The problem with PENCOM

An actuarial consultant’s report on the N43 billion underfunded pension liabilities at NITEL bared the impending danger in pensions in Nigeria. Following a memo by Mallam Nasir El-Rufai, Director-General, Bureau for Public Enterprises, at the time, Chief Olusegun Obasanjo’s administration set up the Presidential Committee on Pension Reform to overhaul the entire pension system.

A Director at Guarantee Trust Bank, Fola Adeola, was headhunted to chair it. Deputy Director at the National Deposit Insurance Company (NDIC), Musa Ibrahim; Oxford-trained, PhD holder in Custody, Timi Austin-Peters; and Chinelo Anohu-Amazu, a Masters Degree holder in Telecommunications and Information Technology Law from the London School of Economics were appointed as members.

Their work, which also took them to Argentina, Chile, Mexico, etc., birthed the Pension Reform Act (PRA) 2004 with the Contributory Pension Scheme (CPS) as the flagship. PRA 2004 also created the National Pension Commission (PENCOM) as the regulator. M.K Ahmed became a substantive DG, Adeola became the pioneer Chairman of Governing Board, and Musa Ibrahim became the Commissioner in charge of Inspectorate, while Anohu-Amazu became the Commission Secretary and Legal Adviser.

Speaking at the 10th anniversary of pension reform in 2014, Obasanjo confessed that the initiative had been a success. He specially thanked his successors for not disrupting the reforms of the PENCOM leadership. Indeed, intelligent and stable leadership, and culture of continuity account for the pension industry’s giant strides until recent years. It is noteworthy that the bulk of the pioneer leadership of PENCOM was drawn from the Adeola Committee. Ahmad-led Exco served two full terms across the Obasanjo, Yar’Adua and Jonathan administrations, unaffected by regime changes.

It is noteworthy that upon the expiration of Ahmad-led Exco’s tenure in 2012 and Anohu-Amazu’s appointment as the Acting DG and subsequently the DG, she diligently pursued the predecessor’s programmes including the initiatives setting up of six zonal offices of PENCOM, regulatory interventions in First Guarantee Pension Limited over several breaches by some Board members. She also pursued further reforms initiated by Ahmad leadership, which culminated in the Pension Reform Act (PRA) 2014.

The Act introduced the Micro Pension Scheme to bring the informal sector into the CPS. It properly established the Pension Transitional Arrangement Directorate (PTAD), thus effectively reigning in the cesspits of corruption by paying pensions directly into pensioners’ accounts. It is noteworthy that it was under Anohu-Amazu as an Acting DG that PTAD got its first Executive Secretary and an independent office even before the completion of the reform.
 
Furthermore, PRA 2014 upwardly reviewed the minimum contribution from 15 percent to 18 percent of the monthly emolument — 10 per cent by employer and eight per cent by employee. It provides the legal framework for states and local governments to key into the CPS. It created new offences and prescribed stiffer punishments. For instance, an act of misappropriation or diversion of pension fund is liable, on conviction, to a fine of an amount equal to three times the amount so misappropriated or diverted or to a term of not less than 10 years imprisonment or both fine and imprisonment. Subject to the fiat of the Attorney-General of the Federation, PENCOM can now institute criminal proceedings against employers, who persistently fail to deduct and/or remit pension contributions of their employees within the stipulated time.

The Act also reduced the mandatory years of experience for appointment as DG from 20 years to 15 years. Sadly, mischief-makers have tried to drown this altruistic and global best practices and financial sector conventions motivated reduction in the mud of propaganda.

For instance, a recent faceless piece in The Guardian titled ‘Pencom and challenges of public institutions in development’ claimed that Anohu-Amazu, who co-authored the first (2004) reform and saw through the 2014 reforms was never qualified for appointment as a Commission Secretary and Legal Adviser or to head PENCOM. It argued that the sole aim of PRA 2014 was to lower the mandatory years of experience for her. How could that be when there were as many as 114 amendments, such that the PRA 2004 was repealed and PRA 2014 enacted? Besides, 109 Senators and 360 Members of the House of Representatives representing various political, regional, ethnic and religious interests passed that law.

Indeed, age is not synonymous with capacity. The Central Bank of Nigeria (CBN) is the engine room of Nigeria’s economy, yet the CBN Act 2007 only stipulates “The Governor and Deputy-Governors shall be persons of recognised financial experience”. The Federal Inland Revenue Service Act 2007 provides that the “Executive Chairman shall have cognate experience”. The Nigeria Deposit Insurance Corporation law makes no mention of years of experience. The Security and Exchange Commission and the National Insurance Commission laws only require 15 years cognate experience. 

Also, not only did 40 years age constitutional requirement for Nigeria presidency as at 2014 not require 20 years work experience, considering our 6-3-3-4 education system and mandatory national youth service, the age bar was lowered to 35 in 2018 through the (Not-Too-Young-To-Run-Bill). It is a pity that while young leaders like Emmanuel Macron of France and Prime Minister Justin Trudeau of Canada are entrusted with world’s biggest economies, mischief-makers thought Nigeria requires a Methuselah, as PENCOM DG. They forgot, as Obasanjo said during the 10th anniversary of pension reform in reference to Anohu-Amazu’s exploits in this regards, that the age of Methuselah has little to do with the wisdom of Solomon, at the helms of PENCOM.

Importantly, the rot and decline at PENCOM since the ill-advised and unlawful truncation of the tenured leadership of last PENCOM Management in April 2017 clearly shows that the age of a DG is not the problem with PENCOM. The real problem instead is thrusting on the helms of PENCOM someone bereft of the intellect as well as knowledge of the agency’s core mandates; someone who has spent all her life at PENCOM as a facility manager.

The result is that for the first time, PENCOM has come under parliamentary inquest bordering on alleged missing N33 billion, contracts bazaar, fake foreign and local trips for which multi-millions were expended, suspension of assumption of 43 recruits, Board approvals for 300 per cent hike in exit allowances and salaries for the DG and senior staff without Board approval, and illegal increase in number of GMs (Directors) from 10 to 17, etc. under Mrs. Aisha Dahir-Umar’s stewardship as Acting DG.

The ineptitude/shady approach played out during the public hearing when Aisha Dahir-Umar told the probe panel under oath that PENCOM had only one TSA account with the CBN, whereas her representative at subsequent hearing, Lana Loyinmi, claimed it was three. But CBN’s letter to the House dated February 9, 2019, clearly listed eight accounts PENCOM operates at the CBN. Let us even assume that there wasn’t an attempt to cover up anything, what mark of incompetence could be greater than not knowing the number and purposes of accounts operated by an agency you have headed for over two years?

The Acting DG has not held any forum with Pension Fund Administrators, Custodians, and other key stakeholders since 2017. This was a regular feature of PENCOM. Apart from the N56 billion secured from FG by the last PENCOM leadership in 2017 to service FG’s pension liabilities, PENCOM under the Acting DG has not secured any additional releases. PENCOM isn’t also bringing more states on board the Contributory Pension Scheme (CPS) as the zonal offices established for robust engagement at that level have been technically demobilised. The universities and military have even pulled out of the CPS. The Micro Pension Scheme, which pilot scheme was scheduled for take off in May 2017 by the previous leadership was only launched a few weeks ago and industry watchers claim that Mr. President was misled into launching a now distorted and unready product. They claim that launching Micro Pension without the driving ICT/software (Pension Administration System) is as bad as a stillbirth.

To save PENCOM and re-energise the pension industry, the Acting DG needs to proceed on her long overdue retirement (December 2016), while the FG quickly reconstitutes PENCOM Management and Governing Board.
 Abdullaziz wrote from Keffi