ARMCO Campaigns to Make Retirement Pleasurable
By Uche Obike
It is not new to hear that most Nigerian workers dread to think about retiring from active service.
The situation has been made worse in recent times with pensioners being subjected to inhuman treatment by those who supposedly were their former employers.
Perhaps, the pensioners allowed themselves to be treated cruelly because they failed to save some for their retirement.
To remedy such grievous mistake of not planning for retirement, a new company Asset and Retirement Management Company Limited (ARMCO) was established by credible and resourceful Nigerians to ensure people are well rewarded in terms of pension when they retire from the service of their employers.
ARMCO (Pension Fund Managers) was incorporated on February 10, 2003. It is licensed and supervised by the Securities and Exchange Commission (SEC) as Pension Fund Managers (PFM). Its responsibility is the management of retirement funds for the benefit of employees of government at all levels, corporate organisations, groups and individuals.
The company's ownership cuts across Nigerians with high integrity. ARMCO has met and surpassed the statutory requirement to operate as Pension Fund Managers in Nigeria.
The Managing Director/Chief Executive Officer of the ARMCO, Mr. Dapo Solanke recently in chat assured Nigerians that his company is the solution to pension problems in the country.
He holds a Bachelor of Arts degree in Business Administration from Andrew University, Michigan, USA (1980) and Master of Business Administration with emphasis in Accounting and Finance from University of Ibadan (1998). Dapo is also an Associate of Chartered insurance Institute of London (1991). Solanke has a good combination of work experience in insurance and banking where he was for about 23 years. He retired from Continental Trust Bank Limited as Deputy General Manager- Credit Management Group. Also, he worked with Gulf Bank of Nigeria Plc as Deputy Treasurer from 1993 to 1995 before he joined Merchant Bank of Commerce now Continental Trust bank Limited.
Members of the board of directors of ARMCO include Mr. Peter Eloka Okocha as Chairman, Mr. Adelani Kehinde Oniwinde, Engineer Abdullahi A. Sule, Dr. Adedeji T. Adeleke, Engineer Don U. Muotoh and Mr. Sam Ayininuola, while the executive management include Mr. Olusola Raimi Osunlola, Mr. Adelani Afolabi, Mr. David Olumuyiwa Ajayi, Mr. Olutimayin Toyosi Abidemi and Mr. Kingsley Okhiria.
The company's main products include corporate pensions, gratuity schemes, personal pensions, target contributions, investment management and advisory services and corporate trust services.
The company has within a very short, but fruit operations demonstrated that it was poised to revolutionise pension delivery services in Nigeria for good;
He noted with confidence that we want to reverse the ugly story and sights about
pension by doing the following:
Bring the practice of pension business in Nigeria to international standard adapting and improving on international practices.
Provide quality pension and allied services to corporate and individual Nigerians like never before.
Make quality education and information available to government, corporate organizations and individuals in order to impact pension decisions at all levels.
To make retirement pleasurable to Nigerians.
To make non-pensionable jobs through personal arrangements of pension plans.
To positively position Nigeria in the global pension picture.
Speaking recently in Lagos, Solanke said that his company get government at all levels: Federal Government, State and Local Government to plan their retirement.
He stressed on the need for Nigerians to set aside some of their earnings, which could be monthly, quarterly, half yearly and annually. "We will save this money for them because we pay interest on every kobo we pick from the public. So, we will grow the fund. And, when they retire, they will come and take the money from us. But, there is the need for them to save for a long time," he advised.
To be a beneficiary of the fund, he said that it is expected that one should sign his personal retirement account the first day he gets his letter of employment.
"Begin to save gradually, and before you know what is happening, you would have saved millions of Naira which will serve as your fallback when you retire from active employment. When you get the bulk sum, there are two things you can do: take part of it as your gratuity, the balance you buy what is called an annuity that will come as monthly salary till the end of ones life. This is money purchased scheme which an individual has bought for himself overtime. And, when, this is put in place, there is peace of mind with financial security. You can live your age with peace, and your retirement becomes pleasurable. Basically, what we do is that we make retirement pleasurable to the public," he assured.
Solanke explained that setting up ARMCO was aimed the complaints by Nigerians over the non-funding of pension by the government.
He regretted that despite the fact the some pensioners have put in many years of meritorious service in government service or even in the private sector also, they go home either they don't get their pension or gratuities as and when necessary, while a lot of them die in the queue, and others even die in their homes out of abject poverty. You will discover that there is a socio-economic gap in the work life of Nigerians as they work and forget to save.
He added that granted that government does not even have something in place for the workers in terms of pension, one can build a personal gratuity and pension on his own with the assistance of professionals such as ARMCO.
The company is right now educating people on the need to have a pension plans for themselves even where government's own is failing. Government, he insisted should go back and make sure that pensions are properly funded on annual basis to make sure that when people retire their monies are there for them to pay.
