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 pension contributors respectively by the pension fund managers.
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 oil pension schemes 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?
Let me share this experience so we won’t mix two things together. The old men and women in the villages that are going for verification every year, I have been in this for many years and what led to this is that the old pensioners were supposed to fill a form we use to call “I AM ALIVE”.
That is the name we use to call it because of the peculiarity of Nigerians, we are not truthful to ourselves and so if you are not truthful to yourself you can never be truthful to another person, so everybody is a suspect and everybody is a liar, and I will never believe whatever you are telling me is the truth.
So, in those days when you become a pensioner under the old law, pension was guaranteed for five years and thereafter for life, what that simply means is that when you retire then from the federal government, whether you are alive or dead your pension will be paid for the first five years after your retirement.
This means that if somebody dies two years after his retirement whatever will be the balance for the three years left will be paid to the beneficiaries, but at the end of the sixth year, if the person had died, such a person will not be entitled to anything again.
Therefore, in those days when somebody dies ten years, twenty years after he has been receiving pension because the family believes that if we report this case that might be the end of the income that is coming to us, so they would prefer to keep quiet and that was why the government had a lot of ghost pensioners, and so to avoid having ghost pensioners that were when the issue of GO AND SHOW YOURSELF TO SHOW THAT YOU ARE ALIVE.
I am alive is still part of the things that is still going on under the old arrangement because some people are still under the old arrangement.
Are there still PFAs under this old law?
There are no PFAs, the federal government established a body called the Pension Transitional Arrangement Directorate (PTAD). That is the directorate that is in charge of 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 dies because that is the nature of that arrangement and as I told you, it is just because we are not sincere.
Of course, if you have earned pension for fifteen years for example, more than the time guaranteed, what stops your family members from reporting that please don’t pay this person’s money, he/she is dead but the money keeps going to his account and somebody is seeing It as a windfall or national cake.
They see it as a usual thing not to report the person’s death and so then the government says that please everybody should come and confirm their status. Whether the government has good intentions or not is a different matter entirely but that is the nature of that arrangement.
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 opened an account with a PFA of your choice.
It is like you opening an account with a bank and your money is going into that account every year or every month so now government now believes that its liability towards you does not go beyond what it is contributing to your pension on monthly basis.
Hence, in the new arrangement, the problem you may have in future has to do with you and your PFA, you don’t have anything to do with the government again. So, as a government, if I like I may not even allow you to come to my office because I don’t have anything to do with you again, I am done,
Under the old arrangement, it was never like that, that is the reason I used the word, “till death do us part” to describe the old pension arrangement.
With this new PFA law, you arrange a program withdrawal that is guaranteed for a period of time, you have an account and when the money gets exhausted, (you are on your own). Hence, the issue of come today come tomorrow does not occur, except for the DB schemes.
What are DB Schemes?
Defined Benefit pension 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 that employer or retire.
The nature of a DB (Defined Benefit) scheme is that when somebody’s pension is payable till he dies. If you pay for somebody who is no longer in existence, you are depleting 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. Then now say look, we want to help this fund so that nobody is a parasite for this fund, we can’t continue to pay somebody that is dead because that arrangement is saying that it is the people that are working that funds the people receiving benefits, so when they retire too another set of people will be working to fund them,
Therefore, we cannot just continue to fund the people that are dead so it is morally right to report to say that this person is deceased please remove his name, 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 new pension arrangement. With the advent of social media, we have even deployed video calls for some people who live abroad, by calling them, without necessarily saying we are verifying, because many might not want to constantly fill out forms.
Although despite the adoption of technology, pensioners under the old scheme will continue to fill the “I’m alive form” it must be done and you can see the background is just because we are not being sincere if it had been a country where we had good records when someone dies, it will surely be reported but here no we do not have good records of birth not to talk of death.
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 Pension Fund Manager, we have tried to ensure that we establish our presence in most areas in the country. I can say for a fact that currently, we have the highest number of branch networks across the country.
We have 20 branches across the country, not seating on banks. Notably, 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 40.