Commotion over N22b pension legacy fund

The Pension Transitional Directorate Department (PTAD) was established in 2013 to manage the N22 billion pension legacy fund under the old pension scheme known as Defined Benefit Scheme (DBS). But the agency literally is taking up arms against some insurance firms for failing to remit the cash in their custody, OMOBOLA TOLU-KUSIMO writes.

Are 10 insurance firms owing the Federal Government’s Pension Transitional Directorate Department (PTAD) N22 billion meant for the Pension Legacy Fund? Yes, says PTAD. Yes, but. .., say some of the firms.

The fund includes the liabilities and assets of pension funds of erstwhile pension offices and treasury funded pensions of parastatals, universities and colleges of education in charge of pensioners under the old pension scheme, known as the Defined Benefit Scheme (DBS).

The PTAD, under the Pension Reform Act (PRA) 2004, now PRA 2014, is charged with pension management under the DBS for pensioners who did not transit to the Contributory Pension Scheme (CPS).

The Directorate has been paying the affected pensioners since its was established in August 2013. However, investigations by The Nation show that while the 10 affected insurance firms have since transferred the pension liabilities back to PTAD as mandated by the Pension Reform Act, they are yet to transfer the assets worth N22 billion to the Directorate.

Already, PTAD is screaming blue murder that the non-remittance of the assets has made it difficult for it to properly pay pension arrears. PTAD claims that the insurance firms have held onto the pension legacy fund in contravention of the Act.

A source listed the firms to include NICON Insurance Plc, UNIC Insurance Plc, LASACO Assurance, Custodian and Allied Insurance Plc, Standard Alliance Life Assurance, and AIICO Insurance.

Others are Goldlink Insurance, Industrial and General Insurance Plc, Nigerian Life and Provident Company and Leadway Assurance.

Leadway Assurance, according to the source, recently paid N330.2 million it claimed to have held to PTAD. Similarly, Custodian and Allied and LASACO are said to have paid N148 million and N309 million, as first instalments.

NICON Insurance is said to have more than half of the fund in its custody, worth N12 billion.

PTAD Executive Secretary, Mrs. Sharon Ikpeazu, explained that the agency, which charged with pension management under the DBS for pensioners who did not transit to the CPS, had been paying the affected pensioners since its establishment.

She said this was despite that the firms were holding back the assets, which were meant to fund the payment of pensions to pensioners from parastatals, universities and colleges of education.The PTAD chief, however, confirmed that only Leadway had transferred the funds in its kitty to the agency’s e-collection account with the Central Bank of Nigeria (CBN), that to recover the assets, the Directorate on two occasions invited some of the firms to a meeting.

According to her, NICON, UNIC, LASACO Assurance, Leadway Assurance, Custodian and Allied, Niger, Standard Alliance Life Assurance, AIICO, Goldlink, IGI and Nigerian Life and Provident Company turned up at the meeting to disclose their balances.

”Consequently, Leadway Assurance has paid N330.2 million it claimed to be owing, while Custodian and Allied and LASACO paid N148 million and N309 million, as first instalment,” Ikpeazu told The Nation. She said while Leadway paid off its outstanding balance as at February 16, this year, Custodian paid its first instalment as at last month; LASACO paid as at February 7, with the next instalment due on March 31, 2017.

“Apart from inviting the affected firms to a meeting, PTAD, it was also learnt, went a notch higher by setting up a Pension Recovery Committee that is looking at the assets, accrued interest on the assets overtime, among other claims made by the firms.

“A dedicated account has been opened at the CBN called Recovery Pension Funds e-Collection Account, especially for the recovered funds,” Ikpeazu said, threatening that PTAD might report the case to the Economic and Financial Crimes Commission (EFCC) to recover the finds/assets should the firms fail to pay up.”

