As agitations and allegations of mismanagement and embezzlement of pension fund under CPS mounts, industry analysts said the situation could only be addressed by education and awareness, Ebere Nwoji reports.
Recent threat by the Nigerian Labour Congress (NLC) to embark on industrial action on account of alleged government’s mismanagement and sidelining of workers and employers in the management and investment of their pension contributions, is a testament to the high level of ignorance and lack of trust by Nigerians on the managers and workings of the Contributory Pension Scheme( CPS) .
It has also spelt the need for the regulator, National Pension Commission(PenCom) to lead the sector operators on the onerous task of instituting periodic awareness campaign that will update Nigerians’ knowledge and understanding of the workings of the CPS and the role of various actors in the management of the pension fund.
Apparently, the CPS which Nigeria adopted from Chile had in June this year clocked 21 years but many Nigerians except few who have one thing or the other to do with the regulator are totally ignorant of the workings of the scheme, the benefits and the sacrosanct nature of the fund.
These are the reason for frequent allegations on mismanagement of the funds and PenCom cannot continue to ignore these voices.
This high level of ignorance transcends the contributing workers to even the political class including those appointed as members of various pension committees in government.
Even some media managers and their reporters and pension programme presenters are not immune from this problem of lack of awareness on the CPS scheme.
Media, law makers ignorance
In one of the pension discourse last week on a popular television station, the manner in which a highly respected presenter in the station who has doctorate degree spoke about mismanagement of pension funds under CPS showed clearly that penCom still has a long way to go in the challenging task of educating Nigerians at all levels on the modus operandi of the CPS .
From the presenter’s line of argument, many are yet to understand that PenCom did not just heap the over N23 trillion pension fund in one place and be spending it at will, allowing people to draw from it or staking it arbitrarily to any portfolio of investment of its choice.
As earlier stated, even among the law makers on whose predecessors’ table the Pension Reform Act 2004 amended in 2014 was drafted, there is also high level of misunderstanding of the system .
Two years back, THISDAY reported an incident that happened at a retreat organised for members of house of representative committee on pension and members of House Committee on Establishment and public service.
Their furious mood at the retreat on account of alleged mismanagement of the pension fund, their accusations and counter accusations on PenCom and Pension Fund Managers on embezzlement of the pension funds shows that they need clarification on how the fund is being managed and on whose custody it is as stipulated by the law.
They made it clear to PenCom that in most cases, Nigerians see PFA managers as people who sit in executive air-conditioned offices enjoying workers’ hard earned money. As such, they don’t so much believe what comes from the PFA managers.
Obviously, these set of people alleging embezzlement of the pension fund lacked knowledge of the fact that neither PenCom nor the pension fund administrators have access to the fund.
They are also ignorant of the fact that PenCom cannot determine where to invest the funds rather institution called Pension Fund Custodians (PFCs) are the ones vested with powers to decide with the directive of the law where to invest the funds that is why the fund is shared into different asset classes for investment.
To crown this high level of misunderstanding of the CPS, the former Chairman of House of representative Committee on pension, Husaini Mohammed Jallo, in some paragraphs of his good will message at the retreat said “ Retirees under CPS are said to be allegedly suffering from the exploitation and rip off under the guise of managing their benefits and entitlement. In 2004, retirees were compulsorily asked to join the CPS operated by the Pension Fund Administrators (PFAs) under the control of PenCom, by virtue of 2014 amended Act, the narrative of retirees plights under the CPS does not change the situation any better. The narrative is that CPS denies them having greater share of lump sum after retirement and dispenses a paltry monthly pension to retirees across the board under this scheme.”
In conclusion he said “ Retirees under this scheme worked for their life-saving benefits while those collaborators (referring to PFAs) under CPS enjoy their hard earned benefits in the name of investing their funds for them.”
But at the end of that retreat, his orientation on CPS was reasonably changed because teaching and learning on CPS actually took place at the retreat and all went back happily.
PFAs awareness campaign
Against this backdrop, the PFAs proposed a major marketing and awareness campaign that would affect every body in Nigeria and cause people to understand the operation of the CPS scheme and the benefits and encourage the self employed to key into the Micro pension scheme enmass.
However this laudable dream of the PFAs was not encouraged and championed by PenCom authorities as a result it went down the drains. It was shortly after this that police agitations for exit from CPS heightened.
NLC agitation
Now, the NLC has started its own agitation and accusation on mismanagement of the fund and PenCom not carrying workers along in the investment of their contributed funds as if all workers are investment experts. They have said that if nothing is done they would stage a show down that will shake the country.
