For the entirety of its essence, PENSION is critically of importance to us all. Whereas the market delineation has created categories of ‘stakeholders’ from among us generally, there is not one of us, outside its influence; not minding the career path, duration of service, sector of service, profession, age, and sex profile…so far as you exist within the productive work age bracket. We are all going in the same direction of the aged; a period when we are either too old or too weak to continue working, and a time we need to be cared for.
The historical perspective, dimensions of engagement and evolution of its operations and essence, in schemes, all qualify for careful study. But importantly, it underscores the importance of pension to us all. In his paper (2015) – AN EVALUATION OF PENSION INDUSTRY IN NIGERIA – Dr. Adeoye Amuda Afolabi, noted that “pension is viewed as a sum of money paid regularly to a person who no longer works because of old age, disability or retirement, or to his widow or dependent children, by the state, former employer employers or from the provident fund to which he and his employer both contributed.” That definition adds to the weight and importance of pension…and we are all involved.
With the signing of the Pension Reform Act 2014 into Law, (since 1951 when the first ever pension scheme was inaugurated – the Pension Ordinance of 1951) the evolution pension industry has recorded about the eight major rework, in our journey towards a more profitable scheme or version of the initial concept of actualising social welfare scheme for the aged, tired and retired. The 2014 Reform, just signed into law, is particularly impressive for its robustness in its inclusiveness: it has effectively widened the scope of coverage in terms of participation, size of market and scope of business involvement.
Our interest is a little shift from the fundamentals of the ‘offer’ to the peripheral involvements of value-addition, with the context of commercial engagement by the industry players. Looking at the critical inclusions by the Reform Act 2014, authors of the new regulation could just be sharing same passion, in this regard: the pension industry must move in the direction of competitive engagement, within the full ambit of profit-driven competitive capital investment. From the ‘outside’, observers see the pension industry operators as a breed of pampered easy-go money earners. Beside the fact that the market is defined and held down for them, industry players (now, the Pension Fund Administrators, PFAs), are not challenged for competitive engagement towards growth in volume and value terms.
If we juxtapose the pension industry with the conventional commercial market environment where BRANDS play, the picture will be much clearer; while the one is faced with immediate gain or loss in direct reaction to the extent of their market-driven, customer-focused resource investment, the other is living a world of affluence which ‘real and opportunity cost’ is at the expense of the market’s buy-end. The law says we must be registered with a PFA of ‘our choice, we must contribute to a registered Retirement Savings Account (RSA), we do not have the option of calling back our contribution, till, of course, that time when we have become unproductive…and whatever our collective contribution is used for, has nothing to do with our preference or decision.’
So, pension industry players are seemingly insulated from the stress conventional brands’ face, trying to determine cost of investment versus market expectation, activities of competition, the risk of customer disapproval, cost of funds/resources, cost of human resources, the contribution of professional competences, and the separate trouble of brand development. Perhaps the difficult part for the pension industry drivers is raising the N1bn capitalisation, there-on, it is all jolly ride to easy earning in a robust environment of monopolistic protection; a defined market which target audience patronage is compelled.
The above is not our perception of insurance market, rather a representation of the general perception of the pension market by the public. In other words, contributors and other stakeholders are yet to measure the value of their patronage in valuable terms. If you ask many retirees, today, they would rather a free-will to determine the choice of options, in preparation for ‘old age’. We do not believe public perception is as a function of inappropriate value definition, because we think the details of the operating scheme is designed to adequately deliver on the core target market expectations.
But we also know that the totality of a brand’s offering compromises core and peripheral value delivery. The PFAs can add value to the quality and standard of living of their clients, who, perhaps due to ‘early retirement, are still strong enough to be productively engaged, by either individually or collectively investing in a manufacturing concern where such people can still be engaged after retirement. This is true of retirees from the armed forces sector; most of them retire at ages within which they are still strong enough to be gainfully and productively engaged. Most of them go in search of jobs requiring of their competences.
Our PFAs can add value in terms of human capital development. Except for those retirees with debilitating and failing health, majority of retirees crave creative and protective training opportunity that can keep them productively engaged till end of time; private training businesses, most with limited competences, take advantage of the business opportunity this class of retirees offer, to drive profitable competitive engagement, while the PFAs seat back and just ‘manage’ contributions from RSA holders.
The market is making demands on the industry players, beyond rationing their contributions to them. It is even more unsettling because most of them can imagine the marginal earning their collective contributions can attract if well managed, not to live more comfortably on the proceed from their savings, instead of their actual contribution (since nobody is opening the books to them). Too much is left to uninformed imagination to not expect odium from among the PFAs’ primary market.
Way forward, the PFAs have a lot of responsibilities to their target market in form of articulate information and communication. PFAs must build their brand personalities with responsibilities to their markets, as a rule. Brands communication and support is fundamental to the survival of any brand. If the legislation compelling patronage of pension industry operators loosens its grip, industry operators should be assured on market failure. That should inform their strategic thinking, from their present position.
There is too much of disaffection among Retirement Savings Account contributors, for the market operators to be comfortable; brand building, marketing communication and strategic target market engagement is imperative at this time. The missing link is the absence of professional brand managers in the mix for brand development in the PENSION INDUSTRY.