“Blockchainizing” Pension Administration
By definition, a pension plan is a retirement plan that requires an employer to make contributions into a pool of funds set aside for a worker’s future benefit. The pool of funds is invested on the employee’s behalf, and the earnings on the investments generate income to the worker upon retirement. What a great and enticing definition that ordinarily would want to make anyone to be a government worker or any employee for that matter. It seems the kind of job that will take care of you when you are able and even more when strength leaves your body. But we all know that’s no longer real. Perhaps it still is in your country but not in mine and a lot of other Third World countries.
I live in a country where the civil servants are only slaves of their employers. Employed to work for several years of their lives with the expectation of getting a retirement benefit after they step down service, only to wait years before being able to lay hands on their hard-earned money. Some even die without collection or spending a penny out of it. In one of my previous articles, I made reference to some employees serving the government completely for a period of 35 years of their useful lives without tasting a penny of their rightful retirement benefit. My dad was one of the star-crossed ones. Waited several years after retiring without receiving a penny from the government, why?
“The kind of job that will take care of you when you are able and even more when strength leaves your body… that’s no longer real”
The whole process of claiming a retirement benefit is such a long and stressful one that someone at the age of 60 or more would find it most difficult but, having no choice, will engage nonetheless. That aside, the government also perhaps intentionally takes a lot of time, years in this circumstance, to process a lump sum for the retirees — usually grouped according to the years of retirement. Luckily, the ones that retired In 2014/2015 recently got part of their benefits. If reasons for such delays can be seen for the problems they truly are, should a solution not be proposed to mitigate the problems?
Although in recent times, Blockchain has been coming up with several use cases that weren’t considered or thought possible at the start. The basic purpose of having a distributed ledger should not however be forgotten. As some sets/classes of people make profit from attacking a centralized database and tampering with information, some run into irrecoverable heavy losses.
We can only begin to understand the extent of these possible damages when a document becomes altered either intentionally or mistakenly. Say, a will prepared and signed before the demise of the estate owner was modified illegally after his death leaving his family out of the scope; or a series of transaction receipts were modified to include commodities that were not purchased by a certain customer. A lot could actually go wrong. Just like a lot continues to go wrong with the pension scheme administration for lack of proper record-keeping on both sides. This is a real life-threatening situation and should not be ignored.
“…some sets/classes of people make profit from attacking a centralized database and tampering with information, some run into irrecoverable heavy losses.”
This is not an article to pass blame around as there is a lot of blame to go round. The purpose is to propose an open solution for those who care to see the possibilities and eventually integrate it into the scheme. The intention behind the pension scheme originally as I believe was a genuine one. This was of course before the demerits of centralization made an opportunity for the deep and endless, self-centred pockets.
Where I am from, many people, basically comprising the Senators, director of pension fund, among others have gotten rich on “blood money” while pensioners were left in anguish. For years, while pensioners suffered and even died roaming the streets of Abuja while waiting for their pensions, the Senate did nothing. For years, aged pensioners turned the corridors and underneath the stairs of the complex housing the office of the Head of Service to their homes; yet, nothing was done by the lawmakers.
“…the demerits of centralization make an opportunity for the deep and endless, self-centred pockets”
Before a solution can be developed, there are some factors that need to be clarified. We need to identify the processes and the loopholes requiring permanent solution. In a recent issue regarding the pension fraud, some findings were made concerning goings-on in the pension offices.
- There is syndicated and institutionalized corruption, fraud and embezzlement in the administration of the payment of pensioners and administration of pension funds.
- The pension office “enrolled as pensioners several persons who had not served in the public service with forged and false documentations”.
- “Officials in the department use numerous fake and pseudo names in the pension payroll and banks to siphon monthly pension funds to their private use”, a report revealed.
- The quarterly verification exercises on which it said the department spent approximately $1 million every year “were only a facade to fulfill all righteousness and a decoy to expend the funds appropriated for that purpose”.
Other issues to consider include:
- Effort and time spent in engaging in screening exercises, identity verification, queues.
