Challenges in the administration of pension reform Act, 2014 (1)-Olagunju B. Bashir

The Pension Reform Act 2014 which replaces the Pension Act 2004 was signed into law by President Goodluck Jonathan of the Federal Republic of Nigeria on 1st July 2014. The Act has significantly altered the scope of the employer’s and employees’ responsibility as well as regulatory powers of the Pension Commission.

I shall attempt in this review to highlight some of the challenges in the administration of the new Pension Act 2014. My approach shall be to reproduce relevant sections of the Act in this review and then comment as appropriate.

Application of Provision of the Act

The provisions of the Act shall apply to any employment in the Public Service of the Federation, the Public Service of the Federal Capital Territory, the Public Service of the States, the Public Service of the Local Governments and the Private Sector-Section 2 (1)

In the case of Private Sector, the Pension Scheme shall apply to employees who are in the employment of an organization in which there are 15 or more employees-Section 2(2)

Notwithstanding the provisions of subsection (2) of this section, employees of organizations with less than 3 employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by Pension Commission (PENCOM)-Section 2 (3)

Comment

The Pension Reform Act 2014 is mute on organizations with a workforce of 3 to 14. It appears the omission is due to typographical inadvertence and/or omission. Pending clarification and/or rectification by the Pension Commission, my recommendation is that organizations apparently missed out should continue to maintain their Pensions and Group Life Policies in accordance with basis of contributions stipulated in the new Act. It is pertinent to mention that under the old Pension Act 2004, the minimum eligibility number of employees was 5 and above.

Those organizations which do not presently have a Pension scheme are urged to incept one. For those falling within the eligibility bracket, an offence is being committed if one has not been incepted. Infraction of the Act has its attendant sanction and these sanctions are severe.

The recommendation is based on the reality that the accumulated Pension Liability together with the Group Life liability remains the employer’s responsibility under the Act. Should an employee suffer death during his/her tenure of employment while the default persists, the employer remains potentially liable for the employee’s entitlements. The employer would have to source for fund from elsewhere to fund the liability. Nigerians are increasingly becoming conscious of their legal rights.

Contributions To Pensions

Contributions for any employee shall be made in the following rates relating to monthly emoluments-Section 4 (1)

• Minimum of 10% by the Employer

• Minimum of 8% by the Employee

Any employee under the scheme may, in addition to the total contribution being made by him and his employer, make voluntary contributions to his retirement savings account-Section 4 (3)

An employer may agree

• On the payment of additional benefit to the employee upon retirement or

• Elect to bear the full responsibility of the Scheme provided the employers contribution is not less than 20% (instead of 18%) of the monthly emolument of the employee-Section 4 (4)

Definition of Monthly Emolument

It means Total Emolument as may be defined in the employee’s contract of service but shall not  be less than the total sum of basic salary, housing allowance and transport allowance-S120.

Comment

Under the Pension Reform Act 2004, the contributions used to be 7.5% by the employer and 7.5% by the employee, giving an aggregate of 15%. The Pension Act 2014 has increased the employer’s contribution to 10% and that of the employee to 8%, giving a revised aggregate of 18%. It is however curious that the employer’s contribution is revised to 20% by the Act if the employer chooses to fund the whole contribution. We can only guess the rationale that must have informed the additional 2%. The new Act also preserves the employer prerogative to pay gratuity in addition to pension. Thus a Pension Scheme and a Gratuity Scheme are not mutually exclusive. Staff motivation is tremendously enhanced if both schemes exist in an organization.

