PenCom: Need to Avert Another

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By Lukman Isiaku

Virtually every sane and patriotic Nigerian is shuddering and cursing over the audacity of corruption and impunity called Mainagate. But, unless the impunity and cronyism visited on the pension industry by the illegal disbandment of the Management Board of the regulator, the National Pension Commission, PenCom, is looked into, another Mainagate may well be in the making.

Whereas efforts by President Muhammadu Buhari and the National Assembly to get to the root of Mainagate in line with the anti-corruption stance of this administration are highly commendable, the real test of effective laws and anti-corruption war is the capacity to prevent crimes/corrupt practices.

It was in this spirit that the Chief Olusegun Obasanjo administration embarked on an elaborate pension reform to reposition a broken, debt-laden, and corrupt pension system bequeathed by the military in 1999. He set up the Presidential Committee on Pension Reform headed by Fola Adeola. It also included the recently removed Director-General of PenCom, Mrs. Chinelo Anohu-Amazu. It understudied global best practices and drafted the Bill that eventually became the Pension Reform Act (PRA) (2004 amended in 2014).

The Contributory Pension Scheme (CPS), which is the hallmark of the reform, has run smoothly without traces of corruption. The only hiccup is the failure of the FG to foot its pension liabilities. But, true to his words, President Buhari is already clearing those liabilities, including the ones he inherited.

Unfortunately, until a few years back, the Defined Benefit Scheme (DBS) or old pension scheme operated by the Pension Departments- Civil Service Pension Department; Police Pension Office; and the Customs, Immigration and Prisons Pension Office (CIPPO) remained the covens of the pension witches and cabals.

Rather than reduce, DBS pension bills kept increasing even though there were not supposed to be new entrants and the senior citizens were not growing younger. Ghost pensioners were used to syphon the funds while the real pensioners continually died queuing for endless verification exercises for benefits that hardly came.

For instance, in 2013, former Assistant Director in the Federal Civil Service, John Yusuf, admitted and was convicted of stealing N2 billion directly linked to him in a N32 billion-pension theft trial he was standing along with three others. He also forfeited a N325 million property.

It was such orgy of looting in the federal Pension Departments that the Abdulrasheed Maina-led Presidential Task Team on Pension Reforms was supposed to expose and end. Unfortunately, Maina, who started well by uncovering mind-boggling lootings, saw big money and allegedly succumbed. A Joint Committee of the 7th Senate indicted him of multi-billion naira frauds.

Meanwhile, the looting in the old pension scheme was possible because of loopholes created by the delay in activating the Pension Transitional Arrangement Directorate (PTADs) as provided in PRA 2004 (as it then was) to consolidate the activities of the various Pension Departments and ensure benefits of retirees under DBS are be centrally managed and transmitted directly to their individual accounts.

The delay can be attributed to the fact that reforms take time to implement. Also, since the corruption in the Pension Departments served the interest of pension cabals and their masters in high places, plugging the slush funds would naturally incur the wrath of people of enormous influence and cash. It takes a powerful backing for Maina to defy the 7th Senate, storm Senate with a police battalion when he eventually appeared, suddenly become invisible once wanted by the Economic and Financial Crimes Commission (EFCC) and Interpol’s Wanted List, fly out and back into the country, get reinstated, get double promotion and paid arrears for work not done.

It took a woman of integrity with more than a lion’s heart like Mrs. Anohu-Amazu to tread in the jungle that even the lions feared to hunt. As a member of Fola Adeola Committee that reformed the pension industry and pioneer Commission Secretary and Legal Adviser of PenCom until her appointment as Acting DG in December 2012, she immediately ensured PTAD was activated in 2013. The FG appointed Ms. Nellie Mayshak the pioneer Executive Secretary of PTAD to man the smooth transition of the three Pension Departments into a single pension administration and management under the supervision of PENCOM.

She also made the proper establishment of PTAD a cardinal object of the pension Act amendment she championed. With PTAD in place, pensioners under the scheme are being verified and settled. Employing technology, bank accounts of verified pensioners are tied to their biometrics in PTAD’s databank. Although PTAD have not been administered to expectation, the nation has put in place a law and system that prevents such and away from the era of Mainagate.

As for the Contributory Pension System (CPS), there has not been a single fraud because the Pension Act ensures that Pension Fund Custodians (PFCs) cannot administer the fund, while Pension Fund Administrators (PFAs) do not have access to the money.

Therefore, the successes recorded in the pension industry have been rightly hinged on solid law and stable and fearless PenCom leadership that has given rise to effective regulation. Section 20(1) and (2) of the Act safeguards PenCom leadership from disruptions in and uncertainties that come with change in government. The positions of the Chairman, DG, and Commissioners (Management Board) are statutory appointments confirmed by the Senate. The first DG, Mohammad Ahmad, served out two terms under Obasanjo, Musa Yar’Adua, Goodluck Jonathan.

Ten years down the line, Obasanjo underscored the essence of the continuity and stability in 2014 when he appreciated Yar’Adua and Jonathan for “not reversing the Pension Act because in a country like ours, for us to make progress, we must build accumulatively on measures, on structures, and where necessary, like have just been done, make amendments”. He confessed that nobody, including himself  “could imagine that within a space of 10 years the fund would have built up to USD27 billion of cool money, not hot money”.

By April 2017, Anohu-Amazu-led Management Board had nurtured the pension fund to over N6.5 from 2.9 trillion she inherited in December 2012. PenCom and Nigerian pension industry players had also consistently come tops at the African Pension Awards.

It is, therefore, not surprising that concerns continue to rise over the disbandment of the Management last in disregard of the law.

As states, the essence of making the appointment of PenCom Management Board statutory and with a defined term is to ensure stable leadership and make the appointees to feel secure to work in public interest.

Although Section 21(1) spells out conditions under which a member of PenCom Management Board may cease to be in office (like resignation, death, bankruptcy, unsound mind, removal by the President, etc.), it neither contemplates nor approves a holistic disbandment of the PenCom Management Board.

Not only were the performing Board illegally and entirely disbanded, Mr. Funsho Doherty was nominated as new DG of PenCom even when Section 21(1), Section 21(2) clearly provides that “In the event of a vacancy, the President shall appoint a replacement from the geo-political zone of the immediate past member that vacated office to complete the remaining tenure”.

The implication of the emerging scenario is grave for the pension industry. It is a clear recipe for another Mainagate because a leadership imposed at the expense of the law guiding the pension industry, will also act in disregard of those laws, including laws guiding pension fund/assets, to further the interests of its benefactors.

 – Isiaku writes from Jos