‘Communication critical in educating pension contributors’

Stanbic IBTC Pension Managers Limited, recently organised a stakeholders’ conference on pension and corporate governance, providing a platform to appraise 10 years of Nigeria’s Contributory Pension Scheme and the new pension law. In this interview, Tosin Akinyemi, human resources director at British American Tobacco Nigeria (BATN), speaks on a wide range of industry issues. Excerpts:

Taking another look at the recently enacted Pension Reform Act 2014, would you say there are enough safeguards to ensure security of the assets that are invested under the Act?
I believe the most significant safeguards introduced by PENCOM have been the governance structures for ensuring the safety and security of invested assets. These include the separation of investment, administration and management from custody which is in line with global best practice, as well as separation of PFCs from the PFAs and the separation of pension assets from their own assets to eradicate any probable conflict of interest with the funds.
Similarly, the provisions with respect to offences and increased penalties for misappropriation are also welcome developments. I’d say overall the act is very robust and in line with global best practices – the true test however lies in ensuring the full implementation of the Act and PenCom successfully fulfilling its governance role.

There have been occasional reports about employers failing to remit funds to PFAs in line with the provisions of the law, resulting in the inability of contributors to access their benefits on retirement. How is your company able to deal with this?

There were initial challenges with remittances of pension contributions in the early days of the PenCom Act i.e. 2004. This was traced mostly to employees who failed to provide their employers with their RSA details.
The Guidelines for the Transitional Contributions Fund (TCF), passed in June 2010, recognised this challenge and provided an adequate alternative for managing this challenge. For us at BAT as a responsible organisation, we ensure that new employees coming into our company provide, as a major prerequisite for employment, their RSA PINs to ensure remittances are done without fail.
With about N4.6trn generated as contributions from the pension scheme, a debate is ongoing on the propriety or otherwise of deploying pension funds to tackle Nigeria’s infrastructure deficit without endangering the pension assets.

Do you support the view that pension funds should be left to the PFAs to manage in the best possible way, or the funds deployed to building much needed infrastructure and other facilities?
The Nigerian economy indeed has vast infrastructural needs and the amended Pension Reform Act has provided increased options for pension asset investment in different channels while ensuring an unwavering focus on returns and safety.
The 2014 Pension Reform Act provides well rounded guidelines on domestic investments of pension funds in sectors geared to benefit the Nigerian economy; this will increase the investment options for pension industry players by introducing certain sector funds, these may include infrastructure development, the manufacturing sector and power generating sectors.
As an employer, our priority will always be first & foremost focused on ensuring the safety & preserving the value of funds contributed on behalf of our employees, therefore so long as proper governance is maintained in order to guarantee these 2 priorities, then I would say it is worth exploring the use of the funds as a potential vehicle to make long term capital available for infrastructural development in the Nigerian economy.

The Contributory Pension Scheme (CPS) has been operational for 10 years in Nigeria. How would you assess the journey so far? Has the new pension law adequately covered participation of the informal sector of the economy, given its huge size?
Whilst having experienced a number of challenges since its inception, the CPS has done well to ensure that employees in the public and private sector save towards their retirement.
The revision of the Pension Act is an indicator that the government is committed to ensuring that the system works and meets the needs it was designed to address, taking learning’s from the initial issues that occurred.
It is laudable the amended pension act has looked to creating opportunities for the informal sector by expanding the job definitions in its review. These are all positive steps taken in the right direction; however, it remains a long journey ahead. The Act is a good step, while implementation to the letter – is the real prize.

Given the information gaps that have largely prevented a lot of people from being properly informed about the workings of the pension system; what specific steps will you recommend that PenCom, PFAs and indeed, employers take in helping to spread awareness about the workings of the PRA 2014?
The key to success of any communication initiative lies in ensuring that the ‘right message’, is transmitted to the ‘targeted audience’, on the ‘most appropriate platform’ and at the ‘most impactful time’. I believe a holistic view needs to be taken to determine the various groups requiring information and segment based on the different information requirements they may have.
For instance, employees already participating in the Pension Scheme have a need to understand what has changed with the new Act and how it impacts them whilst members of the informal sector who are yet to start participating have totally different information needs as well.
Once there is clarity around these then various channels including the social media, SMS platforms, traditional media (radio, television, print) can be deployed as required and suitable to these differing audiences. I believe the PenCom could consider specialist support/advise in this regard from communication experts who can help with properly segmenting the target audiences.

When did your organisation key into the CPS? What were the major determining factors of the choice of PFA?
We have been participating in the scheme right from inception. As with the guidelines stated within the act, we have empowered our employees to select their own individual choice of PFA.
What we however continue to do to support our employees in making informed choices is that we periodically invite various PFAs to our office locations and grant them a platform to communicate directly with employees to talk about their Pension funds and the benefits they offer to their clients different from other providers.
We essentially provide a level playing field to PFAs to provide as much information about their operations & performance to our employees and thus enable employees to make their own ‘informed’ choices based on personal preferences