Group Life

Every employer shall maintain a Group Life Insurance Policy in favour of each employee for a minimum of 3 times the annual total emolument of the employee and premium shall be paid not later than the date of commencement of the cover-Section 4 (5)

Annual Total Emolument in relation to the Group Life Insurance Policy means the Gross Emoluments of an employee or deceased person.-Section 120

Death of Employee

Where an employee dies, his entitlement under the life insurance policy maintained under Section 4 (5) of the Act shall be paid by an underwriter to the named beneficiary in line with Section 57 of Insurance Act 2003.-Section 8

The relevant section under the Insurance is hereby reproduced for ease of reference: A policy of insurance shall not be made on the life of a person or other event without writing in the policy the name of the person interested in it or for those whose benefit or on whose account the policy is made- Insurance Act 2003- S 57

Employees Declared Missing

Where an employee is missing and is not found within 12months from the date he was declared missing and the Board of Enquiry by the Pension Commission (PENCOM) makes a declaration…….that it is reasonable to presume that the employee is dead, the provisions of Section 8 of the Pension Act 2014 will apply. – Section 9.

Consequence of Default in Arranging Group Life Cover

Where there is default in making payment for Group Life as at when due, and the policy becomes legally inoperative, the employer shall make arrangement to effect the payment of claims arising from death of any staff in its employment during such period.-Section 4 (6)

Definition of Annual Total Emolument

It is the Gross Emoluments of an employee or of a deceased person.-S 120

The payment of benefits to the estate of deceased employees under both Pension Contribution and Group Life has always remained a nightmare to most claimants. The process of obtaining a

Letter of Administration from Probate Division of the courts is an open ended journey. It may take months or a year plus with attendant legal fees and probate fees.

A case where the employee died on 25th November 2013. The Burial expenses benefit and the death benefits were settled by insurers on 4th and 27th December 2013 respectively. Whilst the burial expense benefit was released almost immediately to the bereaved family, the Death benefit remains till date marooned in the PFA’s safe awaiting the issuance and release of the letter of Administration was cited

Source  Businessday Newspapers

Social Security: 3 Ways to Make the Most-AdviceIQ

Your Social Security can be worth more in golden years’ income than your 401(k) or individual retirement account. The trick: Know at what age to best file for benefits.
Consider a married couple who both begin Social Security with a first-year combined benefit of just $23,304, based on the Social Security program fact sheet. As of Dec. 31, 2013, the average retired benefits recipient gets $1,294 a month and a spouse $648 a month. A retirement plan needs a value today of $543,147 to provide the same income as Social Security for the next 20 years.
This assumes that each retiree in our couple lives an additional 20 years, during which each receives a cost of living increase of 2.5 percent per year and pays no federal income tax on Social Security income but does pay 10 percent federal income tax on all other ordinary income. Also assume that each spouse’s 401(k) or IRA earns 4 percent, with distributions taxed at 10 percent.
Many preparing for retirement do not understand the value of benefits and how those benefits work, nor do the eventual retirees’ financial advisors. Here are four ideas to help maximize your Social Security retirement income.
1. Use the proper start-date for benefits. Assume that you have sufficient income without starting your benefits at age 62 – your earliest date of eligibility, when you get reduced benefits – and that your life expectancy is average or better. Then, delaying your start date can be a good investment.
If you were born between 1943 and 1954, you can increase your monthly payments as much as 76 percent based on when you start your benefits, at 62 or 70, and does not include any cost-of-living-adjustment.
2. Integrate your retirement and lifestyle, and consider taxes. Today, many post-career years include new or different work in early retirement.
For example, a married couple, both 60 and with a current employer for more than a decade, feel unfulfilled and can’t wait for a chance to change their lifestyle. They can work part-time or learn a new skill or both, while beginning to temporarily draw on their 401(k) or IRA. Both can integrate their retirement and work until they reach full retirement age (or FRA, 67 for anyone born after 1960) or continue this strategy until age 70, when they qualify for the maximum the Social Security benefit.
During this period, both in our couple take distributions from retirement accounts (distributions are taxable) and replace that income at full retirement age or up with higher Social Security income (not fully taxable).
3. Consider longevity planning and survivor protection. Longevity planning estimates how long you can collect benefits; survivor protection looks at how long your spouse can collect.
According to mortality tables, if you are a 65-year-old man you have a 50 percent chance of living to 85 and a 25 percent chance of making 92. If you are a woman the same age, you have the same relative odds of living to 88 and 94. A surviving spouse has a 50 percent chance of living to 92 and a 25 percent chance of making 97. A survivor at FRA or older can receive 100 percent of a deceased worker’s benefit if that benefit exceeds his or her own.
Couples need to jointly decide start dates and take into account age differences and the benefit of the primary wage earner.
4. Enlist a qualified advisor prior to deciding. Social Security representatives are willing to help but not normally prepared to take time to give you a detailed analysis of your best start date. Find an advisor and ask:

