Premium Pension Limited is one of the leading pension fund administrators in the country. When Editors of the Economic Confidential and others were invited to the magnificent headquarters of the company located at Area 3, Garki, Abuja on January 22, they were entertained by the Managing Director Mr. Wilson Ideva who shed light on their company and the industry at large. He was supported at tour and interactions that followed by Mr. Kayode Akande, Executive Director Operations and Services and Mr. Adamu Mele – Executive Director Business Development and Investment. The Economic Confidential was at the parley…Excerpts:
Can you give us a brief about the Premium Pension Limited?
Premium Pension is one of the Licensed Pension Funds Administrators. We committed to services excellence using well trained staff and a state of the art technology to render unequaled pension administration services. Our Mission is to achieve superior customer satisfaction in active and retirement life through best practices. We have a unique board membership that that comprise of very experience people. Our Chairman is Mr. Aliyu Dikko who was one time managing director of UBA and was the pioneer managing director of this company before he became chairman. We also have Mr. Paul Usoro, our independent director, Ahmed Mustafa, Ibrahim Babayo, Mr. Inua Yayaya, Idris Saeed, Nelson Nweke, Victor Anohu, Adamu Mele, Kayode Akande and myself. You can see that we have a board experienced with diversified experience and that is why they have been able to bring what you are seeing here together.
You talked of unique board membership. What do you mean by that?
Apart from the experience of the board membership, the board is spread across the federation. All the major ethnic groups are represented on the board. The Chairman is from the North West as well as Idris Saeed, the South West is represented by Kayode Akande, from the South-South came myself and Paul Usoro, Mr. Nelson Nweke, an experienced banker is from the South East, and you have a reputable engineer in Mr. Anohu from the North Central. From the North Central we have Ahmed Mustafa who used to be the Registrar General of the Corporate Affairs Commission, from the North East is former Commissioner for Finance in Gombe, Inua Yahaya and also Mr. Babayo. This is the only pension fund administrator that can guarantee you a representation spread across the nation. That is why we say Premium Pension is the biggest indigenous pension fund administrator in Nigeria.
What of the management team and your operation so far?
We have a strong management team as you must have seen when we went round. We have here a total workforce of close to 400 and in that we have a very strong and robust management team. We have collective experience of 330 years at the management level. Once you head a department here, you are a member of management. The other thing which you might notice at Premium Pension but which you might not find in others is our capital base. Am sure you know that you need to have a strong capital base to be able to put up a gigantic structure like this our headquarters building and maintain it. Before PenCom increased minimum authorised share capital to N1 billion last year, Premium Pension and two other PFAs were the only companies already with capital of more than N1 billion and as I speak with you, we have shareholders’ fund in excess of N4.5 billion. We are highly capitalised and thus have the resources to do what we want to do. That is why you can see a structure like this; a world class environment with first class facilities ensuring that people work in a conducive environment.
How far have you gone on your service delivery?
About service delivery, you must all realise that pension business is all about service delivery because people have trusted their funds into your hands. There are two things they are expecting from you; they expect service delivery in terms of getting their statements as at when due. By law, we are supposed to give statements quarterly. You are also expected to give them alert when any transaction happens in their account just like a bank. So this is where we are also carving out uniqueness for ourselves. You know in addition to service delivery, we have also created a call centre. The call centre as you have seen is manned by human beings. We want people to be talking to human beings and not machines. When you call Premium Pensions, a human being must answer you and if you choose to discuss in you language whether Igbo, Hausa, Yoruba or pidgin or even any of the minority languages, there is somebody that is well trained to discuss with you.
Today every business is driven by technology. How far have you gone on that?
We have one of the most robust softwares in the industry. Just recently in December 2013, the board approved an upgrade of our enterprise solution- Cepas- from where we are today to 5.7, which is the latest version and it costs us a lot of money but if we must be ahead of competition, that is what we must do.
What is your position in the industry?
Concerning our position in the industry, for now we have total funds under management in excess of N300 billion (actually about N325 billion) but our account is yet to be audited and you know that our financial year ended in December and auditors are currently working on it. You can benchmark that with what you have in the industry and that will put us ahead. As I speak, we have over 600,000 Retirement Savings Account (RSA) membership nationwide. For the current year, we have embarked on what we call upgrade of our branches nationwide. What we intend to do across the country is to replicate this our national headquarters in smaller versions. When you go to Premium Pension office in Mina, Benin, Sokoto or Maiduguri, you are going to see a world class office replicated with all the facilities we have here and the board have approved that. We are starting with three pilot branches this quarter with Mina, Yola and Bauchi and it will continue throughout the year. Before the end of 2014, we are going to have upgraded 12 branches to a world class standard so that people who have their RSA with us will be proud to walk in and do business. They will be able to print out their statements from any of our branches.
Can you emphasise on your return on investment (ROI)?
