By Henry Boyo
Our collective sense of compassion may have become dulled, overtime, to media reports and images of emaciated senior citizens collapsing, after waiting endlessly in long queues, under the hot tropical sun, for verification and payment of pension entitlements. In reality, the victims of this oppression, have no ethnic or religious colouration, but share a common index of social deprivation; regrettably, today’s active workforce have largely remained blindsided to this gross abuse of the dignity of aged men and women, who had served their country for most of their lives.
The unsightly juxtaposition of such horrid spectacles, against the background of alleged impunity, in the misapplication of pension funds, has arguably, broken the hearts of many retirees, and cut short the lives of several others. Unexpectedly, however, pension fund looters have often gotten away with slap on the wrist punishment, despite the severe consequences of their actions.
In a bid to create enduring structures and sanitise the Pension sub-sector, the 2004 Pensions Act, consequently, established Pension Fund Administrators (PFA) to ensure judicious management of pension assets; furthermore, Pension Fund Custodians, (PFC) were also created to superintend pension funds, while the National Pension Commission (PENCOM) was statutorily mandated to regulate the sub-sector and ensure that pension assets are invested in safe and secure instruments.
Remarkably, the exceptional performance of Pension Administration, after ten years, encouraged the hosting of the first ever ‘World Pension Summit-Africa’ in Abuja, where former President Jonathan, noted, in his address, that sustained policy innovations and meticulous management, made possible by the 2004 Act, had successfully facilitated “confidence and credibility in pension administration in Nigeria, such that the fortunes of pension institutions have transited from a deficit of about $12.9bn in 2004 to accumulated pension assets of over N4tn ($27.2bn, N170-N199=$1) by March 2014”.
President Jonathan, consequently, signed the 2014 Pension Reform Bill into law, to build on the gains of the 2004 Act. The new Act was expected to govern and efficiently regulate uniform pension administration for both public and private sectors, and also “provide an enabling legal environment, which will facilitate the creation of appropriate instruments with which pension assets can be primarily invested on vital infrastructure and real estate development”.
Evidently, the estimated N4tn ($27.2bn) pension assets was a handsome nest egg of cheap funds which could be deployed to improve power, housing, education, transportation and healthcare infrastructure nationwide, particularly, when domestic funds are largely inaccessible and too expensive, as long term loans for projects with extended gestation, while hawkish regulators would watchfully restrain the deployment of pension funds into volatile markets for speculation and private equity.
In essence, Nigeria’s pension contributions could be similarly deployed for continuous expansion and upgrading of our social infrastructure, with meticulous management and regulation in line with the spirit of the 2014 Act. Ultimately, the pertinent question, is, whether or not, prompt payments of pensions to retirees, would sustain some semblance of dignity in their lifestyles until they pass on.
Indeed, if PENCOM effectively performs its functions, inadequate funding and tortuously delayed pension payments, with the collateral assault on the dignity of pensioners may become history. Unfortunately, such a facilitated pension payments system may, still not provide adequate protection against the threat of poverty to retirees, as discussions on pension reforms, often, ignore the critical issue of erosion in the purchasing power of incomes.
Even the ubiquitous market woman, labourer or housewife knows from experience that, a thousand naira may buy so much food items and consumables in January, but if unrestrained inflation prevails, the same income would buy much less in December! Thus, in an economy where average annual inflation rates remain as high as 10 percent, static pension incomes will systematically buy less and less goods and services, such that, a million naira savings in 2014, may just be worth less than the paper it is printed on in 2024.
Invariably, every successful economy carefully manages inflation below 3 percent, with 5 to 10-years for review, so as to protect income values, and also encourage a savings culture. Indeed, the greater the value of savings, the greater would be the funds available for investment; conversely, when high double-digit inflation rates prevail in any economy, people invariably save less, and inadvertently reduce availability of loanable funds; expectedly, increasing scarcity of investible funds would ultimately, also impact negatively on social and economic growth, with adverse consequences on employment.
Indeed, the oppressive social impact of Nigeria’s year-on-year double-digit average inflation rates, over time, is probably starkly reflected in the weakness of our infrastructural base and the Naira value. Ultimately, economic growth, employment opportunities and enhancement of social infrastructure and welfare will become seriously challenged by a systemic and uncaged inflationary surge.
In essence, if the 2014 Pension Act reforms were perfectly managed, retirees may, indeed, never suffer undue delays and pains in endless queues before receiving their pensions. Sadly, however, unless our Economic Management Team succeeds in bringing down and keeping inflation to international best practice levels below 3 percent, pensioners will invariably still suffer severe shocks with the unfolding realization that the purchasing power of their nominal pension incomes, will depreciate by about 50 percent within 5 years, if average inflation rate is above 10 percent as it been in the past 4 years. Sadly, therefore, despite the establishment of superior pension reforms, senior citizens may still not escape penury after a lifetime of service to their fatherland!
The above is a summary of two articles, namely; “Is Poverty the Ultimate Reward for Pension Contributors?”, and, “2014 Pension Act: Not yet Uhuru for Pensioners”, these articles were published in this column in September 2013 and July 2014 respectively. (See www.lesleba .com).
Presently, Pencom reports suggest that by December 2018, consolidated Pension Funds had exceeded N8.49tn (i.e. $24bn-N360=$1) from the presumably “more modest” N4tn ($27bn-N170-N199=$1) in 2014!
Notwithstanding, transparent and optimal management of consolidated Pension funds, clearly remain a challenge; for example, in December 2018, Yakubu Yussuf, an official of the Police Pension Office, was jailed for 6 years by an Abuja High Court, with a N22.9bn fine, for stealing N24bn Police Pension funds. Alarmingly, Yussuf had earlier been given a two year prison sentence, with N750,000 fine option by a federal High Court in Abuja.
Similarly, a former Chairman of the Presidential Pension Reform Task Team, one Abdulrasheed Maina, and his cohorts, allegedly also stole and laundered N14bn Pension funds. EFCC investigations revealed that “Maina was deeply involved in stealing the same pension funds he was tasked to protect.”
Incidentally, when a delegation of the Nigeria Union of Pensioners visited State House Abuja in January 2019, President Buhari assured the delegation that the welfare of Pensioners remained a priority. PMB similarly declared that his administration has also put a stop to dehumanization of Federal Government Pensioners by ensuring prompt payment of entitlements.
Similarly, the latest figures released by the Pension Commission indicate that the Federal Government had borrowed N6.16tn (72.5 percent) out of the reported consolidated Pension Fund of N8.499tn by January 15, 2019. Regrettably, the huge borrowing has obviously not added significant contribution to Nigeria’s infrastructure.
Instructively, the N1.49tn Pension funds allegedly invested in government Treasury bills is equally a waste, as Treasury bill investments add no infrastructural value, despite the unusually high interest rates attached.
Notably, also, high lending rates go hand in glove with rising rates of inflation. Consequently, neither safe sovereign bets, nor high yields on pension funds will save pensioners from an ultimately pathetic destiny, if inflation remains stuck in double-digit rates.
In conclusion, unless the ‘curse’ of double-digit inflation is exorcised, Nigeria’s pensioners, may indeed receive prompt pension payments, but in reality early disbursement will not rescue these senior citizens from the clutches of poverty. This frightening realization, may not justify corrupt enrichment, but, it is most certainly a great stimulant to abuse public office and provide ‘insurance’ for retirement and old age.
