The National Assembly Joint Committee on Pension Reform took the war against corruption in pension administration to a higher level with the introduction of the “fit and proper person” test in the Pension Reform Bill, 2013.
The proposal in Executive Bill to reduce the 20 years of experience for the appointment of the National Pension Commission’s (PENCOM) Director-General and the introduction of the ‘fit and proper person” test by the National Assembly are recognitions by both arms that 20 years experience requirement is flawed and has not served any useful purpose in pension administration. Not with the chilling revelations of looting of billions of pension funds mostly by persons with over 20 years experience.
The debates about pension reform bring back memories of the gory pictures of pensioners I constantly saw some years back under the Zone 3 pedestrian bridge in Abuja. The poor old men were hit by the sun and beaten by the rain. They lived, urinated, defecated, ate and slept under the bridge. They were then alleged to be military pensioners. Many of them starved and fell sick, and some were said to have died. It was a glaring case of man’s inhumanity to man!
Today, however, the Pension Reform Act (Amendment) Bill recently passed by both chambers of the National Assembly gives one hope that better days are here for pensioners. The Pension Transition Administration Department (PTAD) arrangement, under the Pension Reform Bill 2013, will, among other things, ensure the security of pension funds and direct payments of pensioners’ money into their accounts. In fact, I commend President Goodluck Jonathan as well as the audacity of the Acting DG of the National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu in activating the PTADs and pushing through further legislative steps to properly establish them.
Back to the “Fit and Proper” requirement, it is a great masterstroke from the House of Representatives. In the wake of the massive fraud, scam and looting of billions of pension funds, which the Senate President, Senator David Mark, rightly termed “Blood Money”, we need “fit and proper” persons to run PENCOM. Those who opposed it and insisted on 20 years expereince argued either out of ignorance, mischief, or selfish interest.
The concept of “Fit and Proper Person” is applied all over the world; from Europe, Asia to America, etc, to select those that will run sensitive financial institutions like PENCOM. From the 1860’s when the British colonial administration introduced the English legal system in Nigeria, one of the criteria for being admitted as a lawyer, solicitor and advocate of the Supreme Court of Nigeria, beyond having academic qualification, is that you must be a “Fit and proper person”. This requirement has been sustained and held sacred over the years by the Council of Legal Education and the Nigerian Bar Association.
“Fit and proper” means that you must maintain standards of honesty, integrity and professionalism, and must not pose a risk to the public. The aim of the fit and proper test is to prevent unsuitable people from running a Financial Service Business or a Trust. Around January 2013, the Central Bank of Nigeria introduced the biennial “fit and proper” test for Bank CEOs as part of its efforts over the years to ensure that only “fit and proper persons” are appointed into top management positions in banks and other financial institutions. Therefore, you can be fired at any point you are found unfit and improper.
In Nigeria’s contributory pension scheme, the fit and proper test will exist to protect the interests of contributors, investors or beneficiaries whether actual or potential because fitness and properness encompasses honesty, integrity, reputation, experience, competence and the ability to conduct business or pilot the affairs of an organization.
Instructively, those who allegedly looted billions of pension funds in the Head of Service had over 25 years experience! While I praise the Senate for heeding the clamour by pension stakeholders to lower the years of experience for the position of PENCOM DG, it is surprising that it retained the 15 years proposed by the executive. Luckily, the House of Representatives plugged the loophole. The House version states that “ persons to be appointed to the office of the Chairman of the Board of PENCOM, the DG and Commissioners shall be fit and proper persons with adequate cognate experience in pension matters”.
I advice both chambers to retain the House’s version during harmonisation of the Bill to raise the stakes in pension administration and give further teeth to President Jonathan’s efforts to rid pension administration of old pension thieves.
Importantly, the National Assembly in adopting the “fit and proper” clause, should stipulate proper guidelines for its application and enforcement to avoid any abuse. In all, the NASS deserves a pat on the back.
Obiora Obeagu, a lawyer, wrote from Abuja