Dr. Hamzat Sule Wuro Bokki, who has over 26 years cognate experience in human resource management, investment banking and corporate governance, among others, is the pioneer Managing Director/Chief Executive, NPF Pensions Limited, which manages the pensions of members of the Nigerian Police Force nationwide. In this interview with IBRAHIM APEKHADE YUSUF, he speaks on the prospects and challenges of running the company vis-à-vis in innovations in pension, among others.
Why was NPF Pensions Limited established?
This company is relatively young. It is the youngest pension fund administration company in Nigeria and it’s less than two years old. The NPF was licensed by the National Pension Commission (PenCom). It is owned by members of the Nigeria Police Force (NPF). Members of the NPF totalling over 300,000, expressed dissatisfaction with services provided previously by the other PFA companies managing their accounts and, therefore, the Federal Government granted their wish.
They now own their own PFA company to manage their pensions accounts and are now able to address all the issues involving the management and administration of their pensions. We actually started the transfers of the Police pensions in other PFAs in December 2014. That is, transferring their contributions from the 20 other PFAs. So far, we have transferred the accounts of over 220,000 police officers in this country back to NPF Pensions Limited. The transfers are ongoing.
But in the past a lot of these pensions’ funds were misappropriated. With this new scheme, what measures are in place to forestall a repeat of the experiences of the past?
No we don’t have such challenges in this scheme. The only challenge the police officers have had is lack of statements. There are two pension schemes. I want to clarify. The first one is the pay-as-you go, which is the defined benefit scheme. We’re not managing that one. That person has to go to the Federal Government, or the former police pension. This one operates under the Pension Reform Act, which has a system of checks and balances. The monies are kept with a Custodian, not with me or the NPF.
So the PFAs managing these monies don’t have them as such, there is no question of mismanagement under this scheme. No. What we have are customer service issues only. For instance, they’re entitled to quarterly statements, having zero balances and all of that. They’re having zero balances because the documentation was not being completed but the money is there in the system. So, it’s not like there is mismanagement. We celebrated 10 years of the new pension scheme in June 2014. As at that time, the industry was managing nearly N5 trillion. There was not one reported case of mismanagement.
In this scheme there are strong safety nets. There is no way the PFAs will misappropriate your money. It doesn’t happen. But when you’re not satisfied with the information given to you by your PFA you have a right to complain. It’s like your bank been unable to give you a statement. Without the statement you may not know what your position is, but the money is there anyway. What I’m saying is that we’re trying to address the customer care issues that police officers have had. The issue of mismanagement has never arose.
Now PenCom is a regulator and I think you can attest to the fact that we have never had one report of misappropriation since the inception of this scheme. I don’t have means to misappropriate no matter how fraudulent one wants to be. The money is not with the PFA. Once the Federal Government wants to pay the pension of a police officer in my own case, they pay to First Pension Custodian. And when I want to invest, I take a paper and write to them, and say please buy the shares of Dangote Cement, at N1b then, I raise a cheque and they will go and execute it. If I want to place money with a bank, I will tell them, I have agreed with Access Bank to deposit N1b fund for a period of 90 days. It is First Custodian that would send the money to Access Bank. When the money matures, Access Bank will return the money to First Custodian. That is the relationship. I assure you the safety net is strong.
In terms of reinvesting the income yielding assets, what modus operandi do you adopt?
First of all, there are guidelines and appropriate regulations for these things as to where to put the funds. We just don’t put the funds where we like. For instance if we’re using a quoted company, it has to have declared profit in the last five years of its operations and must have paid dividend in the last three years within the same period before it is qualified for your investment. And in any case, you don’t invest more than five per cent of the funds in such an investment. So there are limits to what you can do. It’s something that is very regulated and that’s why PFAs have never lost money.
According to the Pension Reform Act, a pensioner is eligible to collect his or her pension when he is 50 years old. Does this apply to the police too?
Yes, it is the same Pension Reform Act that covers us. All the rules and regulations and guidelines are applicable to every participant irrespective of whether you’re a police or a teacher. We apply the same set of rules and regulations. But the police apart from the Pension Reform Act have their internal little contributions; I may not be competent to speak on that. I know they have their cooperatives and all of that. That is self-funded by them. But apart from that, the Pension Reform Act covers everyone equally.
What have been the issues you have had to grapple with thus far?
Most of the issues that we’ve been trying to address are issues that have been brought over from the management of their funds by their previous PFAs. Most of these issues range from underfunding of their accounts, nil balances in their accounts, to mention just a few. Imagine, in the past, an officer will wake up and just about the time he is retiring, realises that there is no money in his account, that it has not been funded overtime.
Then there are issues of underfunding, whereby officers are promoted one or two ranks ahead, but the contributions being paid to their accounts are still the contributions of their former ranks. Let’s assume that an officer is promoted from a corporal to a sergeant and from sergeant to inspector. But you find that the contributions being paid into his accounts are that of the rank of a corporal, whereas what is being deducted is now for the rank of inspector. There is a shortage and it is hanging somewhere. It has to be brought back. And you also find officers; nearly half of the policemen in this country have not been receiving quarterly statements and all of that. These are some of the issues that we have been trying to address.
What other specific measures do you take to prepare the officers and men for retirement?
We undertake a number of activities. Most times, we interact with officers that are due to retire by the end of the year and get them informed about the processes and procedures of how to make the transition smooth and easy for them to collect their pensions at the end of their tour of duty. We talk to them about the documentation and how to go about doing it. So that by the time an officer is due to retire in the effective date he will get his pensions as soon as possible. Most times, we go round this country to do the interface and discuss across the six geopolitical zones. We have started with the South west in the second phase because we know how important the formations and commands here and how large they are.
Once we conclude the exercise in the south west, we hope to head to Bauchi and from Bauchi we go to Sokoto, where we will continue to execute the exercise and it’s a continuous one. We want to interact with our prospective retirees, give them pieces of advice and have their relevant medical conditions checked. We have specialists talk to them on entrepreneurship, on the psychology of retirement and to tell them that there is still life after retirement that they can still do a lot to the country and to their respective communities and families.
What would you consider as the important milestones achieved by the company so far?
I don’t want to say anything yet. But I think we’ve transferred 220,000 accounts out of about 330,000 and we have made very good returns which is far above industry average. So far, we thank God we’re getting the cooperation of the National Pension Commission as well as the cooperation of the police authorities and we’re getting the cooperation of all other stakeholders. So, I think we’re moving on as planned.
What are the challenges so far?
The challenges that we’re facing are negative publicity and negative impression being created by the other PFAs who have said all kinds of bad things against the new PFA, against the police authorities. But it is normal in a competitive industry environment. Not everyone would like the progress we’re making. But I think we’ve made some progress.
You talked about having been able to transfer 220,000 accounts so far. What is causing the delay in doing the turnaround for the other 110,000 accounts?
There is nothing causing it. As I said, it’s a continuous process because the National Pension Commission had decided in consultation with stakeholders not to transfer overnight because it could affect the investments of the other PFAs if they are to return these assets they have to liquidate some investments. And we don’t want them to lose money in the process because it is retirees’ money anyway and we have to be accountable. So we’re doing it gradually so that there are no sudden shocks on the market that may liquidate investments. So that is it. It’s ongoing and it was given a period of 18 months. So, it’s still ongoing and the process is seamless. It’s just a matter of time.
