Posted by News Express | 12 April 2017 | 3,292 times
“A pension is nothing more than deferred compensation” — Elizabeth Warren.
The perennial problem with pension administration in Nigeria is not solely that of availability of funds, though very critical. The real challenge, especially under the Defined Benefit Scheme, was the appalling lack of records of pensioners - a credible database. This contributed largely to the crisis in pension payment, the issue of ghost pensioners, over-payments, duplicated-payments, etc. Against this background, how can the Federal Government make budgetary provisions for pensioners, when it doesn't know the number of pensioners and what is due to them? Absence of these critical data is at the root of the main problem, inadequate budgetary provisions. Thus, even when the funds are available, most times fraudsters got paid at the expense of the real people beneficiaries.
The Pension Transition Arrangement Directorate (PTAD) has had a checkered history. But thankfully, under Sharon Ikeazor, the agency is refocused and reformed, evidence that the challenges that confronted the organisation were “organised disorders” for the benefit of pension hawks. For once, there is empathy, sheer commitment, political will, zero tolerance for corruption, and planning. And this is what has made the difference. PTAD hasn't recruited new staff nor has it imported IT whiz kids from India. Rather, in collaboration with the Office of the Head of Civil Service of the Federation, last month the agency sacked some directors over irregular appointments.
Slowly, but surely, PTAD is building a credible data base of pensioners, through a pain-staking verification exercise. The seriousness that PTAD attaches to the verification exercise is indicative of its resolve to address the fundamental issue that has been an impediment to the smooth operation of the Defined Pension Scheme. Key is a credible database of pensioners that is cleared of all anomalies, including ‘man made’ ghosts. Once this challenging problem of documentation of pensioners was tackled - pensioners captured, ghosts weeded out and those retiring captured in a seamless fashion - the government will be well-informed of its obligations and it can plan. There is no doubt that a clean register of pensioners is critical to PTAD and the Federal Government as a credible voters register is to INEC.
The verification exercise of the police and para-military have thankfully been concluded and the civil service verification is being aggressively tackled. To date, a total of 55,400 have so far been verified. Zones so far verified include the North- east (the insurgency theatre), the South-south Zone, which from field reports a total of 21,123 pensioners were captured. The verification exercise for the Lagos, South-west and North-central zones is expected to commence soon. The directorate, according to Ikeazor, would round up the verification of pensioners by the end of the third quarter of 2017. It is a welcome development that in the course of the verification exercise, over 15,000 unverified pensioners have been weeded out of the payroll, saving government more than N90 million monthly. The story used to be padding of the list and not minus. And the good news is that the figure of “ghost pensioners” is expected to increase once the exercise is concluded.
PTAD at inception had inherited 160,000 pensioners. Presently, it administers about 223,000 from the four pension sectors - police, para-military, civil service and parastatals. This number is expected to increase as more agencies are de-boarded. The testimony by Mrs Kemi Adeosun, Federal Minister of Finance, that PTAD pensioners are treated with empathy, and are paid as at when due, is a recognition that the reforms embarked upon by the Executive Secretary are beginning to yield results.(There must be something about Anambra women and passionate commitment to public service. Sharon Ikeazor is another Dora Akunyili, who is now turning PTAD around, as Dora turned NAFDAC).
The new PTAD has conducted itself creditably, considering that it is not a funded pension scheme. Unlike the Contributory Pension Scheme, PTAD depends 100 per cent on budgetary allocation. PTAD is a funnel, as money doesn't pass through it to the pensioners. In line with its mandate, PTAD only submits a monthly payroll of pensioners to the office of the Accountant-General of the Federation (OAGF), for direct payment to the pensioners.
The House of Representatives’ intervention following a motion on “Urgent need for intervention in the current crisis of unpaid Pension Arrears threatening the lives of Nigeria’s retired senior citizens,” is welcome. But the House must address the critical issues - wealth creation. Toby Okechukwu, the member who moved the motion admitted that there were no provisions in the annual budgetary appropriation exercises for accrued benefits of pensioners, under the Contributory Pension Scheme and Defined Benefits Scheme (DBS).The implication is that the agencies are not to blame.
The picture is definitely ugly, especially under the Contributory Pension Scheme, where retirees since 2015 have not been paid their pensions due to the failure of the Federal Government to contribute its statutory share of 5 per cent to the Pension Redemption Fund, in line with the Pension Reform Act 2014, amounting to a total of N285,946,669,881.00. The picture under the Defined Benefits Scheme which includes the Police, Pensions, the Nigerian Customs Service, Nigeria Immigration Service, Nigeria Prisons Service, Civil Service and other parastatals, looks much better.
Now that the House is aware of the seriousness of the problem; and as Okechukwu rightly observed, the “delay in the payment of pension arrears has resulted in dire situations with many pensioners wallowing in penury, sickness, hopelessness and regret for serving their fatherland diligently, only to be abandoned by government upon retirement.” The question which he didn't address his mind to and which, if he did, would have helped move things forward is the reason (s) why the government is unable and would continue to have problems meeting its obligations to pensioners? How can government meet its obligations to pensioners with dwindling financial resources? The answer, as I said earlier, is wealth creation. So, no matter how efficient PTAD is, it cannot pay pensioners if the government doesn't make the funds available. The obligation on PTAD by law is to make budgetary estimates, to maintain a comprehensive database and to ascertain deficits in pension payments. On the part of the government, it must find the money.
Meanwhile, since the House of Representatives is touched by the plight of the pensioners, it can start by compelling the insurance companies that have bluntly refused to release the over N19 billion in their custody to PTAD. If it truly wants to come to the assistance of pensioners, this will be a good starting point. PTAD, by the Act, is mandated to take over pension assets, funds and liabilities of erstwhile pension offices and boards. While the insurance companies were quick to transfer liabilities, with the exception of Leadway Assurance, the others have been lukewarm in transferring assets. N19 billion in the hands of PTAD will no doubt help in reducing the pension crisis.
The other challenge before the National Assembly is to deepen the reforms of the Pension administration. Budgets are estimates of revenues, which most times are never met, and there are competing demands on the scarce resources. While expenditure are constantly increasing, the PenCom Fund has about N6 trillion. But it can only be invested in treasury bills and bonds due to the law. To date, about N4.13 trillion, about 70 per cent of the over N6 trillion have been invested in government bonds and treasury bills, due to their security and high yields.
For a country with huge infrastructure deficit, the pension funds represents a source of long-term funds that can be used to finance and renew infrastructure, as Brazil did. The National Assembly should urgently amend the law. An intelligent reform package, that will unleash the more than N6 trillion ‘idle funds’ on the economy is critical. The amendment must take another look at the regulatory framework and expansion of the areas of investment.
Unless the economy is grown, if Hon Okechukwu returns to the House in 2019, he will find himself moving the same motion in 2021, about the plight of pensioners. The House must not play to the gallery. And the time to avoid the likelihood of such a motion is now.
•Emmanuel Ado writes from Kaduna. He can be reached via firstname.lastname@example.org
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