- Accuse PFAs of conniving with ‘fraudsters’ to deepen their sorrow
- Over N157bn stolen from pension funds, says EFCC
FESTUS OKOROMADU writes that the antics of pension fund managers have increased the sorrow of pensioners in the twilight of their lives.
Retirement is a season every gainfully employed person looks forward to, especially when one is certain of the benefits that should ordinarily come with it. In better organised societies, retirees are seen as senior citizens and accorded due respect from both the government and the society, but Nigeria has yet to get to this point.
Prior to 2004, when the President Olusegun Obansanjo administration enacted the Pension Reform Act 2004, pension schemes in the country were bedeviled with many challenges.
The old order had challenges with payment of retirement benefits as government resources and priorities were focused on other issues even as the number of retirees continued to increase.
Unfortunately, because retirement payments were tied to annual budgetary provisions, they were often the most vulnerable items in terms of resource allocation.
The private sector was not better off as many employees were not covered by any pension scheme.
Where pension schemes existed, many employers failed to fund them.
Besides, where the schemes were funded, the management of the pension funds were plagued with malpractices between the fund managers and the trustees of the pension fund.
However, with the initiation and implementation of the Pension Reform Act 2004, it was anticipated that the new order would address and eliminate the problems associated with pension schemes in the country.
Pension fund scam galore
But while Nigerian workers thought their post-retirement pains were over with the new scheme, which allows for both the employer and employees to contribute funds into a pool to be managed by accredited managers, they were proven wrong in many respects.
In 2013, six federal officials were tried and convicted by an Abuja court for stealing N32.8 billion of police pension funds.
The sentencing was the first conviction in an elaborate scam that came to light early 2012 involving several top officials, offices and banks.
The convicts included a former assistant director in the federal civil service, John Yakubu Yusuf, who was tried on a 20-count charge alongside Atiku Abubakar Kigo (Permanent Secretary); Ahmed Inuwa Wada (Director);Veronica Onyegbula (Cashier); and Sani Habila Zira (ICT Officer).
Yusuf, who pleaded guilty to betraying trust and fraudulently converting N2 billion of police pension funds to private use, was to forfeit property traced to him by the Economic and Financial Crimes Commission, valued at N325 million, in addition to the payment of N250, 000 or to serve a two-year jail term.
Yusuf had admitted to the 19th and 20th offences relating specifically to him, each involving betrayal of trust and the conversion of N1 billion apiece. The maximum penalty for the offence is two years.
Although the ruling by the judge angered activists and numerous Nigerians who closely followed the trial, the judgement failed to address the issue of pensioners whose funds were diverted and what happened to them thereafter.
While the dust arising from the above scandal had yet to settle, the Head of the Pension Reform Task Team, Abdulrasheed Maina, was accused of siphoning well over N2.1 billion from the fund he was charged to manage.
Maina, whose case came to limelight in 2017, was finally charged to court after some dramatic escape scheme for money laundering by the EFCC in October 2019 and was sentenced to eight years imprisonment.
“In 2013, six federal officials were tried and convicted by an Abuja court for stealing N32.8 billion of police pension fund”
Over N157bn stolen from pension funds, says EFCC
The latest report by Nigeria’s anti-graft agency says it has secured convictions of pension fraud scams to the tune of N157 billion.
The acting chairman of the EFCC, Adulkarim Chukkol, who disclosed this at a two-day sensitisation programme, said the Commission had probed over N157 billion pension scam.
He said many more would unfold as the Commission was ever ready to bring those who embezzled pension funds meant for pensioners to justice.
The programme, which was organised by the EFCC in collaboration with the National Pension Commission,was part of efforts at ensuring the safety of pension funds and forestalling incidences of fraud in the sector.
While acknowledging the challenges posed by dubious operators in the system and the need to sensitise stakeholders, the Director-General of PenCom, Hajiya Aisha Dahiru-Umar, lauded the foresight and dynamism of the leadership of the EFCC for accepting to collaborate with PenCom.
Reiterating the rationale behind the formation of PenCom, the DG said, “As you may recall, the problems of fraud and mismanagement in the pension sector in Nigeria were amongst the reasons that necessitated the pension reform of 2004 by the Federal Government. The Pension Reform Act 2004, which was later reviewed and re-enacted in 2014, introduced legal and institutional frameworks aimed at addressing the rot that characterised the administration of pensions in the pre-reform era. The Act also established PenCom to regulate and supervise all pension matters in Nigeria, including the licensing of Pension Fund Administrators, PFAs, and Pension Fund Custodians.
“The Pension Transitional Arrangements Directorate, PTAD, was also established by the PRA 2014 to administer, in a transparent manner, the Defined Benefits Scheme, DBS, for pensioners exempted from the Contributory Pension Scheme CPS. These measures substantially restored credibility and confidence in Nigeria’s pension systems. Thus, we have, today, an industry that has accumulated pension assets in excess of N13 trillion, invested in various aspects of the economy and still growing.”
