Aisha Dahir-Umar: PenCom is under Attack Because of Our Modest Achievements

The Director-General of the National Pension Commission (PenCom), Mrs Aisha Dahir-Umar, speaks on the challenges she faces leading the commission in an interview with THISDAY. Excerpts

Leading PenCom as the Director-General for over two years now surely has its challenges. What has been your experience?

Dahir-Umar: Facing challenges is a natural consequence of leadership. I acted as DG for two years, so I would say it prepared me adequately for the substantive role. When you discharge your responsibilities properly, there will be winners and there will be losers as well. Our first challenge came from the previous executive management which refused to accept that they had been disengaged by the Federal Government. It was embarrassing but it was eventually resolved. It is not unusual for a new management to want to do things differently. We reorganized and streamlined internal workings. Some felt a sense of loss, which is perfectly understandable. They kicked, as expected, but eventually those kicking from the inside and those goading them on from the outside accepted that it was not going to be business as usual. I am never afraid of new things, as long as they are progressive.

We faced fresh challenges as the agitations for the exemption of the personnel of the Nigeria Police and Paramilitary agencies became heightened, due to complaints of low pension pay-out under the Contributory Pension Scheme. Another challenge was due to the decline in the Federal Government revenue during the period. The Commission was unable to process the payment of retirement benefits of so many retirees of the Federal Government under the Contributory Pension Scheme due to the inability of the Federal Government to pay their Accrued Pension Rights for about two years. This affected the Commission. We felt unable to ensure compliance with the most significant objective of the pension reform, which is that retirees should be paid their benefits as and when due. Despite all these challenges, we have moved forward and we have plenty achievements that we can modestly celebrate.

What are these modest achievements, as you call them?

For one, there has been a big growth of the pension assets from N6.42 trillion in 2017 to N14.6 trillion as at October, 2022. That is more than double at a time of serious economic challenges. We also introduced the Multi-Fund Structure of investment of pension fund assets to address the investment appetite and preference of contributors as well as their age profile, approved a structured reduction of fees on Net Asset Value of pension fund assets and introduced the Micro Pension Plan for the participation of informal sector workers in the Contributory Pension Scheme. The Micro Pension Plan was formally launched by President Buhari on 28 March, 2019.

We also developed the Enhanced Contributor Registration System (ECRS) to clean and enhance the integrity of the pension industry database; introduced the Retirement Savings Accounts (RSA) Transfer Window to enable contributors change their PFAs at least once in a year. We instituted a periodic Pension Enhancement programme every three years, where the retirees’ monthly pensions is enhanced based on the performance of their RSAs. In fact, we are about to commence the third edition of the pension enhancement for retirees in the First Quarter of 2023.

We automated the Annual Enrolment Exercise for FGN retirees to remove the inconvenience of the physical process of the exercise on retirees. We recently issued the Guidelines for Access to a Percentage of RSA balance towards payment of Equity Contribution for residential mortgage. The list of approved Primary Mortgage Institutions that will participate in the exercise was released by the Commission this month of December 2022. We have strengthened the minimum capital base of PFAs from N1 billion to N5 billion for better service delivery to contributors and facilitated the payment of outstanding accrued pension rights of FGN retirees, which drastically shortened the waiting period for accessing their retirement benefits.

One of the controversies under your watch is that the least paid employee earns N3 million a month. We know you have explained but why did this become an issue?

It arose following the Commission’s appearance on 15 September 2022 before the House of Representatives Committee on Finance’s 2023–2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) Interactive Session. There were questions raised by the Committee members on the Commission’s staff costs, to which we responded. The Commission’s staff cost was, however, mischievously interpreted to mean staff salary. This caused negative media reportage.

What do you mean by staff cost?

In finance and accounts parlance, staff costs cover many items, including salaries and allowances, training and capacity building, pension contributions, etcetera. However, one of the committee members did a simple division of the total amount under that subhead against the total number of staff of the Commission to arrive at the so-called jumbo figure. This gave an opportunity for some people to do mischief. Staff remunerations differ according to grades but not even the General Managers (Directors), who are the highest paid, get such amount.

You faced threat of mass action by activists as a result. How did you handle this?

