PenCom: Deploying ECRS technology to improve contributors’ experience

Aisha Dahir-Umar, Acting Director-General, PENCOM

With a view to solving the challenges posed by the Contributor Registration System (CRS), the National Pension Commission (PenCom) recently introduced the Enhanced Contributor Registration System (ECRS), which is expected to open up transfer window for Retirement Savings Account (RSA) holders to switch Pension Fund Administrators (PFAs). SULAIMON OLANREWAJU examines how the deployment of technology deepens pension contributors’ confidence.

FOR the National Pension Commission (PenCom), which was set up with the mandate to establish standards, rules and guidelines for the management of pension funds, one of its major challenges is cleaning up existing data of contributors and pensioners under the Contributory Pension Scheme (CPS). To scale this hurdle, PenCom decided to resort to technology; hence it came up with the Enhanced Contributor Registration System (ECRS), an improvement on the Contributor Registration System (CRS). This has ensured the entrenchment of efficiency and transparency in its operations and consequently has buoyed contributors’ confidence in its capacity.

According to PenCom in a statement announcing the introduction of the system, the ECRS was designed, developed and deployed to provide a more dynamic and friendly user interface even as it fully addresses the issues identified with the CRS. Thus, the deployment of the ECRS will greatly enhance the integrity of contributors’ data and also provide a platform for registration of Micro Pension Plan participants and cross border participants, including Nigerians living abroad and foreigners living in Nigeria, who wish to contribute under the CPS.

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“With ECRS, electronic submission of employer code requests by Pension Fund Administrators (PFAs) on employers and the full automation of the process of issuing employer codes is possible. So are updates and edits of contributors’ information on the National Databank maintained by the National Pension Commission by the PFAs. The deployment of the ECRS is a major step towards the introduction of the transfer widow, which will enable contributors change to the PFAs of their choice, in line with Section 13 of the Pension Reform Act (PRA) 2014,” the statement added.

PenCom also said that “The ECRS is an electronic platform for the submission of requests by Pension Fund Administrators (PFAs) for the registration of contributors and issuance of Personal Identification Numbers (PINs). Consequently the Commission has transited from the use of the existing Contributor Registration System (CRS) to the ECRS.”

The Pension Reform Act mandates every employer with a minimum of three employees to open an RSA for the workers, which would be funded by both employer and employees. The employer is required to pay 10 per cent while the workers are required to contribute eight per cent of total monthly emolument.

Under the CPS, the PFAs manage the funds which are in the custody of the Pension Fund Custodians (PFCs).

Acting Director-General, National Pension Commission, Mrs Aisha Dahir-Umar, said the Commission introduced the ECRS because it has seen the tremendous positive impact which technology can make on the pension industry.

Dahir-Umar further explained that the ECRS consists of six major functions: contributor registration to generate unique pin; recapture for existing contributors; bio-data update; update of signature and picture, where applicable; temporary PIN for employer initiated registration and Retirement Savings Account (RSA) verification service.

The Acting DG said that the assets under the CPS had continued to rise hitting N9.03 trillion “since the introduction of the CPS and I am pleased to note that appreciable progress has been made consistently.” According to her, the statistics shows clearly that the CPS has greatly improved access to retirement benefits for employees in both the public as well as the private sectors.

For contributors’ data integrity, the enhanced registration system also has the following capabilities: dashboard availability for Pension Fund Administrators (PFAs) to view status of their requests and summary reports and PFAs can also receive notifications via dashboard, emails and error codes.

Head, Corporate Communications Department of PenCom, Mr Peter Aghahowa, said that PenCom’s authorised staff can also use the ECRS to view status of submissions by PFAs, generate reports and approve requests that require authorisation. In addition to downloading responses, latest upgrades, patches, employer codes generation, the system also has capacity for National ID verification with NIMC.

The system went live on June 24, 2019, after PenCom assessed the environmental readiness of PFAs and had the pilot run for the PFAs to use ECRS. This new development is significant for the pension industry as it may pave the way for the implementation of other critical policies hitherto prevented by poor contributors’ data.