Stakeholders losing trust in PenCom
In recent times some stakeholders have called for exit from the PenCom scheme. One of such is the Nigeria Police Retirees. The retirees who seem not be satisfied with the benefits accruing to them from the huge pool of funds under the contributory pension scheme, tasked Nigerians to ask PenCom to explain how the N13.9 trillion pension funds in its coffers were being managed.
The retirees’ call is coming on the heels of PenCom DG’s recent moves to stop the Police from being removed from the Contributory Pension scheme.
She had asserted that the exemption of the police retirees, with their N1.3 trillion contribution, would shrink the savings culture of government through the Ecological Funds Account, Excess Crude Account, Consolidated Revenue Fund of the Federation, the Debt Management Office and the CBN Retirement Benefits Bond redemption funds, which were the government’s methods of ensuring adequate savings for payment of pension benefits.
She further argued that the exemption of the police retirees would put a huge financial burden on the budget of the nation and would disrupt the money market and over all monetary policies; which might affect certain sectors of the economy like the real estate and the capital markets, leading to foreign partners not trusting the government’s commitment to pension reform. The Nigeria Labour Congress also spoke against the police pensioners’ exemption.
But the retirees, in a document signed by their National Coordinator, Christopher Effiong; National Legal Adviser, Ofem Mbang; Chairman, Kaduna chapter, John Madaki; Chairman, Akwa Ibom Chapter, Uwem Uyoh;Chairman, Oyo Chapter, Akande Benjamin; member, Anthony Okporka; and 16 others, dismissed the assertions by PenCom and the NLC, describing them as “a ruse”.
The report said, “It is a ruse because the government has mastered the act of saving and that is why it has several accounts for all its economic policies.
“PenCom wants to continue to feed fat on police retirees despite their suffering while the NLC is a meddlesome interloper considering the fact that the NLC has never spoken for them before and the police by law does not unionise.
“The proposed amendment will enable the Federal Government to “take full responsibility for the gratuity and pensions of the NPF retirees and refer to contributing part of their meagre salary for their retirement benefit from serving police officers.
“The projection of PenCom and its cohorts ‘has no fool proof or water and airtight conditions that are sufficient persuasions to sway the considerations of those 85 per cent of the consensus of the public hearing participants. PenCom is being lazy and bereft of modern day ideas of managing the unrestricted pension funds, which are available to it to strive and compete with the private sectors in the capital market and other sectors of the economy.”
However, pensioners have continued to express worry over the challenges they encounter in accessing their retirement benefits even under the Contributory Pension Scheme.
The complaints came even as the National Pension Commission and industry operators deliberate on integrating about 49 million artisans and the micro pension plan of the Federal Government.
Speaking at the maiden annual pension conference organised by the Pension Correspondents Association of Nigeria in Abuja, the National President, Nigeria Union of Pensioners, Godwin Abumisi, lamented the challenges inherent in both the formal and informal pension operations, particularly the inability of contributors to access retirement benefits, owing to what he described as stringent conditions attached to the process.
But the Director-General, PenCom, Mrs. Aisha Dahir-Umar, said the commission had set up a framework for prompt payment of pensions without delays.
Represented at the conference by an Assistant General Manager at PenCom, Ibrahim Garba Buwai, Umar, also directed the PFAs to always ensure that requests from retirees were promptly settled.
She also sought the collaboration of the media to create the needed awareness for the adoption of the pension scheme for the benefit of self-employed, semi and unorganised informal sector operators.
She pointed out that the CPS remained the most successful pension initiative in recent times, evidenced by its asset growth from N2 trillion in 2014 to N15 trillion currently.
The Chief Executive, PenOp, Oguche Agudah, said the scheme offered a significant opportunity for workers in the informal sector to secure their future through retirement savings.
Represented by Project Management Lead, PenOp, Mayomikun Obadofin, he added that the micro scheme presented flexibility in contribution amounts and frequencies, provisions for withdrawing a portion of the savings for unforeseen emergencies, and the option to convert from an informal to a mandatory plan when securing formal employment.
Also, pensioners in Lagos State under the aegis of the Nigeria Union of Pensioners, Contributory Pension Scheme sector, have decried the late payment of their pension, the paltry sum they receive and other challenges they face in retirement.
Receiving a paltry N42,000, monthly, after 35 years in service and retiring as a Grade Level 14 officer from the Lagos State Health Service Commission, was not what Wasiu Okuneye, a retiree, had wished for.
Waiting for over three years after retirement without being paid his pension benefits had deflated the joy he had when his retirement was approaching. Sadly, that was his experience. He said he retired in 2018 but didnot get his first payment until 2021.
Okuneye is one of the many pensioners in Lagos State who transitioned from the old pension scheme, the Divine Benefit Scheme, to the new Contributory Pension Scheme, introduced in 2004 and adopted by Lagos State in 2007.
Okuneye’s participation in the old scheme gave him access to a gratuity and pension to be determined by the government, based on the number of years. Under the new scheme, however, the law prescribed that he was to contribute eight per cent of his monthly salary while his employer contributed 10 per cent towards his pension in an account with one of the Pension Fund Administrators.