The National Association of Nigerian Students (NANS) launched the first attack. We know they are young people who are not very experienced on matters of corporate administration. We decided to enlighten them. We drew attention to the fact that the National Assembly did not, at any time, suggest that the Commission had breached any law or regulation. We also explained that the accusation was completely inaccurate. They seemed to have understood as they cancelled their planned protests and apologized. I believe they were sincerely misled. We also engaged with the Civil Society Organizations to enlighten them. The mischievous ones continued to threaten us but we were no longer bothered.   

There is yet another petition to the EFCC alleging fraud in the Commission. Are you aware of this?

We were told a few days ago. We learnt from insiders that it is part of a coordinated plan to bring the Commission and its management into disrepute, through mass action and frivolous and irritating petitions. Unfortunately, they have chosen the wrong victim. We will never give in to blackmail. There were similar attempts in the past through orchestrated petitions to other law enforcement agencies on frivolous allegations of wrongdoing against the Commission and its management, including myself. All of these failed. Nothing untoward was established against us. We are confident that the same outcome will be arrived at in the event of any future similar inquiry on our affairs. What is constant, however, is that we shall not be distracted from our resolve to ensure due process and legal compliance in the way we administer the Commission’s affairs. We are single-minded about this.

Outsiders are working with insiders to undermine our work. This has been a recurrent decimal since 2017 when I became the Acting Director-General. Despite all the negativities and attempted distractions, we have, by the grace of Allah, been able to remain focused and able to record many significant feats in the discharge of the Commission’s statutory mandate of regulation and supervision of the industry. We understand that one of the burdens of leadership in our operating environment is to accept the reality of adversity, especially when you insist on due process and truthfulness in your official conduct. We shall not derail.      

The National Assembly wants to be excluded from the Contributory Pension Scheme. Are you opposed to it?

The National Pension Commission is categorically opposed to the passage of the Bill seeking to exclude the staff of the National Assembly from the Contributory Pension Scheme. The Commission would have expressed this position had there been a Public Hearing on the bill prior to its passage. Excluding the National Assembly staff from the CPS will defeat one of the objectives of the pension reform, which seeks to achieve an affordable and sustainable pension system for Nigeria. It has also opened a floodgate for all civil servants. Already, the personnel of Nigerian Police as well as the Police retirees are clamouring for exemption from the CPS. There are compelling economic, fiscal, social and public policy arguments against the exemption of the public servants from the CPS.

One, exemption from the CPS would imply additional financial burden on the Federal Government by way of unsustainable pension obligations. The Federal Government is already overburdened with the payment of pensions under the Defined Benefits Scheme as illustrated by the 2022 Appropriation Act. Another immediate negative impact of the proposed exemption from the CPS is to unsettle the FGN’s fiscal policy and financial system stability. As at date, about 63.17% of the N14.6 trillion pension assets are invested in Federal Government securities. Exempting the public sector institutions would lead to material divestment from FGN securities before maturity, which would have ripple negative effects on not only the finances of Government, but on the entire financial system.

The argument has always been hinged on low pensions. But the PRA 2014 has adequate provisions that can resolve this concern without recourse to exemptions from the Scheme. This includes the upward review of the rate of pension contributions for the public servants beyond the statutory minimum of 18% and the institution of additional benefits in form of lump-sum at the point of exit.  I recommend that Nigeria institutes a Zero Pillar Pensions in the form of social security benefit, which is recognised and provided for under Section 16(2)(d) of the Constitution of the Federal Republic of Nigeria 1999 (as amended). If implemented, it will go a long way to alleviate the sufferings of all Nigerians irrespective of whether or not they had a formal employment. It will also augment earnings from occupational pensions.

Would you say the political authorities have been helpful or otherwise?

By virtue of Section 17(5) of the Pension Reform Act 2014, the National Pension Commission reports directly to the President. We do that through the Office of the Secretary to the Government of the Federation. Since my assumption of office as Director-General, the Commission has never had any political interference that hamstrung it from discharging its duties and functions. The President has been very supportive in tackling some of the challenges of the Commission in the discharge of its statutory mandate. An example was what happened towards the end of 2021. The retirement benefits of Federal Government retirees under the Contributory Pension Scheme remained unpaid for about 24 months. The President approved about N159 billion for the payment of outstanding accrued rights and other pension liabilities of Federal Government retirees. We were able to pay their long overdue retirement benefits. This was a big relief.