Today, Premium Pension stands out on return on investments. Our return on investment on annual basis is above inflation and is one of the best in the industry. We started the industry in 2005 but commenced investment in 2006 and over the period from 2006 to date, we have returned to our customers excellent profits of more than 300 basis points above inflation year on year basis. As I talk to you, the unit price is about 2.388, which is one of the topmost in the industry. On the non-active funds (retirees fund), our unit rate is about 1.1739, which is also one of the top in the industry today. Premium Pension stands out in terms of return on investment and also excellent customer satisfaction. We have a very robust and strong administrative architecture in terms of our business development all over the country starting from our headquarters here.
What are you trying to achieve with the gargantuan structure corporate office in Abuja?
If you look at what you have seen so far, there is a deliberate attempt to create a world class institution and that is our focus. Our standard is world class and that is why we have created all that we have created. Our focus is total customer satisfaction. The GSM numbers of the CEO and executive directors are with all our customers and they can reach us at any point in time. All the staff are aware of this so, if a customer is badly treated, it will not take long for the information to get across to us. So with this, all our staff are on their toes. Every staff is potentially a customer service officer regardless of your function and that is why we continuously embark on trainings. When a customer meets you outside, he has met Premium Pensions.
How risky is the pension business in Nigeria?
In this business where we are managing the financial fortune of others, we must not be seen to be gamblers. If you take a look back at when the capital market crashed back in 2008, virtually every pension fund operator in Nigeria recorded a loss in that financial year from their funds under management but Premium Pension did not record a loss and this is because of the diversification of our investments. We are not heavily skewed in any area and we have a very robust research team that is looking at emerging markets where we need to put people’s money to get the best returns for them and not to put them at risk. It is quite interesting that our customers are the ones doing the marketing for us now. We know of retirees who advised their children who are now working to open their RSA with us.
Have your beneficiaries started enjoying the fruit of their investments?
As at December 2013, we have paid N7.6 billion to our beneficiaries and as we speak now, we will be looking at a figure slightly above N16 billion. When I say beneficiaries, we have two classes of them- people that have retired and we are paying their monthly pension and of course the people that unfortunately died. They have dependents. One beautiful thing about the programme withdrawal that a PFA manages for you is after you have lived many years after retirement and we paid your pension all through your retirement life, whatever is the balance in your account when the person finally dies actually belongs to your next of kin. That is why the information on your next of kin is very important and the money would be paid out to them. So when I say N87.6 billion, part of it is the death benefit that we gave to beneficiaries of people who have died and the balance represents people that are still alive, retired and are currently drawing benefits from us.
How are you addressing the challenges of meeting the needs of retirees?
Regardless of where you are living, it’s normal that when you are working you are probably located in the state capital but after retirement, quite a number of people want to return to their villages. Once you retire, you don’t need to be travelling to the state capital to collect your monthly pension because money enters your account where you are located and beautifully, all our banks now have alert systems so, you now hear our retirees ask themselves “have you got your alert?”. Our interest is for our retirees to have what we call a premium life in retirement and this is what we are trying to live up to.
Can you give us an overview and hope for Pension Scheme in Nigeria?
Nigerians are always apprehensive of any government initiative but there is something that I must tell you: the pension industry is private sector driven and since 2005 when this industry started, there has not been any recorded case of fraud because of the internal control put in place. There is a very strong regulation by the National Pension Commission. There is a third party custody of funds by the pension fund custodians and you have the PFAs. This arrangement makes the funds safe and because we are private sector driven, there is competition and competition results in better service. The future for this industry is robust and Nigerians should be certain that their money is safe and they should be able to have the same quality life after spending their years in service just like their counterparts around the world. When you travel around the world, people you see in the day time in club houses and restaurants are people in retirement. In Nigeria however, people in retirement are still struggling but with time, that is being revised because after retirement, you don’t need so much to live. This is where we are going and we will by that also expand our lifespan.
Do you think through the pension scheme average lifespan of Nigerian can be raised?
Right now, the average lifespan in Nigeria is 49 but am sure that if we have a good pension scheme that is sustainable, that might be raised to even 70. And when you note that what we have now is about 7 percent penetration for the new pension scheme because we have a total enrolment of 5.8 million people and if we have a workforce of 60 million or more and if we put that against the population which is currently put at over 170 million so there are still a lot of room for expansion and I want to encourage people to register for the contributory pension scheme. It will also discourage corruption because a lot of people engage in corrupt practises because of the fear of tomorrow. They are afraid that after working as permanent secretaries, directors and they retire there is no assurance of life after retirement. But if you know that by the 19th day of the month, you must get a pay alert like we do for every of our 11,400 pensioners it will help to reduce fraud in our country. And it also might encourage prompt service delivery and we are all worried about what will happen tomorrow but we don’t have to worry about tomorrow because somebody is already doing that for us. And that is why we should be very careful in choosing our PFAs and we must also be engaging our PFAs.
