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Nigeria: New Book Will Improve Pension Administration - Author
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Daily Trust (Abuja)
INTERVIEW
8 August 2008
Posted to the web 8 August 2008
Jibrin Abubakar & Idris Ahmed
What is your take on Pension Administration in Nigeria?
Very recently, in 2004, a new Pension Act was signed into law by the previous administration and that reform has changed pension administration in Nigeria. This has changed, significantly the way and manner pension is managed in the country and it has defined a new pension trust scheme which ensures that every Nigerian workers open a Pension Retirement Saving Account (RSA) and every Nigerian employer to contribute into that account by funding pension and there is assurance that when they retired there will be money in there RSA which they would fall back to.
Therefore, what we have in Nigeria today is a great departure from the past and we expect that this scheme will continue to work so that workers will reap the benefit. We expect that the days of queuing to collect pension will be a thing of the past, and that people will work and when they work, their employers will contribute for them. This contribution will be invested and managed and when they retired, they can draw from those accounts for the rest of their lives.
You have just launched a book on pension administration in Nigeria. What is the motivation?
When the industry started in 2005 and 2006, there were few of us. Few pension fund administrators were licensed and we went out to sell our products. We recruited people to sell our products and work for us. What I found in the last two or three years was what motivated me to write the book.
There was a dearth of knowledge of what pension is all about from the perspective of people who work as pension administrators, pension custodian and employees. There is the dearth of knowledge among all stakeholders on what the contributory pension scheme is all about.
I thought that writing a book on pension at this material point in time will help in addressing that gap in knowledge and try to explain to people in simple terms what the scheme is all about and how it affects them. It is really important not only for the operators but also for the employees. Workers need to understand how it works and how it would work for them. So, you can say because it is a complicated law written in so many pages and therefore we would not be interested. The book is here to address that gap and make it simpler.
Can you give us an insight into the book?
The book is written in about ten chapters of two parts. The first part of the book is an introduction of the pension administration in Nigeria. It goes on to talk about the historical perspective of pension administration in the country, including why the reform was necessary. It talks about how the contributory pension scheme is structured. The operators, the pension fund administrators. It also has a chapter dedicated exclusively to the National Pension Commission and how the commission regulates the pension industry. It even goes further to explain the function of pension operators and the likely operators, people who works in pension commission. It also talks about how products are developed in pension and how it operates, how it provides service and so on and so forth to our customers.
The second part of the book is a bit technical and it dwells into the investment of pension funds. You must understand that under a contributory pension scheme, some money is set aside and that money must be invested. It is within the product of the investment that people draw from when they retired.
The book dedicates the second last five chapters to the investment of pension fund where we looked at the investment fund management generally. The specific type of investment that are permissible under the pension Act and we go ahead to talk about how those investments work, and how they are really going to affect your retirement benefits and it give readers an incite into all lots of risks that pension fund administrators take on their behalf.
What are the challenges in pension administration in Nigeria?
One of the challenges is lack of knowledge. People did not know and even people that are aware of it have some kind of apathy. Nigerians were not clear what we are going to do and they said you people are here again to take our money and put the money into a few private banks that will collapse some day. So, one of the challenges was knowledge and the quality of what people knew which perhaps was what motivated the book.
The second thing is complaints. It is a tough business where you have people in the private sector not coming to fund the contributory pension funds. This could be as a result of many things.
Many employers see it as an additional burden and they need to be educated to understand that it is not an additional burden. In fact, it is an enhancement on the welfare of their workers. You will be surprise that we received negative comment from workers, saying their take home pay is so small. They say you are over tasking them for demanding for 7.5 percent. Sometimes, that is the reason why some employers simply back out. Both the employees and the employers think it is an additional burden.
What people need to do is to understand the scheme. If the company where someone works closes down and they have been contributing into the pension fund, they will still benefit. It is significant because we cannot eat everything today and forget about tomorrow. That is what pension and retirement benefit is all about. And people should not take it for granted and beyond that, a few other challenges in terms of operations and marketing are being addressed.
There is also technical hitches, information and others but by and large, the scheme is very successful and we believe that when people are involved, we would improve on it.
At what age can an individual access his contribution?
You can only access your fund when you retire. The Act says you can access your retirement saving account when you retire or you are 50 years old.
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If you are retired and above 50 years then you can access your account. If you have not attained the age of 50 years, then you can't, except you are retired due to right sizing or your company sacked you or you can show evidence that your company would wind up because of financial difficulties, or if you are retired because of ill health.
please what is the title of this book and where can one get it to buy.Additionally, how much does it cost.The book looks very nice for those of us who do not know much about the pension administration in nigeria.frank
It is called Pension und Administration in Nigeria. it is available in leading bookshops and at the publishers Pen & Pages. it costs N3,500. Hope you enjoy the reading experience
Frank, you can purchase the book at Pen & Pages bookstore in Abuja, and in leading bookshops across the country. it costs N3,50, and thanks for the vote of confidence
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