Mr Aliyu Dikko is
the Chairman of Premium Pension Limited. He was
pioneer Managing
Director of the company until he retired in 2011 and was
immediately
elected as the Chairman, Board of Directors of the Company.
Before becoming
the MD of the Company, he was the Chief Executive Officer of
United Bank for
Africa Plc (UBA) until May 10, 2005, when he voluntarily
disengaged from
the services of the bank to pursue private initiatives.
In this interview
with TONY ICHEKU, Dikko bares his mind on the pension
industry and how its over N5 trillion accumulated in 10
years of contributory pensions scheme can be optimally deployed for
economic growth.
...........................................................................................................
At the just concluded World Pension Summit
held recently in Abuja, investment of the N5 trillion
naira accumulated within the 10 years existence of
Contributory Pension Scheme, CPS was
highly topical. Some State
Governors are already looking at how they can access the pension fund for
infrastructural development of their States. What do you make
of this?
There were three States that attended the
Governors forum arranged for the
Summit namely, Kaduna, Akwa Ibom and Kebbi
States. Out of the three States
only Kaduna State has complied with the
scheme. We are the leading PFA for
Kaduna State. Kebbi State has since
inception been talking of complying but has
not complied. Akwa‐Ibom has also not complied up till now.
They have just been
promising to join in spite of all the
revenues that they have in the State. They just
keep postponing the date for
implementation. This means that it is only Kaduna
State that may be able to meet the
requirement for pension asset investment. My
advice to the States is that it is in their
own interest to comply because once they comply,
a lot of opportunities will be opened to them. Otherwise they may not be able
to access the funds.
After all the talks at the Summit, do you
think there is a way out yet on the way
forward as to how the pension fund should
be invested in infrastructure?
This is really the issue and it is not
limited to the recent summit. What we have
been doing as a nation in the past is to
sit down, talk and go. There are always no
plan for implementation and another set
will come and talk and go and it goes on
like that. There will be so many reports
and committees but implementation has
been zero. My advice is that there has to
be timeline for implementation for
whatever whoever intends to do. With
respect to the pension asset, yes we have about N5 trillion on
the ground part of which is not liquid but in asset. But
at least 70% of that is liquid asset which
is available for investment.
And this amount is available for investment
in, say for instance, infrastructure...?
PFAs cannot put in money into
infrastructure without a proper framework where
the infrastructure will clearly show the
revenue they will generate to be able to
retire whichever instrument is used to
invest in such bond or infrastructure. There
has to be capacity development. I also need to know how to structure the
funding so that as I fund, it will not affect my
liquidity as a Pension Fund Administrator or cause problems for me in other areas.
Recently, the immediate past chairman of
Pension Operators
Association of Nigeria (PenOp) told us that
the Federal Government is owing
about N100 billion in arrears and
remittances. What is your view about this
bearing in mind the fact that the same
Government is trying to make Nigerians
have confidence in the current system?
Unfortunately, the Government may have had
very good intention in introducing
the CPS and I must say that what the
government has done so far is
commendable especially the Federal
Government. This is because before the
problem of the oil price decline,
Government was almost 100% compliant
in terms of remittances with respect to
federal government employees. The
Government was largely in compliance also
to past service liability but
unfortunately, the oil price lap came and
has now affected almost everything.
Yes, there is an outstanding of more than
N100 billion in terms of past service
liability and I don’t know whether the
government is clearly remitting its
obligation in terms of even the current RSA
remittances. But in terms of past service liabilities, yes, there is a huge
outstanding. It is a temporary
setback but I do believe the government
will address the issue going forward.
The pension asset under management
generally is over N5 trillion. People
see it as huge but it’s still a far cry
from what is possible. What advice would you give to be able to shore up people’s interest in joining the scheme
especially in the private sector and the informal sector?
The working population is said to be around
49 million but so far, just about 6
million have registered which means there
is still a very wide gap. I think the gap
has to do with the informal sector which includes
the unorganized or semi‐
organized artisans among others. I believe
that the way to bring them into the
scheme is through incentives. Once there is
incentive and it is clearly
communicated to workers in the informal
sector, we will begin to see them
joining the scheme. Part of this is perhaps
to make their own contribution as
flexible as possible. It should not be as
rigid as what we have for the formal
sector. There could also be some tax
incentive and maybe accommodation to say
if you are able to contribute so much, you
are guaranteed a loan to own a house
or a loan to buy motorcycles. This is how
other countries like Mexico and
Chile were able to bring in their informal
sector into the scheme. The National
Pension Commission (PenCom) is working on
the guideline for the informal sector which will soon be out. We are waiting to
see the content of the guideline. The sector is a huge market.
But some experts have argued that without
improvement in the condition of
living among the Nigerian public, people
especially the informal sector will not
be able to join the scheme. What is your
take on this?
We believe that with improved government policies, there should be
improvement in the general condition of
living. It is really better to start
somewhere because we cannot say because
there is no improvement in the
condition of the informal sector employees
then we will not start. There
is no
time that we can say this condition is
optimum. At any given time you will see
need in some other areas and then you just
have to continue to address them.
What
are the other challenges in the pension industry?
The most crucial is the challenges of
compliance largely and especially by the
private sector. Other challenges also
mentioned earlier is funding which is now
slow. These are some of the major
challenges.
Many state governments have not joined the
scheme. PenCom has said it will
continue to engage them through moral
suasion. This seems not to be working. Is there no way for the Federal
Government to say that this is
compulsory for everybody?
What happened was that when the scheme
started, there was supposed to be
law for the Federal Government and for each
State to have its own law. But later on
it was realized that many States were not even willing to enact the laws. So at a meeting during former president Olusegun
Obasanjo’s administration, the
Council of State decided that all States
should comply even though it didn’t say all
States should adopt the same Federal law. But
the council just simply agreed that
all States should comply. After that some
States decided to comply but quite a
number of states saw it as an additional
cost. They are not looking at the future
but at whatever contribution they are
supposed to give now.
How
has your company, Premium Pensions been able to amass the more than N380
billion you claim to be
under
the management of the company?
We have been able to achieve this because
we believe in customer care. We are
very close to our customers. This has made
us to be a preferred PFA in the
pension industry. We were
among the first set of Pension Fund
Administrators (PFAs) to be licensed and we are today one of the leading PFAs
with asset
under management of about N400 billion. We
have also dedicated a lot of resources to our staff by
providing proper training, competitive
remuneration package and created a very conducive
environment for them. This has helped us a lot in achieving success.
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