"The major problem facing pension scheme in Nigeria is that most Nigerians do not know that they can on their own build their own pensions. But, good as that may be, some of them still find it difficult to save for a long time. They want money they can save for about two, three, four years and they come and collect it. That is one major problem that we have experienced. But, even at that, a good number of them have signed on and every month they pay. Some of them have even paid up for this year, while some others have standing order with us. Nigerians do not save for a long time. Nigerians want to save today, come about two or three months after to collect that money and consume it. You don't plan your retirement in this order," said Solanke.
ARMCO encourages personal pension arrangement as the company's personal pension plan gives one his retirement benefits, withdrawal benefits and death benefits which makes ones pension plan complete.
Beyond the issue of poverty, the pension fund manager decried that the awareness is still not enough because those that are expected to know about the benefits of pension plans, do not know or they know, but do not know enough.
ARMCO insists that there is the need for Nigerians to have a parallel pension plan where one can save substantially. It regrets that a number of employers of labour in Nigeria do not have pension plans for their staff even as the productive part of their life has been given to such establishments.
He warned that those who manage their pension plans in-house because it is too dangerous as they stand to lose everything if anything happened to such establishment, the whole funds consolidated towards their pension is gone.
He advocates the handing over of pension funds to pension fund manager who will manage and grow the funds. The pension managers have the expertise needed, the plural valuation needed to be sure that the fund is solvent.
He advised those that are in charge of human resources and board members of most banks and big establishment to give their funds to pension fund managers, except they have set up proper pension fund management department that have the expertise to manage such funds. "If the expertise are not available in-house, they better give them out to pension fund managers. And, infact, if they manage in-house, those funds must be separated completely from the working capital of the establishment so that it is not lost in the process of operations," Solanke said.
He is happy that the rules as provided by the Securities and Exchange Commission (SEC) requires that 50 per cent of the fund collected from the public must be in government securities.
"The implication," he explained "is that ones money is collected from the public, government gets hold of 50 per cent in treasury bills, while in the other 50 per cent, part of it will go into the capital market and real estate, in addition to serving as specimen with other banks that are healthy. That is to say that 50 per cent of the contributed fund is safe with the government, the Central Bank of Nigeria (CBN) in treasury bills, treasury certificates and bonds.
Secondly, the fact that part of the fund will go into housing estate means that those houses will be there as long as they are sold. And, their value will continue to appreciate. And, overtime, one can use them to hedge against inflation," he said.
On the safety of funds with the pension managers, Solanke expressed confidence that the new pension reform bill provides.
He said that "if the new pension reform is properly put in place, as we all are anticipating right now, pension fund managers are not going to touch cash but cheques. And, those funds will be with pension assets custodians. The pension managers or administrators will only give instruction to the pension assets custodians on what to do with the money. It is only certain percentage of returns that the pension manager is entitled to at the end of the day. So, the funds are safe. Therefore, some safety measures have been built into the entire mechanism now under the pension reform. The organised private sector must be careful to make sure that those that are working there, have proper pension scheme in place. If government can take care of those that are working for them, those that are in organised private sector should do the same thing immediately to ensure that people are well rewarded in terms of pensions when they retire."
Talking about ARMCO's cutting edge over its competitors, Solanke explained that "we are registered with the Securities and Exchange Commission, because we are ready to throw our books open to the public at anytime, and wherever we make mistakes we want to take corrections, and if there is any reasonable penalty, we will pay as we would have learnt in the process, and, the public would be able to trust us better. The SEC is very strict when it comes to supervision. Secondly, when we manage corporate pensions for any establishment, all we take is three per cent statutory fee (spread) on the interest return. The regular supervision by the SEC is one major scare to some organisations that do not want to be subjected to the Commission's regular supervision. We are new, we are young, we don't have any hangover on us. We are not owing anybody. We have not borrowed any money from any bank. At present we manage the funds that we have. We do our regular placement, investments and so forth. Anybody dealing with us will definitely have peace of mind, that is one clear edge we have over our competitors.
We are also flexible within the law. ARMCO is a solution to pension problem in Nigeria."
According to him: "What we are going to witness under the new pension reform is what is called individual retirement savings account. This means that each person has an account with his pension fund administrator, while the same account is maintained by the pension asset custodian. Whether you are in public sector or in private sector, you can know on a daily basis, the balance to your account and the return on it. You can also know at the end of every year how much has been credited as interest into your account. It is like you are saving money in a bank as they provide statement on monthly basis, quarterly basis or on an annual basis.
The company has already embarked on serious enlightenment campaigns to educate the public on the benefits of imbibing saving for retirement. It has started organising free lectures for bankers, groups in the churches and other various associations.
The company also plans to come to the market as soon as possible. "ARMCO wakes Nigerians up to the business of pensions because it is a generational business. Pension business worldwide is one of the best you can put your money. It is new in Nigeria. It has future in Nigeria. Apart from being a business in which we can earn returns, it is a service to humanity," said Solanke.
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