• Do you know when I need to stop and restart benefits between age 62 and my FRA or between FRA and 70?
• Do you know how the following may affect my start date: the Social Security tax-favored advantage; use of separate start dates for spouses; the higher step-up survivor benefit?
• Do you understand how to integrate my lifestyle with Social Security?
• Does your retirement-income planning integrate Social Security with 401(k) and IRA income?
• Do you know why I, the primary wage earner, may want to start benefits based on my spouse’s lower earnings record instead of on my own record?

Carefully consider your Social Security start date. These are just a few of the numerous factors to take into account.

Written by Wayne Fourman. Wayne Fourman works with the May Financial Group in Greenville, Ohio, and has served individuals and businesses with personal financial counseling since 1983. He was among the first in the nation to provide Social Security start-date planning.

Culled from Wallstreetcheatsheet

Three reasons why no one needs to buy an annuity -Alan Higham

Comment: annuities are shockingly poor value for money and there are better ways to use your pension savings, says Alan Higham

Investing your money will give you a better return than an annuity, says Alan Higham Photo: HOWARD McWILLIAM

"Let me be clear. No one ever needs to buy an annuity again." So said the Chancellor, George Osborne, in his Budget speech in March.

So, with annuity purchase optional, is there ever a reason to buy one? In my opinion the answer is no. Here are my reasons.

1. Value for money

As they stand, annuities are simply shocking value for money.

For people in good health, the best annuity offers the prospect of an annual return of less than 1pc over the 20 years of expected retirement for a 65-year-old. Locking into a 20-year fixed savings rate of 1pc is financial folly.

Anyone who can afford to take some measure of investment risk could do an awful lot better on a do-it-yourself basis.
Aviva will pay you a fixed yield of 5.5pc on its 22-year corporate bond, with your capital back at the end of the period or on earlier death. A 63-year-old man might live for another 22 years and he could buy an annuity paying 5.5pc a year for life with no capital on death. Even if you live to 100 or more, having £100,000 capital preserved is a decent return for the risk.
Aviva might default, of course, and I don’t for one minute suggest that people put all their eggs into one bond investment. But a mixture of bonds, shares and property ought to do a much better job than an annuity, especially if inflation takes off.
2. Even enhanced annuities are no better
"Enhanced" annuities pay a bigger annual income to people in poor health because insurers acknowledge that they won’t live as long. Enhancements vary between a few per cent and more than doubling the rate for the more severe conditions.
One man I helped has motor neurone disease and a very uncertain life expectancy; his specialist said three to five years when he was diagnosed two years ago.
He could have bought an enhanced annuity that pays more than double the rate for healthy people – 12.5pc rather than just under 6pc. But if he died within a few years, as was highly likely, he’d have lost more than half of his fund. We could have protected the fund by buying a guarantee that payments would continue for at least 10 years, but that reduced the rate to 8.7pc – in other words, getting back only 87pc of the capital and zero investment returns.
Adding his wife to the policy just turned the annuity into her annuity.
Unless he was an exception, like Stephen Hawking, he would be better off drawing chunks of his pension as and when needed, leaving the rest untouched.
Anyone who has less than 12 months to live – as certified by a doctor based on the balance of probabilities – can access their whole pension fund tax free.
3. There's another – better – way to get a guaranteed income
What about an annuity's "insurance value" – making sure you don’t run out of money no matter how long you live? I’m a big advocate of covering your essential expenses with secure sources of income such as the state pension, a final salary pension or an annuity.
Consider Dave, 65, who receives £6,000 from the state pension and £4,130 from a final salary scheme and has a £100,000 pension pot. Dave needs a minimum of £1,000 a month (£12,000 a year) to cover his essential outgoings, so he has a £1,870 annual shortfall in secure income.
He could spend £55,000 buying an inflation-linked annuity to cover the shortfall. He could also spend £33,000 buying a "level" annuity, which means taking some risk with inflation.
But better still he could defer his state pension for three years, spending £25,000 of his pension fund to cover that missing income and the shortfall. That way, when his state pension starts, it has been increased to the point that the missing £1,870 a year has been covered. (This method is explained in more detail here.) Why buy an annuity for £55,000 when the state will provide the same benefit for £25,000?
The small minority who should still consider an annuity
There are limits to state pension deferral: the longer you defer for, the less valuable it is, and your state pension can only be boosted so far. For people with very high essential outgoings relative to their state pension who can afford to buy an annuity despite its poor returns, I would advise doing so.
Also, if you are in very poor health and have no dependants or beneficiaries to whom you wish to leave your funds should you die at young age, again an annuity would be suitable for you.
Before the Budget, more than 90pc of people bought an annuity with their pension savings. In the future, state pension deferral terms will become less generous and people’s retirement pots will be far bigger, so I expect the annuity to return. But I think very few people making a positive choice about their retirement today would conclude that an annuity is the best option.


