Aisha Dahir-Umar: Relieving Pension Pains

There must be very few, if any, public servants in Nigeria who was so openly underrated but went on to exceed all expectations as Aisha Dahiru Umar has been doing as the Director General of the National Pension Commission, PenCom.

Some had raised doubts about her quality when she was first appointed in acting capacity in 2017. Seen and unseen forces threw spanners in the works to stop her deserved position at the top. Entrenched interests in the industry who preferred the status quo rose in arms, deploying largely the media and politicians as their combat weapon.

But she was calm in the midst of the storm. Where others would have barked and roared against detractors, she was tranquil in turmoil. Showing admirable composure and focus where others would have become desperate like a prey cornered. She gracefully stepped over the hurdles one after the other, and preferring to bury the hatchet where others would have become contentious and rowdy.

But no one doubted her compassion and passion for the job at hand. Pensioners are vulnerable; they’ve always been vulnerable in this country. But it doesn’t have to be that way. Prospective retirees in the public and private sectors deserve better life when they’re no longer in active service. But no one is planning for them! The plans do not favour them; they are plans that pain, regulations that regiment lives of pensioners.

But she is changing the narrative to make pensioners smile. Prospective retirees are also looking forward to retirement with more confidence, thanks to new reforms and rigorous enlightenment.

She is using her capacity and charisma to push the frontiers and ensure the pension industry runs smoother for the benefit of the pensioners.

The Pension Reform Act 2004 was repealed and replaced with the Pension Reform Act 2014, which established a mandatory Contributory Pension Scheme (CPS) for workers in both the public and private sectors. Section 4 of Pension Reform Act 2014, provides for a mandatory minimum contribution of ten and eight percent of employee’s monthly emolument by the employer and employee respectively.

Each employee is to open a Retirement Savings Account (RSA) into which the contributions are to be paid, with a Pension Fund Administrator (PFA) licensed by the National Pension Commission, established under section 17 of the Act, to regulate and supervise pension schemes in the country. The PFA is to manage and invest the fund in the RSA from where a contributor will draw benefits on retirement in line with the provisions of the Act.

The Act is undergoing further reform and a new bill is before the National Assembly. At one of the public hearings on the Pension Reform Amendment Bill, Dahir Umar opposed proposition by lawmakers to pay at least 75 percent lump sum to retiring workers.

The bill is seeking a one-time payment of 75 percent to retirees from the Contributory Pension Scheme (CPS), leaving 25 percent to cater for their old age. But in her argument, she said it was a contradiction of the requirement of Section 173 of the 1999 Constitution.

But it was while making a case to amend Section 1(c) and Section 7(2) of the Pension Reform Act 2014 that we saw the strategic thinking going on at PenCom.

Dahir-Umar said, “It is inaccurate to suggest that there is a fixed lump sum for all retirees; rather the lump sum is determined after securing a minimum replacement ratio of 50 per cent of last pay as monthly pensions.”

She stated further that retirees must have periodic pensions and paying such huge sum at retirement exposes the pensioner to financial uncertainties.

She posited that what the lawmakers were proposing would “converts the CPS into a Provident Fund and leaves such a retiree with no periodic pensions, contrary to the requirement of Section 173 of the 1999 Constitution.

“It is doubtful if the 25 per cent balance in a retiree’s RSA, after deduction of 75 per cent lump sum would be adequate to reasonably cater for his livelihood in old age.

“It is important to note that the payment of 75 per cent of RSA balance as a lump sum upon retirement is not obtainable in other jurisdictions operating the CPS.

“This is due to its resultant effect of rolling back the principal objectives of the CPS. The objective seeks to provide a pool of pension funds that are invested for the benefit of retirees throughout their retirement life and not just immediately upon retirement.”

The DG further argued that notwithstanding the provision of the Act, an employer may agree on payment of additional benefits to the employee upon retirement. She said through the provision, employers may establish Gratuity or End of Service Benefit Schemes that are to be managed by licensed Pension Funds Administrators for the exclusive benefit of employees at retirement.

If this is included in the review, retirees would look to a rosy future after service as it would considerably enhance the amount available to employees as retirement benefits.

Such strategic thinking and diligence are responsible for the massive rise in pension fund assets and RSA membership. Assets under the Contributory Pension Scheme has risen from N7. 41 trillion in November 2017 to N14.27tn as of June this year.

Official data showed that N9tn of the total funds was invested in Federal Government securities, comprising bonds and treasury bills. Other investment portfolios where the funds were invested include domestic and foreign ordinary shares; corporate debt securities comprising corporate bonds, corporate infrastructure bonds, corporate green bonds, and supranational bonds.

According to PenCom, the total number of persons with Retirement Savings Account (RSA) in Nigeria now stands at 9,795,957 from 7,589,936 workers in 2017. Online verification and enrolment exercise for retirees and prospective retirees of Federal Government Treasury-funded Ministries, Departments and Agencies (MDAs) has continued to increase RSAs.

Aisha Dahiru Umar’s outstanding achievements in the pension industry is testimony to her industry, diligence and commitment to relieving the pain of pensioners. She has triumphed over challenges and is establishing her legacy in the industry.

– Suleiman is an Abuja-based journalist.

Disclaimer: This article is entirely the opinion of the writer and does not represent the views of The Whistler.