Earth Movement in the Pension Industry
It is eighteen years since the Pension industry was carved out of the Insurance industry and government direct management. The new Act of 2004 began a new journey for one of the fastest-growing industries, making it the cynosure of all eyes – friends or enemies of the industry. The purpose and intent of the Act were to arrest various abuses of not only the pension funds by certain cartels and individuals, but as well address the gross disrespect and abuse of the aged and retired individuals who had served the country for the best part of their mental and physical energies. This group of citizens, who were now weak needed to be rewarded with restful retirement. Especially disturbing was the public sector management of workers’ pensions.
The new industry thus needed to be nurtured to be strong, viable, dependable, and effective. Even though novel, the signs have been strong. It has removed the unsightly views of queueing up of senior citizens in inefficient lines for frequent verifications. Moving them from long distances even when they were too frail to be moved around, just to protect their pensions.
Recently, the indefatigable Pension Regulator, PenCom, led by Aisha Dahir-Umar and her team, moved to ensure a stronger base for Pension Fund Administrators to enhance efficiency, and effectiveness and to address other concerns of its core clients – the Nigerian populace. This was to encourage consolidation between the players where there were individual weaknesses observed. The capital for running was thus put at unencumbered N5 billion, with a deadline date of 27th of April. This saw a flurry of activities and underground movements to beat the date. All the PFAs did successfully.
These weaknesses may range from weaknesses in the distribution network of some of the companies in market outreach, adequate working capital to fund needed robust fintech infrastructure, strengths in the public or private sectors, a rejig of certain boards for better corporate governance, a rebalancing of market shares and strengths to reduce the previously heavily skewed market shares in favour of the top five to ten Fund Administrators.
Thus, we have seen some earth movement in the industry. Newer interests are courting the pension industry – the banks and some private investors, have moved in with some more energy. This is evidence that the industry is thriving and winning the confidence of the many.
The likes of Tangerine group, Norrenberger group, GT holdings, repositioning of Access bank in the industry and the consolidation of First Pensions custodian and Access custodian in the offing, and acquisition of FCMB of Aiico Pensions are examples of movements for a stronger performing industry.
The dichotomy of the company funds and the pension contributions fund has allowed for greater sanity in the operations of the industry. Gradually, the novel idea is becoming a great idea. We must thus avoid the great disservice done to the insurance industry and the Nigerian populace by decimating the insurance industry’s strength and services by splintering it. The clamours for creating further splinters in the industry, instead of consolidations could reduce its strengths and a return to the past for some other personal interests.
This happened when the government took away workmen’s compensation insurance from the insurance industry and gave it to a government organ – NSITF who were strangers in that field. The recent filters and seeming inactivity from it is of grave concern for Nigerian workers. This raises concerns as well for other possible social services the NSITF could render to Nigerians, like unemployment allowances or other comforts as obtained in European countries and other social services innovations from the huge but silent funds accruing to the organ.
This also happened in the health insurance sector. While the NHIS initiative was good, its present predicaments question the place of government as a player instead of remaining as an umpire. Strengthening the industries is better than the government being a player, as we find in the Pension industry.