Culled from the Telegraph

Pensions meltdown threatens savings revolution-Dan Hyde

As the first major provider comes clean about the problems of adapting to the new pensions regime, will a crisis engulf all savers?

Toby Strauss, chief executive of Scottish Widows, says the entire pensions industry is on the verge of a customer service disaster Photo: Graham Trott

Millions of savers face lengthy delays in accessing Isas, retirement funds and life cover as the insurance industry stands on the brink of a customer service meltdown, Telegraph Money can disclose.

In some cases savers face hours on hold on the telephone – and then a month-long wait before their money is paid out.

Toby Strauss, the chief executive of Scottish Widows, one of Britain’s biggest insurers, today tells of his regret over “unacceptable” service levels at his firm in recent months, and says other pension providers are also struggling.

Scottish Widows, which has two million pension customers, admits it has reached “breaking point”. Mr Strauss blames the pension freedoms announced in March for creating a frenzy of calls to the company. Staff and systems have been unable to cope, he says.

In an article for Telegraph Money (below) he says: “It has been an unprecedented three years in the pensions world – with a roller coaster of changes.

“In the absence of any breathing space, we have concerns that the industry is in danger of reaching – and in fact breaching – its capacity to cope. Many of our own processes have struggled in the wake of the ongoing changes and as a result our service levels are in some areas falling short of the high standards our customers expect of us.”
In a plea to the Government, he asks for a moratorium on new pension laws to allow the industry to “develop new processes and systems” and employ more staff. Mr Strauss has set aside £20m to upgrade computer systems, start training programmes and increase call centre staffing.
Scottish Widows is the first high-profile firm to admit to struggling to cope with the pension reforms announced in the Budget by George Osborne.
The Chancellor said in March that no one would be forced to buy an annuity with their life savings. Instead from next April people will have full discretion over their retirement funds after age 55.
This has led to a large spike in the number of customers ringing insurers’ call centres. At Scottish Widows, the deluge has created a backlog of cases, delaying even the most basic of requests.
Telegraph Money reported last month that its pension investors faced three-week delays to get hold of their own money. We warned that the backlogs could worsen when next year’s reforms kicked in.

