Pension

Customer service tool to unlock micro pension

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The quest to enroll over 50 million workers in the informal sector into Contributory Pension Scheme (CPS) using Micro Pension initiative, remains a task for National Pension Commission (PenCom) and pension operators. Chuks Udo Okonta in this report, examines the role of customer service in making the dream a reality.

In recent times, the National Pension Commission (PenCom) and pension operators have been having sleepless nights working hard to integrate about 50 million workers in the informal sector into Contributory Pension Scheme (CPS) using Micro Pension initiative. To achieve is feat, they have set a target to attract at least 20 million informal sector workers and self-employed persons into the Scheme in the next four years.

The micro pension scheme is expected to cover three strata – Lowest, Middle and High income earners. It was designed for targeted individuals such as; the self-employed in various trades and professions in Nigeria – artisans, accountants, lawyers, mechanics, tailors, market men/women, hair dressers, architects, engineers and more.

Benefits

The scheme is expected to avail contributors access to regular stream of retirement income at old age; improves living standards of the elderly and enable contributors to benefit from the various incentives to be offered by the Pension Funds Administrators (PFAs).

Other benefits include: Deepening of financial literacy and inclusion; secures financial autonomy & independence of retirees; provision of national savings & long term funds; promotion of growth & development of the capital, mortgage and insurance markets and overall positive effect on the national economy as pension assets increases.

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Challenges

Good as the benefits are, it is believed that they can only be derived through good customer service which is presently a big challenge to pension operators.

According to Head, Benefits and Insurance, (PenCom), Olulana Loyinmi, inadequate communication with/enlightenment of pension contributors and retirees by Pension Fund Administrators (PFAs) is a clog that is pulling back the wheel of progress of the pension sector.

He maintained that the poor customer service by some PFAs has brought about influx of contributors and retirees into the Commission to obtain clarifications on trivial issues.

This statement actually raised concern for the need for pension operators to strengthen their customer service, as they eye 50 million subscribers which is a huge number compared to about 7.2 million contributors and 132,405 retirees, they are presently servicing.

Measures in place

According to the Head, Micro Pensions Department, PenCom, Polycarp Anyanwu, to make the scheme work smoothly, the commission has put in place measures such as the use of Pension Smart Cards for the transactions, adding that the products to be offered are ladened with incentives.

He said there would also be minimal transaction cost; easy withdrawal of contribution, technologically driven and strict regulation of the investment of Micro Pension funds to guarantee safety and fair returns on investment.

Other steps taken by the commission according to him are: Establishment of a Micro Pension Department; Development of a Micro Pension Database; Collaboration with potential contributors; Collaboration with Chambers of Commerce and other Government Agencies like the CBN, SMEDAN; Validation of the EFinA research on the preferences of target audience for Micro Pension Scheme; Review of the implementation of Micro Pension in other jurisdictions like Kenya and Ghana; Formulation of Guidelines and Framework on Micro Pension; Consultations with licensed Pension Industry Operator and Enhancement of the Commission’s ICT capacity to accommodate the Micro Pension Scheme.

However, Pension Fund Operators Association of Nigeria (PenOp), which the umbrella body of the operators, said it is leaving no stone unturned as regards equipping practitioners for the tasks ahead.

According to the Executive Secretary PenOp, Ms Susan Oranye, the association is working with the National Pension Commission (PenCom), to conduct trainings for the operators on key procedures such as; basic calculation of fund pricing, differences between Programmed Withdrawals and Annuity, death benefit requirements and new initiatives in the sector.

She said the trainings which had held in Lagos; Abuja and PortHarcourt, provided opportunities for the workers to share knowledge and initiate measures to tackle challenges affecting their operations.

She maintained that the trainings and other measures adopted by the association are geared toward making adequate provisions for workers that are presently covered in the scheme and those that will be integrated through recent initiatives taken by PenCom and the association.

“We are aware that there are approximately 176 million in this country and about 70 million people in the workforce and currently we have about 6.4 million in the contributory pension scheme.

“The Pension Fund Operators Association of Nigeria (PenOp) recently concluded its customers service training that held in PortHarcourt, Abuja and Lagos and was attended by key staff of all the operators in these three regions,” she added.

The focus of the training, according to her, was to build the capacity, knowledge base and confidence of the staff, especially those who are at the front line in the organisation they work for.

The President of PenOp, Longe Eguarekhide, said pension operators are anxious, to commence micro pension business, adding that Micro-pension remains one of the key focal points for development over the next 10 years.

“We had actually advanced to certain degree and we had discussions on what need to be done. There is also the structure which is the type of guidelines we can use to approach this market. We probably have to create a separate fund for informal sector subscriptions because most of the people in the informal sector, mostly micro-pension people always have a liquidity need. So, we do not want to include them in the same pot as the informal sector workers.

“There is also the fact that they want a different way of accessing their benefits. They probably want what we might call a guarantee return on their contributions. These are all the issues that need to be dealt with and I think that we are rapidly dealing with them,” he said.

He noted that the operators would use a special means to reach out to micro pension subscribers, stressing that the kind of material used to create awareness for the informal sector, would be extremely different from those in the formal sector.

He maintained that champions have been appointed from operators and the regulator to handle issues around the scheme, adding that there would be an increased activities and better compliance in the next 12 to 18 months.

Conclusion

Policy formulation is never a problem to many players, but enforcement of the policies has remained an albatross for the country. As all eyes seemed set on PenCom and pension operators to see what they could make out of micro pension scheme, issues on customer service should be on the front burner to ensure subscribers get maximize satisfaction as they leverage the scheme to plan their future.

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