How do you address the challenges of Infrastructure?
For every sector there are usually challenges but when you are able to overcome the challenge, it becomes positive. Challenges bring out the best in you and if you don’t have challenges, there will not be innovation. For a successful entrepreneur or a good leader, the challenges you face today will lead to future achievements. The industry is at infancy and the cost of getting people to register for our services is quite enormous and also the set up we are expected to have is huge. We have to set up regional offices and also in all the state capitals. That is a huge cost. The other issue is trust. The old system is fraught with fraud and lack of prompt payment to pensioners and so, people are still battling with that hang-up between the contributory pension scheme and the old scheme. So today, when you hear that something had happened within the pension industry, people become apprehensive but when you get to the bottom if it, you will realise that it has to do with the old scheme. In the old scheme, there were not much check and balance but it is difficult to mess up the new scheme because like the N3.9 trillion that has accumulated in the contributory scheme we only do paper work to manage the fund. We do not have access to the cash. That is why you can see that in our industry today, managing directors of PFAs still live like normal folks with no flamboyance at all because you have no way of living above your income within the system. In a nutshell, the challenges include cost of penetration, awareness creation and strong regulation. It has been said that the pension industry is the most regulated in the whole world. Every day we are expected to submit valuation reports. Internally too, we have the challenge of making a statement that a Nigerian company can be run the same way like a world class business. That is why you see we are making so much effort to run a world class institution. In everything you are doing, human capital is very important. Staff must be well motivated.
What are the major areas you invest the pension funds into?
Concerning investment, if you look at the investment guidelines from PenCom, you will discover that PFAs are allowed to invest in infrastructure but it has to be through a structured instrument through infrastructure fund, private equity. We are not allowed to invest directly in infrastructure because of the complexity involved. For us to have a good diversification and also a good return on investment, it’s a very good avenue for us to invest but it is a challenge for investment managers to be able to provide structured vehicles. The number one priority for us is safety of funds and also a good return over a long period. Investment in infrastructure takes a long time to mature. If there are not serious mitigants we are not going to take your funds and then invest in that kind of venture but with the enabling environment that the Federal Government has already provided, there is a challenge for asset managers to come up with such kind of structured vehicles. In a nutshell, the industry does not have any problem with investing in infrastructure. We only need the required structured instrument that will ensure that there is no policy summersault in future that will jeopardise the funds put in such ventures.
How do you address issues concerning unclaimed benefits?
It is different from unclaimed dividends. Somebody retires and file the necessary papers with us and we get the necessary approvals, we pay the lump sum and continuously pay in his monthly pension. The money goes into his account on a monthly basis so the issue that whether it will be claimed or not claimed does not arise. That is why the requirements before we start disbursing money to you are very stringent. You can’t just write on a piece of paper and say that is your bank account. We will get several confirmations from you and from the bank to confirm. If there is a slight change in the name, we will not start payment because if you start paying into a wrong account, then there is a problem. Unclaimed benefits however will arise when you retire but refused to file your papers. Your money remains with us and continues to be invested by us and we will still be getting returns for you. For Federal Government employees, by the time they retire, the government is expected to pay bond into their account. If you are retiring now it means you have put in 35 years of service which means you started working before this new scheme which is just like eight years old. What you have in your RSA is just what has accumulated in these past nine years or so if you actually registered on the first day that we started. Government then calculates the initial 25 years, convert it into a bond and pay it into your account. As we speak, we already know our customers who are due to retire this year. What we do is that if you are supposed to retire soon but you have failed to put in your papers, we put up advertisements in national newspapers and also visit them at home to make them file papers to collect their benefits.
How do you rate the scheme so far in the country?
And industry that is about eight year cannot be rated like those that are already 100 years old. It is still at infancy. The whole pension asset we have in this country which we think is enormous is less than what the California pension scheme has. But many of the offshore pension bodies are amazed at our rate of growth because where they got to in their first eight years we have surpassed three times over. We attend seminars and conferences at Ivy League institutions all over the world and we tell the story of our pension scheme, our colleagues are always amazed. I will not be surprised if in the next five years, Ivy League institutions like Harvard are doing case studies on Nigerian pension industry. Again, other countries have been coming to PenCom to understudy our scheme. In terms of size of assets, we are only second to South Africa on the continent.
In the case of a deceased beneficiary, how can the family get the benefits?
About letter of administration, it is a statutory requirement. It is even in the interest of beneficiaries to remove potential conflict. Anybody that will be appointed as the administrator of an estate will go through a stringent condition. Somebody may be married to two or three wives and have children from all of them. When such a person dies, who takes charge? It must be someone that all of them agree upon. Even a next of kin has to get a letter of administration from the court to be able to access the deceased pension fund.