^{How we disclosed the delays last month}
Mr Strauss agreed that the issues were more widespread than had been feared. Hundreds of customers, financial advisers and employers have been affected, regardless of the type of query.
The company said it had already answered more calls this year than it did in the whole of 2013. Last year the average call took five minutes. This has more than doubled to over 10 minutes because of the complexity of the questions.
Customers are routinely waiting more than an hour on hold. A “significant number” of customers and financial advisers had hung up in frustration, a spokesman said.
Scottish Widows had already planned to increase the number of staff by a quarter to cope with new rules that force every company to enrol employees automatically into pensions. The company is one of the largest providers of the workplace pensions being used for so-called “auto-enrolment”.
In the aftermath of the Budget it has decided to hire an additional 400 people in its call centres. Around 250 will solely deal with inquiries about personal pensions and the retirement freedoms.
The Association of British Insurers (ABI) said the industry was also weighed down by new EU rules and investigations by regulators. Currently, the Financial Conduct Authority is reviewing products sold before 2000 and assessing annuity sales practices.
A spokesman for the ABI said: “The long-term savings industry has undergone significant regulatory and legislative reform in the past two years. The industry is working flat out to apply these large-scale changes, which will in time deliver benefits and improved services to consumers. This is a crucial time for customers – it is vital providers are able to get it right.
“We hope for a period where regulators and policymakers consider the overall impact of further change when setting their priorities.”
'I realise the impact on customers’
By Toby Strauss, chief executive of Scottish Widows
It has been an unprecedented three years in the pensions world – with a roller-coaster of changes – but ultimately I believe that a fairer, more transparent world is being created for our customers.
Since I joined Scottish Widows in late 2011, we have dealt with the implementation of the Retail Distribution Review, the roll-out of automatic enrolment, government caps on pension charges and the changes announced to annuities in the 2014 Budget. All of which give savers greater transparency, flexibility and choice.
In the absence of any breathing space, we have concerns that the industry is in danger of reaching – and in fact breaching – its capacity to cope. Many of our own processes have struggled in the wake of the ongoing changes and as a result our service levels are in some areas falling short of the high standards our customers expect of us.
I fully appreciate the impact that our service issues have had, and are having, on our customers and we are working hard and investing significant resources to ensure that we fix this as quickly as possible. Scottish Widows is investing tens of millions of pounds over the coming months and years to make us better placed to deal with this new world.
This involves new customer service staff, upgrading IT systems and investing in training programmes. We are working with financial advisers, employers and the payroll industry, where we are also seeing capacity challenges.
The most recent Budget changes will enable consumers not only to have greater flexibility with their savings but also to have an ongoing dialogue with their adviser. In the future, retirement won’t be a one-off conversation.
So to deliver real benefit to consumers, these changes must be allowed to bed in before any further change is considered, so that we can ensure we have robust approaches in place to help our customers with their financial decisions.

Culled from The Telegraph

How to Cope With Retirement's Growing Price Tag-Fishers investments

Longer lifespans cost more than you may think.

Assuming you aren't on the Forbes list of global billionaires, you might be planning to tap your savings and investments to fund retirement. Here is a question many people don't bother asking until it's too late: How long should you plan for your savings to last?
It has been well documented that there is an epidemic of under-saving for retirement in the U.S. Retirement's price tag is growing. Why is it growing? Americans are living much longer than their parents or grandparents. In some ways, that's a sign of our nation's prosperity and a tangible, direct way to see the positive impact of technology in our lives. However, it does come with costs.
According to the most recently updated version of the Centers for Disease Control's (CDC) U.S. life expectancy tables, the average American born today will live to see age 78.5. Since there are those who (tragically) die young, Americans who reach a rough approximation of retirement age (65) have even later life expectancies -- 84.1. (A 65-year-old man will live to age 82.6 on average, and a woman to age 85.3.) CDC data shows a whopping 41.1% of babies born in the U.S. live to age 85 and 23.6% to age 90. By this measure, nearly 30% of women will define their "later years" as ages 85-90.
The implications for retirement investing are enormous. Put simply, you likely can't afford to have your money cease growing when you stop working. If you retire at age 65 and are one of the nearly quarter of Americans who will live to age 90, you have more than 25 years of retirement to fund, and inflation makes those needs greater as time goes on. Let's hypothetically explore what happens if you plan to draw the inflation-adjusted equivalent of $40,000 a year to cover your expenses. Exhibit 1 shows an estimate of the annual withdrawal and the total sum needed to fund these 25 years.