Though PenCom has in a very lengthy letter in reply to the NLC’s accusation signed by its Acting Director of Corporate Communications, Ibrahim Garba Buwai, described the allegations as incorrect, gravely misleading and surprising, assuring NLC that all pension contributors and retirees pension contributions remain safe and secured.
He further explained that the Commission did not directly invest pension funds. Instead, licensed Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) have been assigned to manage and safe-keep the investments under strict regulations and supervision. This goes to show their low level understanding of the CPS system.
Part 11 subsection 54 of the PRA 2014 says,”From enactment of this Act, pension fund shall only be managed by Pension fund administrators under the act.”
Sub section 56 of the act says “Pension funds and assets shall only be held by pension fund custodians licensed by the commission.”
Question before PenCom
But the question remains, for how long will PenCom continue to play this defensive role all the time. Is it not better for the commission to embark on offensive activity of carrying awareness on the scheme even to the door step of every Nigerian worker and stake holders in pension?
Experts in marketing said the commission should do this by embarking on awareness creation through various education programs using the media and organising seminars,workshops and periodic meetings to enlighten various stakeholders on CPS .
Sector stakeholders said there is need for PenCom to align with PFAs and resurrect the proposed campaign which the former regime in the commission swept under the carpet.
Analysts’ view
Analysts urged the present PenCom Director, Omolola Oloworaran, not to assume that at 21 years, everybody in Nigeria should have been conversant with CPS, rather should employ every possible publicity means to continue to push information and education on the CPS until all have come to the full knowledge of the system. This will definitely engender public trust on which the pioneer Director General of PenCom, Muhammad Ahmad challenged operators and the commission at one of the workshops for law makers in Lagos.
The analysts warned that if not, with this level of ignorance and agitations, in no distance time, new group of law makers could rise up and evolve another pension system to replace CPS since majority of the contributors have negative views about the CPS scheme.
The analysts said the commission should not make the mistake of thinking that the CPS has come to stay and ignore these yelling voices. They warned that after all former president Obasanjo who introduced the CPS scheme with his law makers have exited from power and given the Nigerian system, “another president could come up tomorrow with another set of law makers and decide to enact fresh law on a new pension scheme.”
This and more are the reasons why the analysts insisted that PenCom should work harder on educating the masses on CPS to boost their understanding of the scheme and engender trust among them.
They recommended that PenCom should not ignore or jettison some “training the trainer” programme like the annual media retreat instituted by the pioneer Director General of the commission, Muhammad Ahmad, education of relevant bodies like the NLC and house of reps committee on pension.
They said the commission should even extend this campaign to universities who apart from being part of the system are producing future workers who will contribute to the scheme.
PenCom, the analysts said, should periodically organise sensitisation programes for workers in various sectors of the economy.
They said though the commission sparingly does this, given the situation on ground, it should intensify efforts in this regard.
They said PenCom should borrow a leaf from what insurers are doing in their efforts to deepen insurance penetration in the country.
The insurers went to the extent of writing books on insurance and distributed to secondary schools and universities.
They even organised tutorials lessons for secondary school teachers to ensure insurance is accommodated in school curriculum.
They even lobbied government to include insurance in the curriculum of schools .This they did in their “Catch them Young “ programme for the youths.
The analyst urged the current Director General of PenCom to realise that all is not yet well for the pension sector but should roll her sleeves and tackle this obvious ignorant and hostility of Nigerians towards the CPS.
On his part, the Former Director General, (PenCom), Muhammad Ahmad, said the micro pension segment market of the sector needs to be tapped in order to bring every Nigerian in both formal and informal sector into pension coverage.
He said pension operators have a lot of work in this regard, insisting that large chunk of their work is in the area of conviction and building trust.
He said operators’ starting point in tapping the opportunities in the informal sector is analysing the market, building trust among contributors lack of which is playing up in the agitation of some contributors to be allowed to exit the CPS while others like NLC are threatening show down if not carried along in the investment of pension fund.
Sector stakeholders said the DG should speed up action on education to douse this dust on pension fund mismanagement and embezzlement which though lacked proof should not be ignored because these people can through their agitations throw spanner at the wheel of penCom’s progress.
Obviously at 21, industry watchers have given pass marks to both PenCom and the operators for growing the fund to the present level of N23.86 trillion as of February 2025. They however said sustainability is key and that efforts should be made towards sustaining this progress through building trust on the part of the public.
