Mr. Samuel Banji Abolarin is the Managing Director/CEO of NLPC Pension Fund Administrators Limited.
In this interview with Nairametrics, he gives an insight into the verification and recaptures process of retirees and RSA holders respectively by PFAs.
Abolarin also mentioned the need for retirees under the old pension scheme to continue to go for verification. According to him, the nature of the arrangement under the old pension scheme requires constant verification, so as to ascertain if the retiree is still alive or dead.
One of the major complaints of old retirees is constant verification, what is the need for this?
In response to this question, Mr. Abolarin shared an experience to clarify the need for constant verification. He said, the old men and women in the villages that go for verification every year have been in this for many years and what led to this is that the old pensioners are expected to fill a form called “I AM ALIVE”.
According to him, that is the name we call it because of the peculiarity of Nigerians, not being truthful to ourselves. And if you are not truthful to yourself you can never be truthful to another person, causing more distrust amongst ourselves.
In those days, when you become a pensioner under the old law, pension was guaranteed for five years and thereafter for life. What this simply means is that when you retire as a civil servant, whether you are alive or dead your pension will be paid for the first five years after your retirement.
For example, if someone dies two years after retirement, the three years balance will be paid to the beneficiaries. However, if the person dies at the sixth year, beneficiaries of such a person will not be entitled to anything.
Unfortunately, family members took advantage of the process by not reporting the death of the pensioner long after their demise so as to continue enjoying the monthly income at the expense of other retirees. This led to a large pool of ghost pensioners, hence, the need to fill the “I am alive” form.
This process is still ongoing as there are retirees who are still under the old arrangement.
Are there PFAs under the old law?
There are no PFAs operating under the old pension arrangement. The federal government established a body called the Pension Transitional Arrangement Directorate (PTAD).
The directorate is charged with overseeing those that are under the old arrangement, so till kingdom come they will continue to fill the I am alive form until the last person under the arrangement dies.
How does the new pension arrangement work?
Under the new pension arrangement, the issue of “I am alive” every year does not arise, because you now have an account with a PFA of your choice.
For better understanding, it is like you opening an account with a bank and your money is going into that account monthly. At this point, the government believes that its liability towards you does not go beyond what is being remitted to your RSA monthly.
Hence, in the new arrangement, any possible issues in the future is going to be between the RSA holder and the chosen PFA.
On the other hand, it was never like that under the old pension arrangement, that is the reason I used the word, “till death do us part” to describe the old arrangement.
With the new PFA law, the industry regulatory body, PenCom has authorized the minimum pension guarantee (mpg) for pensioners that may exhaust their funds under programmed withdrawal.
What are DB Schemes?
Defined Benefit schemes are pension arrangements in which the amount you are paid is based on how many years you have been a member of that employer’s scheme and the salary you have earned at the time you exit that employment or retire.
The nature of a DB (Defined Benefit) scheme is such that a person’s pension is payable till death. In other words, if you continue to pay for somebody who is deceased, it depletes the fund and is a punishment to those that are still alive.
So, for anybody under the DB scheme, such an arrangement is still necessary. Note that we want to help this fund so that nobody is a parasite on this fund. The idea is that we can’t continue to pay somebody that is dead, because that arrangement suggests that those working are funding the people receiving benefits, so when they retire, another set of people will be working to fund them.
Therefore, the continuous funding of dead pensioners is morally wrong, which is why it is essential that the family members report the death of any retiree. It is in the interest of the fund and in the interest of those that are still living.
How do you adopt technology to help make verification easier?
Technology has really assisted in the process of verifying pensioners under the contributory pension scheme. In a more digitalized environment, video calls are used to verify pensioners living abroad. We have also deployed a mobile app called PenSmart, which has helped our services to our clients.
We also use our social media channels for ease of communication, which has equally helped as a feedback mechanism between our firm and clients.
We understand that the Nigerian population is quite large and our pension penetration is still low. What is your firm doing to improve this?
At NLPC PFA, we have tried to ensure that we establish our presence in most locations in the country. I can say for a fact that currently, we have the highest number of branch networks across the country.
Notably, we have 20 stand-alone branches across the country. Specifically, we have 4 branches and 16 service centres located in strategic areas in the country, all in a bid to bring pension service closer to everyone.
Interestingly, we have a service centre in Maiduguri despite the insurgency in the area, and we attend to our customers over there.
Currently, we have approximately 400,000 registered contributors across the private and public sector of Nigeria, and we are not stopping. It is our mandate to manage the wealth of our contributors in the best way possible and in line with the guidelines of the regulators.
We have also adopted the use of technology in expanding our reach and making pension services seamless for our clients.