Okuneye stated, “In 2013, we got feelers that the scheme was not properly implemented and by 2017, people started complaining. I retired in 2018 as a Level 14 officer and I waited for four years before I could collect my bond. When I collected it, it was nothing to write home about.
“As of 2007, when the Lagos State Government adopted the new pension scheme, some of us had been in service for about 11 to 12 years. Our accrued benefits from when we began working with the government up till when the new scheme was adopted ought to have been given to our PFA as of 2007. That way, our money would have yielded a lot of interest. Unfortunately, or maybe deliberately, the government did not pay the money to the PFA, and as of 2018, when I retired, the value of the money in 2007 was what was given to me and I got it after four years from my retirement date.”
He argued that if his pension from when he started working with the government until 2007 when the new pension scheme was adopted had been paid to his PFA, his monthly pension remittance would not be the paltry sum of N42,000 he currently receives monthly.
He noted that pensioners who retired at Level Five and below were paid off, leaving them with no monthly payment.
Okuneye, who added that he was a member of labour unions in the state, noted, “When we asked for the reason those who retired at Level Five and below were paid off, they said the money could not sustain them as monthly pension. We wrote letters to the state government and met the Director-General of the Lagos State Pension Commission and his entourage and presented all the facts to them. At that meeting, they agreed with us that that was the amount paid and insisted that that was what they would pay.”
In its Save our Souls letter, the Nigeria Union of Pensioners, Lagos State Council, said it was constrained to write the letter after a series of letters to the governor, Babajide Sanwo-Olu.
The letter titled, “Save Our Souls: Pensioners under the new Contributory Pension Scheme are dying of hunger, neglect and depression” highlighted the need for the government to urgently attend to their demands.
Attached to the SOS was a copy of the letter sent to the governor, dated July 25, 2023, and signed by the Chairman and General Secretary of the association, Michael Omisande and Johnson Olagbaye, respectively.
“The retirees who seem not be satisfied with the benefits accruing to them from the huge pool of funds under the contributory pension scheme, tasked Nigerians to ask PenCom to explain how the N13.9 trillion pension funds in its coffers were being managed”
It read in part, “We need immediate payment of the outstanding bonds of our members from 2020 till date; an urgent need to consider a comprehensive review of the pension payment system to implement the pension scheme of service documents fully, that is payment of shortfall as a result of non-remittance of our accrued benefit to our RSA account as of 2007.
“The contributory pensioners of Lagos State can no longer bear the adverse effects of the current hard times; we are dying gradually. We therefore solicit your consideration and compassion to urgently do something, without further delay to alleviate the unbearable suffering we are passing through.”
Delayed payment stifling members – NUP chair
The NUP chairman in Lagos State, Michael Omisande, explained that members of the union under the new contributory pension scheme were grossly affected.
He explained that when the 2004 Pension Act was adopted by the Lagos State Government in 2007, workers under the old scheme, Divine Benefit Scheme, were assumed to have retired in 2007.
“All our accrued entitlements since the 1980s when we started working, they were supposed to calculate and pay the money into our PFA account. That is what the law says but they did not do it,” Omisande said.
The NUPS-CPS chair noted that he retired in 2016 but got his pension benefits in 2019.
He noted that the exact amount of his accrued benefit from when he started working until 2007, when the new scheme was adopted, was what he was paid in 2019.
Analysts’ opinion
Investment analysts think pensioners could actually earn more from the huge pool of funds.
However, such claims must be taken with a pinch of salt as the PenCom Act specifies where the funds can be invested to guarantee safety.
A real estate investment analyst, Obinna Okechukwu, who spoke with our correspondent, said, “Pension savings may lead to deeper and more efficient capital markets. Pension savings directly increase funds in capital markets available for private investment. In addition, deeper capital markets may lead to better allocation of capital, thereby improving overall efficiency and economic growth.”
He implored people to make wise investment decisions at earlier stages of their lives so as to avoid the huge mistakes.
“Most people do not even realise they are making mistakes and continue to make those mistakes. Given that your pension will be invested in stocks and shares, there will be a fair bit of risk involved. Of course, if your pension investments do perform terribly for a while, the good news is that if you’re still far off retirement, thereis plenty of time for those investments to bounce back. What’s more, you will be able to acquire more shares for your money in a falling market. So, this may work to your advantage, but if you are approaching retirement and your pension scheme is performing badly, it can be extremely worrisome,” he said.
According to him, one of the biggest fears is also misappropriation of funds and terrible investment decisions made by those who control or have access to pension funds. “The big question is: do you have control over this pension fund? The sad answer is: no,” he said.
Still speaking about the funds’ management and the impact of inflation, he said, “Inflation on the other hand increases the prices of goods and services over time, effectively de- creasing the number of goods and services you can buy with money in the future as opposed to that same amount of money today.
“If your earnings remain the same but inflation causes the prices of goods and services to increase over time, it will take a larger percentage off your income to purchase. If your earnings remain the same but inflation causes the prices of goods and services to increase over time, it will take a larger percentage of your income to purchase the same goods or services in the future.”