Exhibit 1: Estimated Inflation Impact on Initial $40,000 Withdrawal Need Over 25 Years

Source: US Bureau of Labor Statistics. Amounts inflation-adjusted by increasing initial amount at the median 2.75% annual rate of the Consumer Price Index, 1983-2013 (seasonally adjusted).

That's right -- the hypothetical price tag of this retirement is just over $1.4 million. And those aren't using particularly high inflation rates -- they're using the median rate seen in a relatively benign inflation period. And they're based on the headline rate, which would apply only if you buy goods and services in the exact quantities the BLS uses in the basket of goods and services that comprise the CPI. Few do.
Retirees tend to spend more than younger people on items that rise far faster than the headline rate - such as health care. Since 1983, headline CPI excluding medical care rose at a median 2.60% annual rate, while medical care increased at 4.05%. That difference may seem small. But it isn't. Exhibit 2 re-runs the earlier analysis again using $40,000 inflation-adjusted with a twist. This time, we assume $10,000 increases at medical care's higher rate and $30,000 at CPI excluding medical care. This tiny tweak increases the hypothetical retirement's price tag by $45,951, or nearly exactly the current sticker of a BMW 435i coupe.

Exhibit 2: Est. Inflation Impact on Total $40,000 Withdrawal, Medical Care and CPI Less Medical Care

Source: Bureau of Labor Statistics. Amounts inflation-adjusted by increasing initial amounts at the median 4.05% annual rate of the CPI Medical Care and the median 2.60% annual rate of the CPI Less Medical Care, 1983-2013 (seasonally adjusted).

Your retirement plan must account for these changes in prices. It should also account for the fact that your spending won't stay static over time -- most people spend far more on health care at age 90 than at age 65. But too many plans don't. Many annuities provide non-inflation-adjusted payouts. Strategies heavily reliant on fixed income and cash are also at risk. In many cases you'll need to get some growth to make your portfolio last your lifetime.
There are many risks facing retirees, but it isn't so hard to learn the basic factors you should consider when you're crafting your retirement plan.
If you have a $500,000 portfolio, download the guide by Forbes columnist Ken Fisher's firm. Even if you have something else in place, this must-read guide includes research and analysis you can use right now. Don't miss it!

Culled from the Wallstreetcheatsheet

PHYSICAL AND EMOTIONAL SATISFACTION AS A VERITABLE PART OF PENSION SCHEME-Odunze Reginald

In the 4ps of Marketing, we talk about the product, price, promotion and the place element, which is the distribution element of marketing; the 4ps have been expanded to 8 Ps and Even 12Ps. But we shall be more interested in the 8 Ps of Marketing which talks about product, price, promotion, place, process, people , permission marketing and Physical and Emotional satisfaction.

Kotler (1980: 9) aptly captured this scenario when he defined marketing in his earlier book as the “set of human activities directed at satisfying needs and wants through exchange process. But in his later edition, he tends to overlook this basic element of satisfaction in his definition of marketing.

Leo Burnet said “ Don’t tell me how good you make it, tell me how good it makes when I use it” Le Boeuf (1987;23) stated that customers will exchange their hard earned money for only two reasons:

Good feelings
Solutions to problems.

Continuing Le Boeuf (op cited) stated that the success or failure of any business depends on how many it rewards with two things stated above and how well it does it” and as Francis Rodgers , a former Vice President of Marketing for IBM put it ”The secret is to understand the customers problems and provide solutions so as to help that customer be profitable and feel good about the transactions” Feeling good about a transaction brings out the best in the customer and makes him to be physical and emotionally satisfied.

