‘Why PenCom could not curb corruption in pension departments’

‘Why PenCom could not curb corruption in pension departments’

Chuks Udo Okonta

Pension funds are released to the pension departments for payments of pension benefits by the government without recourse to the National Pension Commission (PenCom) its Director General Mohammad Ahmad, has said.  

In a statement Ahmad said this has resulted in the lack of external independent review that could serve to authenticate the accuracy of pensioners’ entitlements determined by such budgetary estimates, thus ensuring that pensioners are not underpaid or on the other hand, that government liability is not overstated.

He noted that the commission has inadequate supervisory control over pension department, adding that pension departments had operated within their parent Ministry, Department and Agencies (MDAs), with same administrative/operational structure.  This arrangement he said weakened the regulatory and supervisory oversight of the commission over the pension departments due to lack of centralization of the oversight functions.  He noted that this has resulted in a situation where the commission is unable to exert supervisory control over the pension departments as they do not regard the commission’s supervisory role over them, a clear violation of Sections 30 to 38 of the Pension Reform Act (PRA) 2004.

He noted that in accordance with the provisions of Section 30(3) of the PRA 2004, the pension departments are required to render returns to the PenCom on monthly pension payments, deceased pensioners and other activities such as verification exercises carried out, etc.  He said several efforts, such as reminder letters, telephone calls and follow-up visits have been made by the commission to the pension departments with a view to ensuring their compliance with these statutory provisions, adding that pension departments hardly render these statutory returns to the Commission. 

He said the military pension board which hitherto rendered returns consistently stopped it since June 2011, stressing that these returns would have assisted the commission in carrying out its supervisory role over the pension departments effectively. 

He said: “Yearly pensioner verification exercises have been institutionalised by the continuous budgetary allocations to the various Pension Departments towards such exercises.  This appeared to have provided an incentive for each of the pension offices to carry out verification exercises yearly. In addition, the exercises were centralized in state capitals or few chosen locations, which made it difficult for the aged pensioners to travel long distances to be verified. Indeed, some aged pensioners have lost their lives in attempts to be verified or risked losing their pensions.

“Inadequate logistics support has been one of the challenges that have rendered pensioners’ verification exercises cumbersome resulting in a good number of the pensioners being reluctant to turn up for the exercises at scheduled dates. Furthermore, the preliminary assessment of the Pension Departments carried out by the Commission revealed that some of the Pension Departments failed to update their databases with the outcome of such exercises. 

“Although verification exercises are carried out annually by most Pension Departments, the incessant complaints of non-payment, short-payment and non-harmonization of pension benefits had continued to inundate the Commission, which is indicative of the ineffectiveness of these exercises.

“Preliminary assessment of the Pension Departments carried out by the Commission in 2010 showed that some Departments had no proper archiving system in place, especially the Civil Service and Police Pension Departments.  Retrieval of pensioners’ files when needed was an arduous task.  Most of the Pension Departments do not have biometric database of their pensioners.

“The pension payment arrangement for Parastatals pensioners involved payments from the Budget Office (BOF) to insurance firms, which in turn released such funds to the Board of Trustees (BOTs) of the Parastatals for onward payment to the pensioners.  The Scheme has so far faced serious implementation challenges, including insufficient funding, diversion of pension funds by the insurance companies, inadequate documentation maintained by the BOTs and consequently, lack of accountability.” 

Ahmad said Pension Desk Officers (PDOs) of the MDAs are incessantly changed at will by institutions, which made it difficult to keep track of records. He noted that this situation was further compounded by the absence of proper handing-over leading to truncation and lack of institutional memory, adding that the situation was even made grave by the lack of basic skills required to effectively man the desks as there was an observed dearth of requisite knowledge leading to improper appreciation as well as application of basic skills for the computation of pensioners’ benefits. 

He said in a bid to address the above challenge, PenCom has commenced regular training and capacity building for the desk officers across the nation with a view to upgrading their skills in the emerging scenarios.

He said inadequate Information Communication Technology (ICT) infrastructure remains of the problems of the pension departments, adding that most pension offices are not adequately automated.  He said they do not have sufficient personal computers with adequate hardware and network configurations and that they do not also have the capability to capture and maintain a robust pensioner database with biometrics (i.e. photos and fingerprints) or detect multiple/duplicate pensioners’ records and generate reports analyzing the database.

He noted that except for the military pension board, none of the pension offices had a reliable off-site back up arrangement and disaster recovery plan, stressing that it is pertinent to emphasise that effective pension administration is driven by efficient data management, which can only be achieved through automation. 

Ahmad noted that to curb the rot in the pension departments Pension Transitional Arrangement Department (PTAD) that would co-ordinate the activities of the existing pension departments should be established in accordance with Section 30(1) of the PRA 2004 and in addition, the PTAD would be regulated and supervised by PenCom and would be required to operate under the rules, regulations and directives issued by the commission, from time to time, as provided in Section 30(2)(4) of the PRA 2004.

“In order to address the identified challenges in the operations of the Pension Departments, it is imperative to strengthen their administrative structures to enshrine transparency and accountability in their operations, institute efficient operational infrastructure such as ICT infrastructure within the Departments and provide an enabling environment for effective regulation and supervision of their activities.   

“Budgetary estimates prepared by Pension Departments should be reviewed by the Commission for accuracy and completeness. 

“There is need to determine, once and for all, the number of existing Federal Government pensioners, their entitlements and outstanding pensions and generate a robust database for these pensioners. As the number is not expected to increase, it will provide a platform for accurate estimation of the liabilities of the FGN pensioners and hence avoid the routine annual verification exercises. To avoid annual verification exercises, a robust system whereby pensioners can indicate that they are alive should be worked out and instituted,” he added. 

He said there is the need for an independent review of the outcome of the verification exercises to authenticate the accuracy of pensioners’ entitlements determined by such exercises, stressing that this would ensure that pensioners are not underpaid or on the other hand, that government liability is not overstated.