…stakeholders seek expanded investment
Investigations have revealed that poor administration of pension funds has resulted in the colossal loss of about 30 percent of the funds to ghost workers.
Informed sources who spoke with BD SUNDAY called for expanded invest- ment outlets for the pension funds.
In October 2014, the Goodluck Jona- than-led Federal Government of Nigeria (FGN) said it uncovered a total of 60,000 ghost workers in federal establishments across the country following the staff audit of ministries, departments and agencies (MDAs) on the implementa- tion of the integrated Personnel and Payroll Information System (IPPIS). Ngozi Okonjo-Iweala, immediate past minister of Finance, who made the revelation, said the dis- covery had saved the government over N160 billion, which was amount paid to the ghost workers as salaries and allowances, and informed that the case had been transferred to the Independent Corrupt Practices Commission (ICPC) for prosecution of those involved.
Over the years, the “Ghost workers” syndrome appears to have become part of the Nigerian system and has consistently been used as a drain pipe by some elements to enrich selves.
These elements enter fictitious identities to earn benefits they are never entitled to.
In many cases, names of dead persons are still left on payrolls and all manner of entitlements are claimed on their behalf. In some cases also, names of individuals who are never in the employ of government are used to claim money.
The last administration said it discovered that it was paying millions of dollars per year in payroll to “Ghost workers” who were neither legitimate nor eligible employees.
BD SUNDAY investigations revealed that Nigeria’s retirement funds experienced phenomenal growth since government introduced reform, beginning in 2006, which transformed a largely unfunded defined benefit scheme into a defined contribution system that mandated participation from all em- ployees covered by pension plan, and the industry nearly tripled in size between 2009 and 2013.
According to the National Pension Commission (PENCOM), the total pension assets as at the 1st quarter of 2013 was about N3.38 trillion, about 8percent of Gross Domestic Product (GDP) of that year, which was a result of the reforms in the industry, with a monthly inflow at the time of about N25 billion pension assets with an average annual growth rate of 30 percent.
The total value of pension assets increased from N4, 419.12 billion as at the end of the 2nd quarter of 2014 to N4, 591.93 billion at the end of the 3rd quarter, representing an increase of N172.81billion (3.19 percent).
During the same quarter, the PEN- COM received 779 applications for issuance of compliance certificates, out of which 674 employers were issued the certificates while the remaining applications were rejected on the ground that they did not meet the requirements.
The employers that were issued certificates remitted the sum of N82.16 billion into 43,321 employees’ Retirement Savings Accounts (RSAs).
Available information also revealed that the Com- mission received 2,260 applications for the transfer of contributions amounting to N185.82 million from the defunct National Provident Funds (NPF)/ National Social Insurance Trust Fund (NSITF) pen- sion scheme to the respective RSAs of contributors.
Upon a review of the applications, the Commission conveyed concurrence for the transfer of N125.07 million into the RSAs of 1,740 applicants, while 141 applications were rejected due to factors like incomplete documentation, zero balances and duplicated applications.
The remaining 539 appli- cations were being processed for eventual transfer into RSAs of contributors.
But industry watchers are raising fresh alarm that the “silent” boom in the country’s pension funds also means an escalation of corrupt practices by officials who know how to manipulate pension funds administration to engorge personal bank ac- counts, like the country witnessed during the tussle between the Senate Pension Probe Committee and Abdulrasheed Maina, former chairman, Pension Reform Task Team (PRTT).
Despite the claims by Maina, who was a deputy director in the Office of the Head of Service, that he was trying to sanitise the Nigerian pension process, which according to him, led to the recovery of over N151 billion, he was accused by the Committee of helping himself with money from the Police pension’s accounts, an allegation many said was only possible because of the huge pension funds available.
According to the Committee which was headed by Aloysius Etuk, and his deputy, Kabir Gaya, with pension funds, Maina allegedly opened accounts in different banks, one of which was opened in his younger brother’s name; with the alleged illegal transactions yielding an interest of about N100 million monthly.
The committee observed that it was the mopping of funds from designated banks across the country by Maina that had made it impossible to pay thou- sands of pensioners across the country for months.
Maina was also accused of spending up to N1billion to carry out biometric verification for retirees, both in Nigeria and abroad.
On the whole, Maina alleg- edly misappropriated about N195 billion. However, Maina denied the allegations and rath- er, alleged that he was being persecuted for refusing to succumb to the senators’ demand for bribe, and consequently went to court to challenge the warrant issued for his arrest by the Senate.
He later instituted a N1.5 billion case against the Senate and the then Inspector General of Police, Mohammed Abubakar, who had declared him wanted following a warrant of arrest issued by David Mark, the 7th National Assembly’s Senate president.
Investigations also revealed that a whole lot of people and institutions are usually involved in the racket, all of whom benefit from the “ghost monies”.
For the money to be successfully mopped from one location to another, government agencies, banks, human resource departments and other top officials in related departments are usually involved in the chain of transaction. “The Pension Fund Administrators have invested N228.3billion in real estate.
This amount is about 5.2 percent of the N4.3 trillion total pension assets as of May, 2014. N190.8 billion and N78.8 billion had been invested in state government securities and corporate debt securities, representing 4.1 percent and 1.8 percent of the pension asset, respectively.
It stated that N813 million and N7.5 billion had been invested in foreign money market securities and private equity funds in that order.
The Pension Fund Administrators have invested a total of N1.9 trillion in the Federal Government of Nigeria bonds.
This is the best way to go,” says Mohammed Shuaibu, former managing director, Amana Pension Man- agers Limited.
A senior official of AIICO Pension Manager Lim- ited who did not want her name on print because of her tie with the current leadership of PENCOM, told BD SUNDAY that a recent report by PENCOM also showed that the PFAs had invested N737.2 billion and N548.7 billion in the FGN treasury bills and domestic ordinary shares, which are 17.5 percent and 13.04 percent of the total funds, respectively.
She gave the amount invested in the local money market securities as N355.2 billion; real estate prop- erties, N228.4 billion; state government securities, N195.2 billion and corporate debt securities, N79 billion, and that PENCOM report also showed that N53.16 billion was invested in foreign ordinary shares; N46.2 billion, cash and other assets; N22 billion, open/close-end funds and N9.3 billion, private equity funds.
“Nigeria’s ARM Infrastructure was reported to be close to raising $250 million in the country’s first infrastructure fund, to invest in transport, energy and utility sectors across West Africa, with much of the money coming from pension funds. The fund was expected to close by mid-August and was at the documentation stage with various investors including some Nigerian pension funds and other institutional investors such as the African Develop- ment Bank, Opuiyo Oforiokuma, ARM managing director said recent. We are indeed witnessing a departure from the past as far as pension funds administration is concern”, she said.
Though, she said PENCOM under the current leadership has done creditably in repositioning pension funds administration, she, however, em- phasised that more still needed to be done in order for the country to catch up with the likes of South Africa and Namibia who are already ahead in pen- sion funds administration.
In 2001, Botswana switched from a defined ben- efit system to a defined contribution plan, extended coverage to more of the working population and opened the market to private competition.
At the moment, Botswana has about 100 pension funds jostling for business in a country with 2 million populations.
Those funds had combined assets of some $6 billion in 2012, or 42 percent of GDP, ac- cording to the Bank of Botswana. Only South Africa and Namibia boast a higher percentage among sub-Sahara African countries.
Efforts to reach PENCOM for official comments did not yield any result as several phone calls to its line were not answered.
NATHANIEL AKHIGBE
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