One of such policies is the transfer window provided in the Pension Reform Act, 2014 (PRA 2014), allowing RSA holders to switch PFAs if they so desire. Under the CPS, a comprehensive and reliable data of RSA holders had been a huge challenge, a development some sources said was the reason PenCom has been reluctant to open up the transfer window.

The PRA 2014 provides that an employee may, not more than once in a year, transfer his or her RSA from one PFA to another without producing any reason for such transfer. Despite this provision, PenCom has yet to authorise PFAs to allow RSA holders to transfer their RSAs from one PFA to another.

The implication of non-availability of the RSA transfer window is that RSA holders, whose PFAs are underperforming in terms of return on investments, are stuck with such PFAs as they cannot move their contributions to PFAs with better history of high returns on investment.

Indeed, poor contributors’ data integrity has been a major hindrance to the opening of the transfer window. There are concerns among pension managers and operators that until existing data of contributors are properly refined and deemed reliable, there will be cases of identity theft and large-scale frauds. The coming of ECRS is one of the innovations of the Commission to clean up the database of RSA holders to ensure that issues such as duplications and misinformation are tackled.

In this regard, PenCom recently directed all RSA holders to provide their National Identity Number (NIN) to their fund managers. The new development involved both active and retired RSA holders and is in line with Federal Government’s policy mandating all Nigerians to have a National Identity Number.

By law, the NIMC has the mandate to implement the national identity system in Nigeria and the harmonisation by all data gathering agencies may be part of Federal Government’s strategy to have a clean national identity system.

PenCom has advised RSA holders to approach their PFAs to provide their Bank Verification Numbers (BVNs), NIN as well as other needed bio-data. These latest innovations, ECRS and integration of BVN and NIN with RSAs, may be a golden opportunity for PFAs to clean up their databases to combat identity theft as well as prevent fraud in the pension industry.

The PenCom data showed that total pension assets in the country have risen to N9.03 trillion as of March 31, 2019, up from the N7.44 trillion it was in January 2018.

The Commission said these assets have been judiciously and prudently invested in 24 major asset classes to yield interests to the contributors. Giving a breakdown of how the assets were invested, the Commission said Federal Government’s securities took a lion-share of the investment as it received well over N6.51 trillion, representing 72.9 per cent of the total assets.

Specifically, Federal Government bond got N4,458,806.38 of the funds, representing 49.37 per cent of the total assets; while N1.94 trillion was invested in treasury bills (21.44 per cent); N11.96 billion in agency bonds (NMRC & FMBN), (0.13 per cent); N94.11 billion in Sukuk (1.04 per cent) and N8.51 billion in green bonds, (0.09 percent.). The Commission also said in line with the multi-fund structure, Retirement Saving Account (RSA) Fund I, witnessed N12.73 billion investment and RSA Fund II, recorded N3.99 trillion investment, RSA Fund III, saw N2.15 trillion investment while RSA Fund IV, recorded N732.13 billion investment.

The report showed that N596.61 billion, which was 6.54 per cent of the funds, was invested in domestic ordinary shares; while N62.59 billion, amounting to 0.69 per cent was invested in foreign ordinary shares.

Also, N144.31 billion (1.60 per cent) was invested in state government’s securities; corporate bonds got N463.99billion (5.4 percent); corporate infrastructure bonds, received N8.64billion, (0.10 per cent); corporate green bonds, N5.46billion (0.06 percent); supra-national bonds got N5.37 billion (0.06 per cent); local money market, N874.39 billion, (9.68 per cent) commercial papers, N64.46 billion (0.71 per cent); banks – N809.94 billion (8.97 per cent), among others.

Financial pundits commended the management of PenCom for their consistent, devoted, transparent and enlightened implementation of the Pension Reform Act which has led to more contributors embracing the CPS and deepening of the financial system. They insisted that series of reforms in the sector have raised accumulations from contributors to N9.03 trillion, as well as brought brighter hopes to retirees.