We pay over N260 million to retirees every month – Sigma Pensions MD
Alhaji Umaru H. Modibbo is the Managing Director/CEO Sigma Pensions ltd. In this exclusive interview with our correspondent, he speaks on the benefits of pension, how Sigma Pensions is treating its customers and sundry issues. Excerpts:
October 31 is World Savings Day. Though this is celebrated more in the banking circles, is it relevant to pension?
Savings is a word that is key in financial circles. Everybody that starts work needs to save for retirement. Whether it’s a current account savings or whatever type of savings, another reason to save is for you to be able to sustain yourself at old age. Pension can be ascribed as one of the key pillars of savings and why it’s so important is because, you are saving for when you are weak and unable to generate income. There are several other reasons to save; some people save to grow assets while some others save to buy necessities of life. In my view, the most important of all is pension savings.
The pension savings keep rising and there is debate that the assets should be used in financing the huge infrastructure deficit in Nigeria. How does that resonate with you?
The debate is healthy. We need infrastructure but while I support using pension assets to invest in infrastructure, the investments must be done in such a way that whenever pensioners want their money, they get it. We should be careful in handling pension money. We should structure it in a way that there would still be enough liquidity to pay retirees. Anything short of this, I wouldn’t support. The industry needs to do due diligence on the type of infrastructure pension funds should be invested in.
But the National Pension Commission (PenCom) says there would be a guideline and that the structure would be carefully thought through.
Yes of course! There will be guidelines but the guidelines aren’t ready yet. PenCom has been discussing with the relevant agencies especially with the Federal Ministry of Works, Power and Housing so I believe they will get bankable projects/instruments. Bankable projects/ instruments are viable projects that will guarantee cash flow that is sustainable so cash is available to pensioners when they need it. Anything short of this, it wouldn’t be worthwhile.
The last time we spoke, you said Sigma was among the top five PFAs but that you are gunning for the first top three, where are you now?
We are still the fifth PFA in Nigeria in terms of assets under management. We are managing over N260 billion as at today. That’s the status. You know we are in a recession and a lot of companies are laying-off. That is also affecting our remittances generally. But recession is temporary, it will go but pension will remain here. So going forward, pensions would be more viable because the reengineering that is happening in the economy will throw up more opportunities possibly in some different sectors of the economy. People are looking at the agricultural sector, the mining sector and others..
Is the recession also affecting the level of remittances from employers? Recall PenCom has been battling employers who deduct pensions from employees yet refuse to remit. Is the problem exacerbating with recession?
There are some employers that are not remitting but there are recovery agents going after them. But there are a lot of challenges. Some of these companies are no longer in existence, so even if you send recovery agents after them, they will find out they have closed shop and there may be nothing you can do.
How many retirees are you currently managing and how much do you pay out monthly as pensions to retirees?
We have about 9,280 retirees on our payroll as at today and the average payment on a monthly basis is over N260 million.
Some retirees are complaining of the difficulty to access their 25 percent lump sum from their savings after losing their jobs, what’s the experience at Sigma?
If you lose or out of job for four months then you become qualified to access the 25 percent lump sum. Provided remittances are not received into the RSA within the period.
Are there any other conditions besides these?
Apart from the required documentation, there is no other condition to be fulfilled.
So how do you engage your retirees and prospective retirees?
We have Retire Foras every month and we rotate it among the six geo-political zones. At these sessions, we educate them on the withdrawal options available, resolve and clarify questions raised, update their biodata, prepare them for retirement and provide financial planning at retirement.
A reader had sent in an email asking if he could access his full pension savings. He said he had collected the 25 percent lump sum when he lost his job. But he has been out of job and needs to offset his mortgage loan thus he needs the 75 percent balance. He said he will be 50 by next year, the retirement age. What’s his fate?
Retirement Savings Account (RSA) is dedicated for pensions, is not meant to settle mortgage loans, building of houses, purchase of cars, payment of school fees. Pension money is to keep you going daily in retirement - drugs and foods stuffs basically. It is also believed that at retirement, your kids should have also left school and you don’t have much responsibility. The money is just for sustenance. He can’t take all the money. But where you have other savings or investments, these can be used to handle such.
Sir, I won’t stop talking about the transfer window. Some pensioners can’t wait to leave their current PFAs to another. A lot of them complain of the quality of service delivery. So where are we now?
The National Pension Commission (PenCom) is still working to achieve a seamless process. The moment we get a go ahead, we will comply. I believe very soon, the guidelines will be released. People should be a little patient. We at Sigma Pensions are sure of keeping our customers and we are ready to take on new ones. With the level of our service delivery,we will be net gainers at the end of the day.
Inflation keeps rising and the recession is here too, how are your investments doing in terms of returns on investments?
We have a good mixture of portfolios and we can easily migrate from money market, capital market or the bond market. We have a good mix of investments and our returns are impressive.
What’s your message retirees? to
The message to workers is to save more so that when they retire, it will be possible to maintain their life style. Our focus is to continue to service our retirees diligently and to make them feel secured in retirement.