrastructure financing.

The immediate past chairman of Pension Operators Association of Nigeria (PenOp) said that the Federal Government was owing about N100 billion in arrears and remittances. What is your views?

Unfortunately, the government may have had very good intention in introducing the CPS and I must say that what the government has done so far is commendable especially the Federal Government. This is because before the problem of the oil price decline, government was almost 100 per cent compliant in terms of remittances with respect to federal government employees. The government was largely in compliance also to past service liability but unfortunately, the oil price lap came and has now affected almost everything.

Yes, there is an outstanding of more than N100 billion in terms of past service liability and I don’t know whether the government is clearly remitting its obligation in terms of even the current RSA remittances. But in terms of past service liabilities, yes, there is a huge outstanding but I do believe that as the government settles down with ministers given portfolio, this will begin to go down.

I don’t think any government will play with the future of its employees because the Retirement Savings Account (RSA) is the future of the current RSA holders. I do believe that the government will do everything possible to retain the confidence of the RSA holders who are their workers. It is a temporary setback but I do believe the government will address the issue going forward.

What advice would you give to be able to shore up people’s interest in joining the scheme especially in the private sector and the informal sector?

The working population is said to be around 49 million but so far, just about 6 million have registered which means there is still a very wide gap. I think the gap has to do with the informal sector which includes the unorganized or semi-organized artisans among others. I believe that the way to bring them into the scheme is through incentives. Once there is incentive and it is clearly communicated to workers in the informal sector, we will begin to see them joining the scheme. Part of this is perhaps to make their own contribution as flexible as possible. It should not be as rigid as what we have for the formal sector.

There could also be some tax incentive and maybe accommodation to say if you are able to contribute so much, you are guaranteed a loan to own a house or a loan to buy motorcycles. This kind of incentive will encourage those in the informal sector to join the scheme. This is how other countries like Mexico and Chile were able to bring in their informal sector into the scheme. The National Pension Commission (PenCom) is working on the guideline for the informal sector which will soon be out. We are waiting to see the content of the guideline. The sector is a huge market.

Experts have argued that without improvement in the condition of Nigerians, people especially the informal sector will not be able to join the scheme. What is your views on this?
 

We believe that with improved government policies, there should be improvement in the general condition of living. It is really better to start somewhere because we cannot say because there is no improvement in the condition of the informal sector employees then we will not start.  There is no time that we can say this condition is optimum. At any given time you will see need in some other areas and then you just have to continue to address them.

What are the other challenges in the pension industry?

The most crucial is the challenges of compliance largely and especially by the private sector. Other challenges also mentioned earlier is funding which is now slow. These are some of the major challenges.

Many state governments have not joined the scheme. PenCom has said it will continue to engage them through moral suasion. This seems not to be working. Is it not possible for the Federal Government to compel them to implement the scheme?
 

What happened was that when the scheme started, there was supposed to be law for the federal government and for each state to have its own law. But later on it was realized that many states were not even willing to enact the laws. So at a meeting during former president Olusegun Obasanjo’s administration, the Council of State decided that all states should comply even though it didn’t say all states should adopt the same federal law. But the council just simply agreed that all states should comply. After that some states decided to comply but quite a number of states saw it as an additional cost.

They are not looking at the future but at whatever contribution they are supposed to give now. So they saw it as a cost and decided not to be interested in the scheme. But I do believe that now that most of the states have some sanity, they might be able to see it as something that is inevitable because if you are not doing it now, you are simply postponing the difficult days. In the next five, ten years, other states who have complied will reap the benefit which is that they wouldn’t have to pay retirees benefit but the states who refused to do it will still have to pay retirees benefit and they will realize what they have missed.

Give us a background of Premium Pension Limited

Premium Pension was licensed in 2005 to participate in the management of the new pension scheme, the Contributory Pension Scheme (CPS). We commenced operation in July 2005 and I was the pioneer Chief Executive Officer. We were among the first set of Pension Fund Administrators (PFAs) to be licensed. Our registration commenced January and February 2006 which makes us to be among the pioneer PFAs. Premium Pension is today one of the leading PFAs with asset under management of about N400 billion. Our vision is to be the leading PFA in Nigeria and among the top pension administrators in the world. We have a mission to be with our customers in active and retirement life. Our mission also includes providing first class service to our customers with best practice in whatever we do. So that, in a nutshell is the background of premium pension Limited. So far in terms of human resources, we have one of the best-trained pension staff in the industry. In terms of corporate governance, we are one of the best in the industry today. That is the short history of Premium Pension Limited.

What are the company’s plans at ensuring that retirees and workers get good service delivery?
 

As a company our norm is customer service and care for each and every stakeholder. Our stakeholders comprise of our Retirement Savings Account (RSA) holders who are now employees in the various organizations, our retirees who are now retired and enjoying their pension, the community where we operate and the regulators. We are a customer-centric organisation and our mission is to satisfy all our stakeholders. That is why we inculcate in all of our staff from cleaners to drivers and everybody in the company how to be customer-centric. We believe that without the customers, we cannot not exist.

How have you been able to amass the more than N380 billion you claim to be under the management of the company?

We have been able to achieve this because we believe in customer care. We are very close to our customers. This has made us to be a preferred PFA in the pension industry. We have also dedicated a lot of resources to our staff by providing proper training, competitive remuneration package and created a very conducive environment for them. This has helped us a lot in achieving success. We have also be able to make profit based on our prudence. We have had a very prudent culture in the organization right from when we started. We started on a very low-cost profile. When we started, every single thing was low cost and a lot of sacrifice was made from the management to the staff and this was what resulted to where we are today.