Insurance firms react

PTAD’s threats to report the case to EFCC may have hit the right chord in the ears of the affected insurance firms. The Managing Director, AIICO Insurance, Mr. Edwin Igbiti, affirmed that the company has N1.54 billion pension asset in its custody. He, however, said the assets were held in instruments in accordance with insurance laws. Specifically, he said the company was willing to transfer only the assets backing up this fund to PTAD. Subsequently, the company, he said, has requested for a meeting to discuss the modalities. PTAD is the government’s directorate saddled with managing the pensioners of the Federal Government under the old scheme.

The funds managed by the insurance firms were remittances from the Ministry of Finance for paying pensioners under the insured scheme,” Igbiti said. He, however, explained that in 2014, after the creation of the Directorate, the Ministry took over the function and instructed that all payments should stop in July 2014, which AIICO complied with.  Said Igbiti: “As at the time, there were no outstanding obligations.We would like to clarify that AIICO is not withholding any funds, which are pension funds that have been invested.

“Also, the total fund in AIICO’s books as at date and spread among 18 parastatals is N1.54 billion, and are in assets held in instruments in accordance with insurance laws. In compliance with the instruction of PTAD, AIICO forwarded to the office, a comprehensive statement of the accounts detailing how funds were received and the disbursement made.’’

AIICO chief told The Nation that after the meeting with the House of Representatives Committee on Insurance, PTAD and the insurance firms were mandated to discuss the modalities of the transfer of the assets.

“The mandate was followed up with our letter stating again the fund balance and the intention to transfer only the assets backing up this fund to PTAD and subsequently requested for a meeting to discuss the modalities,” he stated.

Igbiti added that after two attempts to meet with PTAD, a meeting was scheduled for Thursday, April 6, 2017, but that it could not hold. He said a new date was yet to be fixed. “AIICO is not reluctant to transfer assets and has begun the process, which we hope will be concluded soon,” he assured.

Similarly, the Managing Director, Standard Alliance Insurance Plc, Mr. Bode Akinboye, said the company was holding meetings with the regulator, National Insurance Commission (NAICOM), stressing that a reconciliation meeting was already afoot.

Akinboye, however, explained that the money was paid to the firms by the Federal Government under the old pension scheme, noting that this money is supposed to be transfer to PTAD. He, however, pointed out that to remit it without proper planning would bring loss to the affected firms. The money, he said, had been invested on long- term projects, such as real estate and shares, that would require time to mature and recoup.

”We are going through reconciliation because during the pension transition arrangement, there was some money that was managed by Pension Transition Committee under the Presidency. Some of it is what we are trying to transfer back to PTAD.

“We cannot bring out the money now without proper planning. PTAD is saying give us back the money, but we are saying that it is not going to be that straightforward. The portfolio will include dividend share and we all know what has happened in the last eight years to shares at the capital market. There is no way it won’t be negative.”

Also, the Deputy General Manager, NICON Insurance Plc, Mr. Kunle Adewale, said the company had given PTAD a proposal on how they intend to pay. “At present, we have sent a proposal to discuss a full and final payment and we are waiting for PTAD to give us a response,” he said.

He added that overtime, technicalities were involved, but that the most important thing was that the company had made a proposal to pay.

LASACO Assurance Plc Managing Director, Mr. Segun Balogun, said his company was paying back as agreed by PTAD.

Goldlink Insurance Plc spokesperson, Mrs. Adeola Adigun, said the company was about to transfer the assets to PTAD. ”We are at an advanced stage to pay by transfer to PTAD. However, the liability being an industry issue is under close monitoring by Nigerian Insurance Association (NIA), the umbrella association of the insurance industry,” Adigun said. Efforts to get UNIC Insurance’s reaction proved abortive. Its Managing Director did not respond to text messages sent to him nor return calls made to his mobile phone.

How PTAD’ ll use recovered funds

Upon recovery of the assets, PTAD would use the funds to settle pension payment arrears. Already, the agency, according to Mrs Ikpeazu, was working with the Minister of Finance to ensure that all outstanding legacy funds were transferred to the agency to have money to defray some of the liabilities arising from the non-payment of pensions.

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