STORIES BY VICTOR AHIUMA-YOUNG

The Pension Reform Act, PRA, 2004 is being reviewed. As a member of the National Assembly, how far has it gone as workers are asking for upward review of the contributory ratio instead of the present 50-50?

Well, it has gone far. The issue of contribution is a major area of concern to us. We are looking at the feasibility of that option where employers will contribute more than workers should contribute.

But whatever we are doing we are mindful of the fact that some of these things can push up new issues like retrenchment and things like that.

So, we will not do anything that will be an  incentive to unemployment or disincentive to investment itself so  we try to find a point between them.  It’s pretty difficult but we will do all that we can.

The review is necessary because after a decade of implementation of the past Pension Act, the time is ripe for a review so that some of the identified loopholes and grey areas can be properly fixed so that we can now have a piece of law that addresses reasonable percentage of our challenges, if not all.

The issue of old retirees that are not covered by the contributory pension scheme, especially from the federal civil service where   pensioners are not paid, but some dubious public servants steal money meant for the payment.

Is there any effort to ensure that legally, more supervision  is done,  especially through the National Pension Commission, PenCom?

Well,  I look at this from a practical point.  By the 2004 Act two regimes were created, the regime of Pension Fund Administrators, PFAs, and then the Closed Pension Scheme which was particularly for those who have been in employment for so many years and never made contribution and have few years to go. I happen to benefit from that as a retiree.

The generation of PFAs is where people do 50-50 contribution. Now  it is true  the management of the closed pension funds in the public sector is  characterized by a number manipulations and fraud. But for some of us, we believe that the solution to it is not to merge them or   to migrate all of them to PFAs because it is difficult to actually determine what will now be accruable to individuals.

In the PFA regime or dispensation, you get what you contributed. Now these people did not make contributions. For instance, I did not make contributions; SPDC made all the contributions for workers at that time.

Now for such category of people you get your pension until death. If you now migrate from that arrangement to the PFA arrangement, how much are you going to put in stock for them because there must be some value attached to it for every individual? How do you determine that?

That is going to be pretty difficult. Secondly, you don’t change a policy simply because there are challenges. You seek to address those challenges first. It is not when they become more or less difficult or impossible to ameliorate that you begin to think of a total change.

So, I still have my fears that even if we decide to migrate all of them to PFAs, new challenges will arise and it will not solve the problem. So, it is better to fine-tune the existing arrangement and see how the loopholes can be plugged and then sanity is assured in their management of such schemes.

I know for instance that there is the Police Pension Scheme.   The government is making effort to bring in a more credible administrator with a pedigree who has done it elsewhere, who is capable of transparently managing it.

I think that is the kind of approach that I personally expect from government rather than thinking of how to migrate.

If you have to migrate such funds for instance, what are you going to do to Nigerian National Petroleum Corporation, NNPC? What are you going to do to other organisations that have been able to effectively and efficiently manage their own?  So, if you do a blanket policy of migration of public sector closed pension funds, you may be undoing these kind of organizations….. it will be a disservice to retirees in this category.

Can’t they be brought under the supervision of the National Pension Commission, PenCom, so that they can be reporting to commission directly?

There is no one that does not report to PenCom. Presently, they all  report to PenCom, I don’t think that there is any pension fund  administrator or custodian that does not report to PenCom; I don’t think so.

They report to PenCom, but it might not be there to audit them on a daily basis.  So, we should focus on auditing and ensure that if you are saying that PenCom should over sight more frequently to ensure that they audit, maybe once in six months or annually, that makes more sense to me.

But I don’t think that the problem is with the present structure, it is not. The problem is with us because we have very fraudulent people, because we have a thriving culture of fraud. That is the problem.

Is it possible to know when the amendment will be through with?

I can’t predict just now because I know that it involves a lot of processes and we have  a lot of work to do. So, what I know is that no effort will be spared in ensuring that all the loopholes are plugged for a better legislation.