Repositioning the NSITF
THE Nigeria Social Insurance Trust Fund recently made public its report card. The report covers nine years and nine months including, curiously, the first quarter of 2004, instead of its adopted and conventional calendar year period. It seems, therefore, that the release may have been an attempt at swaying public opinion at a critical stage of the then pending Pension Reform Bill. The goal was seen as an effort to wrench legislative support for the organisation's desire to not only avert being scrapped but also secure a place as one of the Pension Fund Administrators.
But luckily, the NSITF already had the ears of the National Assembly because the ensuing contributory Pension Act which came into being a few days before the formal release of the report on the organisation's tenth anniversary on July 1, 2004, substantially obliged its prayers. And so, congratulations to NSITF on both its anniversary and giving the public the opportunity of assessing its accomplishments. But we hasten to add that Nigerians demand as of right that henceforth, in place of unattested self-promoting decennial statement, there should be duly audited annual report.
The release informs that NSITF was created to replace the then National Provident Fund (NPF) which was in operation from 1961 to 1994. All the assets and liabilities of NPF were vested in the NSITF under Decree 73 of 1993. The scheme is financed by payroll taxes split between the employer and employees. It operates on a tripartite arrangement with a Management Board comprising two representatives of employers, two representatives of labour, and six representatives/appointees of government including the Managing Director, all drawn from several agencies. The scheme provides for old age, invalidity and survivors' benefits through grants and monthly pensions based on funds accumulated over the course of employment, namely retirement grant/pension, invalidity grant/pension, survivors' grant/pension and funeral grant.
The NSITF expectedly crows and paints a rosy picture of its achievements. However, a little scrutiny of the report reveals that there is not much to write home about concerning the organisation's effectiveness in pursuance of its mandate. Many of the "severe operational inadequacies and constraints" which faced the defunct NPF have persisted or even worsened under the NSITF.
For example, first, while workers of private sector firms employing five or more persons are required to subscribe to the scheme, the average registered establishment since 1994 has accounted for 69 enlisted members (the average under the NPF was close to 160). In effect, virtually all small and medium-sized private employers seldom participate in the scheme. Since many a small establishment is at one time or another approached by the NSITF (and NPF before it) for compliance, the apparent absence of small and medium-sized firms from the scheme bespeaks the tendency of such officials to strike personal bargains with employers and then look the other way.
Second, pertaining to benefit administration, NSITF inherited some 2.8 million members from NPF and has added 1.4 million thereby raising its current cumulative membership to roughly 4.2 million. Compared to NPF the average NSITF membership would generally be older and, therefore, more prone to invalidity and/or ready for retirement. Furthermore, the prevailing economic downturn over the period would escalate job losses.
Yet, the average number of claimants settled, which was 13,775 per year under NPF or 0.42 per cent of the 1961-94 cumulative membership of about 3.3 million (claimants settled plus members transferred to NSITF), fell to 6, 180 per year or 0.14 per cent of NSITF current membership. The report is silent on whether all claimants received due settlements.
Now, assuming conservatively that the claimant rate has remained at the level settled under NPF in the face of ample pointers to worsened attrition rate in the workplace, the above figures imply that two out of every three potential claimants have in the past decade of NSITF era been denied benefits due. That inference tallies with the widespread complaints about non-payment by NSITF of benefits as and when due including rampant cases of missing numbers of registered members at the relevant NSITF offices.
And third, the NSITF is partially commercialised and acts as an institutional investor in the money and capital markets subject only to its Management Board's set principles of "safety, liquidity, yield, diversity and socio-economic utility" of securities to deal in. The cost of its investment portfolio by March 2004, was N32.11 billion while some N8.07 billion has been realised as investment income since 1994. NSITF's real estate business attracted a market value of N7.40 billion at the last review. But it was not until 2003, according to the report, that "all the administrative expenditures of the Fund have been drawn from the investment income, thereby leaving the members' contributions intact".
Therefore, contrary to the superficial positive image created by the report, the quality of service rendered by NSITF in the last decade as noted has been mediocre. It is no secret that virtually all public institutions have similarly failed in performing the functions for which they were set up. Consequently the starting point for making the NSITF efficient should be to scale down to the very minimum government's representation on its Management Board and then arrange to run the organisation like a quasi-bank. It is only then that the NSITF can assume and make a success of the additional responsibilities of providing social security to all Nigerians as envisaged by the contributory Pension Act.
