Stanbic IBTC, FCMB, other PFAs defy PENCOM’s directive on gifts

By AYOOLA OLAOLUWA

A customer war between Nigeria’s top Pension Funds Administrators (PFAs) has sparked a brutal competition in the pension industry, putting operators under huge pressure and threatening the over N14.8trillion pension fund contributed by Retirement Savings Accounts (RSAs) holders, Business Hallmark can report.

Pension administrators, BH gathered, have been offering incentives to RSAs holders in a bid to retain their accounts, as well as winning over accounts from their rivals.

Investigation revealed that some of the gifts personally delivered to account holders to dissuade them from switching to another administrator include birthday cakes, Sallah rams, as well as end of the year presents.

Worried by the development, the National Pension Commission (PenCom), had in October 2022, directed operators in the industry to end the “unhealthy competition”.

Sequel to PenCom’s directive, many of the PFA’s wrote to their customers that the practice of giving out gifts during festivals had been suspended.

One of the operators, Stanbic IBTC, in a notice to a customer seen by our correspondent, explained that its “loyalty programme” had come to an end as a result of the directive.

“The National Pension Commission has released a regulation that prohibits Pension Fund Administrators from offering gifts to customers.

“Following this regulation, we regret to inform you that the Loyalty Program will be coming to an end.

“Effective immediately, the program would be terminated, and the Stanbic IBTC Pension Managers Loyalty Card will no longer be valid when presented at our partner stores.

“While we sincerely regret any inconvenience this may have caused, we would like to reassure you of our dedication and commitment to providing you with exceptional service at all times”, Stanbic IBTC Pension Managers said in the letter.

Other operators, BH gathered, also send messages to their customers to inform them of the suspension of their loyalty programmes.

Barely a month after its order, PenCom gleefully announced to the world that all PFAs have complied with the directive.

The commission’s spokesperson, Abdulqadir Dahiru, while making the announcement, said; “All PFAs have complied, we know this because we have a surveillance department that monitors compliance”, Dahiru had said far back in October 2022.

However, BH findings revealed that the PFAs still send gifts to their customers in total disregard of PenCom’s order.

Most of the operators, sources informed BH, sent end of the year gifts to their active account holders in December 2022.

Most guilty among them are PFAs owned by Deposits Money Banks (DMBs), namely Stanbic IBTC Pension Managers, FCMB Pensions Limited and Fidelity Pension Managers Limited.

Stanbic IBTC Pension Managers, it was gathered gave out gift vouchers worth hundreds of millions of naira to its customers, especially civil servants in December 2022.

For instance, all the teachers in the employment of Lagos State government, who have RSA accounts with IBTC received gift vouchers ranging from N25,000 to N150,000, depending on their levels and savings.

The vouchers, a credible source in one of the benefiting Local Government Education Authority (LGEA), were forwarded to public primary school teachers in all the 20 LGEAs across the state.

“Towards the end of academic activities in December 2022, huge gift vouchers were delivered by the PFA at my LGEA for onwards transmission to workers, who operate with the PFA.

“I am also aware that the gift vouchers were sent to all the 20 LGEA across the state.

“While I received a gift voucher worth only N25,000, top public officers from Grade Level 15 upward, who have saved several million got vouchers up to the value of N150, 000”, the source, who spoke on the condition of anonymity stated.

It was also gathered that the end of the year largesse was extended to all government ministries, agencies and parastatals, as well as individual contributors and account holders in private institutions.

A director in a blue chip company with headquarters in Lagos, who did not want his identity revealed, informed our correspondent that he usually receives gifts from his operator at least three times in a year.

“I operate a retirement savings account with one of the leading PFAs in the country, which I will not like to name for obvious reasons.

“Where they get the funds from or how they manage it, I don’t know. But so far, they have been wonderful. For the past eight years now, I have been receiving huge birthday cakes personally delivered to my office. And these are quite big cakes that won’t cost less than N75, 000 to N100, 000.

“Despite being a Christian, I normally get a big ram every year during Sallah. And I also get end of the year gifts, which normally come in the form of gift vouchers.

“If I am not wrong, these gifts will have combined value of between N450,000 to N500, 000. And I know at least six other colleagues, who get almost the same package, not to talk of the junior and mid-level workers, who though do not get as much as we get, but nevertheless go home with something tangible each year”, the top executive explained.

The practice of giving gifts to customers, BH learnt, started several years ago at retirement forums organised by PenCom, in collaboration with PFAs and employers of labour.

However, there has been an alarming surge in the rate at which operators dole out gifts to RSA holders since PenCom introduced the transfer window, which allows pension contributors to change their PFAs.

While relatively bigger PFAs with deep pockets are gaining upper hands, smaller operators, who could not cope with the unequal competition, it was learnt, have protested to PenCom to halt the practice.

A source in PenCom informed BH that the October 2022 directive to suspend the unhealthy practice was necessitated by series of complaints from several quarters.
According to him, the competition around the quantity and quality of gifts among PFAs were affecting the quality of service.

Speaking on the development, PenCom’s spokesperson, Abdulqadir Dahiru, said the commission is trying to sanitize the industry.

“The commission (PenCom) released a circular stopping all these ‘gifting things’ because it was getting out of hand and we were getting a lot of complaints so the commission had to put a stop to it. With the transfer window, it was becoming alarming.

“We prefer PFAs to improve their level of service delivery, invest in infrastructure that would help them to effectively service their clients as opposed to competing on who can give the biggest birthday cake.

“We think it is becoming unhealthy and so the commission has to step in and provide a measure of control”.

Dahiru further disclosed that the PFAs were not really making much except the fees charged on the funds they were managing because the funds were in the custody of Pension Fund Custodians (PFCs).

“When you start spending on all these, where is that money going to come out from? We don’t want unhealthy competition in our industry”, he demanded.

The pension commission spokesperson, however, said engagements were on-going to find solution to the problem.

Customer war threatens pension investments -WPS Office.docx