Therefore the need for customers physical and emotional satisfaction in the pension scheme cannot be over emphasized. This is because when the customer is satisfied and is convinced not beyond reasonable doubt as in the legal profession or beyond points of further dispute as in the physical science but in being firmly convinced within himself that he has made a wise decision will you be able to say that the customer is going to have emotional or physical satisfaction. Each and every one of us have at one time or the other made transactions , having been convinced by the marketer, or the sales person but goes home feeling dissatisfied at that transaction, the result is that the customer develops a deeper hatred about the organization, its product or service and even the sales person.

The reason behind this is that when a customer is fully convinced that he made a decision by himself, and is getting appropriate quality service , the better the customer feels satisfied and will be in better position, to even go as far marketing the product or service to other of his colleagues, creating awareness even when you are not there. Not only that the inexperience and vulnerability of fresh employees makes them susceptible to asking questions from their old colleagues about the state, degree and effectiveness of the pension fund administrators as the present themselves for enrollment to the pension scheme..

You can imagine what the answer will be if you as a pension fund administrator is not going the extra mile to satisfy your customers.

Personal and Emotional satisfaction will always create more customer base to the organizations involved and will definitely lead to a good will. Good will is an intangible assets in most balance sheets of organization and it has monetary value.

When an organization has consistently satisfied its customers, it leads loyalty, customer patronage; pension fund administrators may not understand it now as National Pension Commission has not lifted the window of transfer. As the loyalty and patronage will in turn provide increase in profits, return on investments and spur the organization to contribute positively to the development of the environment or locality in which they find themselves, thereby increasing the intangible assets.

The power of Branding and its effect on Pension Business -Odunze Reginald

I have a friend who has that hatred for Americans that he developed a theory called the conspiracy theory, he linked the theory to American’s ambition of controlling the financial resources of the world, he was so enthusiastic about the theory that he even link the exportation of Ebola Disease to Nigeria as part of the conspiracy theory with the American aim of developing a drug and making money from it and bearing in mind that Nigeria is the most populous country in African. He went on to say that the other African countries impact will be minimal but the effect on Nigeria will create a maximum impact. Hence the exportation to Nigeria through Patrick Sawyer. But I am not interested at this point on the conspiracy theory that will be a study for the later time. But one thing that marvels me is that after his conspiracy theory, he ends up taking a bottle of Coca-Cola.  He has become obsessed with the Cola drink.  That is the result of branding, even though he dislike American, but he loved their Cola.

In a special report in 2003 by Business week captioned “The Best Global Brands”, Annual Ranking of the top 100 Brands. In a sub title “Brands in an age of Anti Americanism” the report stated and I quote” Park Young Hoon of Seoul was quick to clench his fist and yell slogans against George W Bush in a giant rally denouncing the US president’s tough policy on North Korea. The report went on to say “but that doesn’t mean the 33 year old Computer Engineer is willing to loosen his grip on his favorite American coffee or cola” 

“Calling for political independence from the US is one thing and liking American brands is another” he says off course I like IBM, Dell, Microsoft, Starbucks and Coke”

The report also stated that “Yemeni students were out burning American flags, chanting kill the Americans noted by Valenti CEO of the Motion Pictures Association of Americans, as soon as the theaters open at 7pm, bingo, they are all there”.

 The popular Islamic fighters also states that they are against western education, but bingo, they are carrying the latest assemblage of state of the art weapons and ammunitions which are the products of foreign countries  , they are also  uploading their videos, pictures of the exploits in You tube, and other social networks, the Islamic State militants  that killed the American In Iraq were busy castigating the Americans, yelling anti American slogans, but by evening they are communicating their exploits in Twitter, Face book and You tube. One thing is to hate a country, a society and another thing is to like its product or service.

This is the importance of branding and building a brand loyalty , as customers will always run to your brand unknowingly after making attacks on the company or the country in which the products originates.

People have at one time or the other condemned the activities of the Japanese and the Germans during the Second World War, but they cannot do without the German Machines, Mercedes and the Japanese automobiles like Honda and Toyota. Even when they cast aspersions on these countries, they cannot do without their brand of automobiles.

