In 2006 while working in Nigeria’s pension industry, I got a call on a Saturday afternoon from a Pension Desk Officer (PDO) in one government agency with a proposition that one gets used to hearing within the Financial Services Industry, especially when dealing with unionized organizations in the private sector and the public sector. He wanted to know what “deal we could strike” – he had a number of Retirement Savings Account (RSA) forms from his colleagues that he wanted to deliver to my office the following Monday and wanted to know how much my company and I were willing to pay in exchange. I remember responding firstly with a general apologetic statement to the effect that since I was a very young man and I hadn’t met the caller in person and could not adjudge his age, I was apologizing for the next set of statements I was going to make, especially if indeed he turned out to be older than me (which he was). I gave him what I hoped was the tirade of his life – scolding him for seeking to exploit the decision made by his colleagues in what was meant to be clearly a personal choice, and being so typically corrupt. The previous pension scheme which the Contributory Pension Scheme was replacing was destroyed by public servants like him – who couldn’t smell anything that had to do with money, without demanding their own piece of the pie. Interestingly, after my tirade, he thanked me, and showed up in my office the next Monday with the forms – we didn’t pay anything.
A year after, I had another encounter – same job, same hustle: selling RSAs. This time a Human Resources Director invited me for a discussion in his office in one of the self-funded government agencies. I had only met him once before during a sales presentation we made at his office, and I was expecting the “usual”. I almost didn’t go, but I remembered that my first responsibility was to honour my clients and get the business, so I went. It was the fastest meeting I had ever had with a “big-man”. In less than 2 minutes after arriving the reception, I was ushered into his office, and his request was clear and interesting, I paraphrase: “Mr Barrow, there are all sorts of money that you can see and want to chop in this government work, but there is also money that I will never touch – Pensions: old people’s money and money for dead people. We have this fund for our old retirees that we want your PFA to manage. Here is the cheque, and the list of beneficiaries. Please liaise with the legal department to draft an agreement, but I do not want this money around here any longer with too many people putting their eyes on it”. Now there was a man who had a conscience – who understood that even if we needed to STEAL, why steal from the poor and vulnerable.
Why am I telling these stories – well these are among many stories that I tell as I speak to professionals in the pension industry in workshops, seminars and conferences that I facilitate. Ten years down the line, and this trend of “egunje for pensions” is still alive and well. What I have found sickening is how many professionals in the pension industry, from clerks to senior executives think that the only way to get pension accounts and grow is to pay someone within the client organization some money to commit the crime of influencing or coercing others to get accounts. The only saving grace is that the pension system is largely immune from failure the way banks are due to the inherent risk management framework, and separation of the custody of pension assets from the administration and investment of pension funds. In spite of this safeguard, the moral hazard and ethical consequences that this culture of “egunje for pensions” can cause other forms of failure in an industry with huge fiduciary responsibilities. One clear consequence of the hazard is the low level of professionalism and competence often displayed some professionals in the industry.
During an interaction with some professionals a couple of years ago, I was told that the acceptable justification for paying out bribes in exchange for accounts was that the money for the bribes was not coming from the accounts of account holders, but from the shareholders’ funds of the company. Interesting! So instead of the company to deploy its shareholders’ funds to deepen the capacity and capabilities of its employees for ethical selling, they are prepared to take the short-cut and pay immediate bribes for accounts whose life-time value they could not predict, while leaving their sales professionals as mere “form-pickers” and destroying the future leadership and talent pool for the company. In another conversation, a professional said that even the individual account holders kept asking for corporate gifts or incentives before making a decision. In response, I told him that his problem was that he was focusing on acquiring accounts of lower-level staff at the factory who could be easily swayed by such material inducements, rather than on more sophisticated senior staff or senior managers who will be more interested in evaluating the brand promise, value proposition and capabilities than asking for a pen or jotter. What he and many others fail to understand is that the more senior and sophisticated customers who are not demanding “petty gifts” in exchange for RSAs offer higher value contributions and longer life time value (they tend to have longer and more prosperous careers).
Finally, this “egunje” for pensions syndrome creates a moral hazard and a reckless mercenary culture similar to what happened in our banking industry. While in this system employees can hardly defraud customers by way of stealing their monies, they can defraud the company, abuse office/information or induce customers to make dangerous non-pension financial decisions in a bid to enrich themselves. In one discussion, I got very senior industry professionals to realize that this syndrome, if left unchecked, could encourage their lower-level staff who may be involved in parcelling these “gifts” to PDOs to start keeping part of the gifts for themselves or looking for other ways to enrich themselves to the detriment of the organization.
My plea to professionals in the industry is that they do not lose sight of the huge ethical expectations from the customers, regulators and our society regarding the responsibility of managing pensions, that they are not swayed by the antics of desperate and hungry public servants claiming that “everyone is doing it” I am also appealing to the individual account holders not to give up the right to make a good choice under duress or false promises of instant gratification from marketers; and that the guilty PDOs and Union Leaders/Representatives feel the wind of change blowing in the country and refrain from these desperate acts that will try to bring our noble and burgeoning pension industry into disrepute.
Omagbitse Barrow
Omagbitse Barrow is a Chartered Accountant and Trainer/Consultant in the Nigerian Pension Industry.