- Elongated processes in previous work clearances, bank statement and certificate verifications among other required confirmations.
- Depreciating value of pension worth spread over 18–19 years as value of fiat currencies depreciates making sustenance on the pension more difficult as the year goes by.
- Human intervention needs to be reduced in the processes.
- The whole process, transactions, registration and verification needs to be transparent.
- Employee registration using biometrics needs to be done online.
- All required files for the verification need to be submitted automatically and signed online using the unique oracle source.
Blockchain is a decentralized and transparent ledger but with the aid of the smart contract and the Oracle, it can do a lot more than store information but execute both simple and complex tasks. It presents a solution where human intervention is not only minimized but processes are done faster and completely transparent. Even better, it provides means of achieving complex tasks not only accurately but also with less costs as middlemen are removed, thereby presenting the best solution for the earlier explained predicament.
“Blockchain is a decentralized and transparent ledger but with the aid of the smart contract and the Oracle, it can do a lot more than store information but execute both simple and complex tasks.”
Everyone is talking about Blockchain, and no one wants to be left behind. As a distributed, tamperproof ledger, a well-designed Blockchain doesn’t just cut out intermediaries, reduce costs, and increase speed and reach. It also offers greater transparency and traceability for many business processes. Gartner forecasts that Blockchain will generate an annual business value of more than USD 3 trillion by 2030. It’s possible to imagine that 10% to 20% of global economic infrastructure will be running on Blockchain-based systems by that same year.
Pretty much every process that has to do with a lot of people and their welfare needs to be made transparent and decentralized. Secrecy is not in the best interest of everyone except a few deep pockets, self-centered elected officials. Around here, pension administration used to be a government’s full responsibility. Although it has been privatized with responsibilities shared between both the government and some private companies given the opportunity to win the heart and interest of pensioners to employ their services. But then, workers have no free right to select which pension brand to go with as they are imposed on them by the sitting government. Why you may ask? What other reasons other than the aspiration for personal gains that will come from it.
“Gartner forecasts that Blockchain will generate an annual business value of more than US $3 trillion by 2030”
Now, creating a Blockchain use-case for a company, especially a long-term existing one, may not be as easy as creating one for startups. Trust is easier built from scratch than along the way. According to PwC’s 2018 survey, it’s one of the major concerns in Blockchain barriers in business acceptance and utilization. Some of the other challenges stated include: regulatory uncertainty, inability to scale, among others. An interesting thing about most African countries is we practice a form of mixed economy, which is exercised without much barrier. Being a less developed continent, it’s pretty much open to technological exploration and utilization without much regulatory concerns — provided of course that it’s not life-threatening. Secondly, scalability being another concern is an issue for most Blockchain companies, which brings the dire need to explore options only on a scalable Blockchain platform.
My favorite of all, coming of course with full recommendation, will be the Ardor Blockchain platform, specifically designed to solve Blockchain-based problems, scalability-inclusive, and for business adoption. As an African, if you must emulate anything, emulate the sun. If you must promote an energy-consuming solution, the sun had better be your option. If you must embrace the Blockchain, be environment-friendly. Choose Ardor, the Blockchain powered by the sun. We have the advantage of the sun; why not make use of it and adopt a lasting solution that utilizes it as well.
“… if you must emulate anything, emulate the sun. If you must promote an energy-consuming solution, the sun had better be your option.”
A look further into Ardor, you will discover how unique it is not because of one particular attribute but many. Ardor is a real Blockchain-as-a-service first because you can take advantage of the current network, even you can use their parent chain as consensus-as-a-service where trust is guaranteed by the almost 5 years of existence on Proof of Stake network. And second because you do not have to worry about maintenance. The nodes are updated without client interaction. This enables several companies to come together to use the same platform as a unique Blockchain solution knowing the design wasn’t made by a self-centered competitor but a neutral third party basing the solution on a mutual advantage for all creating a link/interaction between several businesses.
Blockchain will save your business. This is not a drill! (Part IV) was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.