Branding is very important in business and its impact in pension industry cannot be over emphasized. Building a successful brand in the pension industry requires the positive actions of the operators of the scheme as bad news emanating from one organization will adversely affect the activities of the others. As a name is so interwoven that any bad image adversely affects other localities and families that associates with bad name, as the African adage states that it is one finger dipped in oil that affects the other fingers.

What then is Brand?   Branding is a name, term, symbol or sign used to identify a product or service.

Adirika et al (1997:127) noted that branding is a major issue in product strategy  , on the one hand developing  a branded product requires a great deal of long term investment spending especially for advertising, promotion and even packaging”

Adirika et al (op cited) stated that brand is a name, term, symbol, or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitions.

The American Marketing Association AMA defines a brand as a name term, sign, symbol or design or a combination of them intended to identify the goods or services one seller or group of sellers and to differentiate those of other sellers.

McCarthy et al 1985, in Anyanwu (1993:39) defined branding as the use of a name, term, symbol, design, or a combination of these to identify a product. And according to Toyin Benson, “a brand can be described as the total sum of various consumer perceptions and beliefs formed over time as a result of various contacts with the product under reference, it can be seen as a combination of meaning ( in terms of proposition,) a reference point ( in terms of category) , an identifier  of a brand ,( in terms of name or logo) within  a global positioning framework  ( in terms of global benchmarking”)

Laura Lake (2011:1) “therefore it makes to understand that branding is not about getting your target market to choose you over the competition but it is about getting your prospects to see you as the only one that provides a solution to their problems.

Lake identifies that a good brand will achieve 5 objectives

Deliver the message clearly

Confirms your credibility

Connects your target prospect emotionally

Motivates your buyer

Concrete user loyalty.

Name is one of the major element of a good brand and in fact impacts more on the brand than other element (Benson)

Even in real life, names are so much valued that individual and family are always protected by those owning their names from any form of tarnish, stain or blemish and when a names goes wrong either by bad character , people find it difficult to answer such names again, I have never come across one answering Judas or Jezebel based on the characters they exhibited in the Bible.

A good name therefore becomes a selling point both to the individual and to the organization. Nowadays women attached their maiden names before attaching their marital name and some have worked so hard that they even find it difficult to attach their marital names especially in the movie industry. That is power of a name and even the Holy aptly captured that a good name is better than silver and gold.

Creating lasting impressions by a brand is hinged on the strength, quality and appeal of the brand to the customers. The combination of the brand elements coupled with the expectations on delivery symbolize a promise by the brand which the consumer expect to fulfill a need (Benson)

It is the fulfillment of the need according to Benson that helps to build a brand equity and leverage effectively on this over a long term. Continuing Benson went on to highlight that the “pricing distribution and availability of the brand helps to reinforce the consumers patronage of the brand.

The pension industry is roughly ten years in Nigeria and with the recent speculations of the lifting of the transfer window, Pension Fund Administrators need to work hard to create an enduring brand, this is because when brand do not meet up with the expectations  of the consumers and customers, they move elsewhere  and look for alternatives probably never to come back as noted by Benson. Continuing he stated that when brand meet with up with expectations, i.e. consumers expectation, then a lasting impression is made and  a chemistry is established with the customer as was observed with the global brand reports of Business week.

The various customers of the PFAs are looking up for such brands in the pension industry, this is the time for the PFAs to create such brand and take us away from the old practice of failure in the pension industry. Failure is no longer an option coupled with the stringent principles of the National Pension Commission , PenCom and other regulatory organs and act, like the Banks and other Financial Institutions Act 1991, as amended, or the Money Laundry prohibition Act , 2004,  the Advance Fee fraud Act and other fraud related offences Act 2006  and the pension Reform Act 2oo4 which has been repealed , and the Pension Reform Act 2014 are all geared  towards the success and creation of an enduring brand in the pension industry . 

Odunze Reginald

Managing Partner, Chareg Consulting, Managing online Editor, Pensionsbenefit.com, Reginaldodunze.com and theverynewsinfo.com