Author: The Nation

Some Pension Fund Administrators (PFAs)  have been sanctioned by the National Pension Commission (PenCom) for some infractions. 

  They are Pension Fund Administrators (PFAs) RM Pension Managers Limited, Crusader Sterling Pensions Limited, Tangerine APT Pensions Limited, and  Guaranty Trust Pension Managers Limited.

The regulator stated that the companies who are Pension Fund Administrators (PFAs) were sanctioned during the first quarter of this year for violating regulations and guidelines of the Commission.

Other PFAs sanctioned, according to PenCom, are Access Pensions Limited, Leadway Pensure PFA limited, and Radix Pension Managers Limited.

PenCom made this known in its Quarter 1, 2023 report, which section on operational activities stated that the commission held a PenCom/Operators Consultative Forum during the quarter. The report also said: “The Department also held a virtual meeting with the Chief Compliance Officers (CCO) of Licensed Pension Fund Operators. The meeting deliberated on the functional responsibilities of CCOs and the expectations of the Commission, in carrying out their statutory mandates.

“Status of guidelines and framework being reviewed by the department include Revised Guidelines for Appointment to Board and Top Management Positions was forwarded to EXCO for approval; Draft Framework for the Establishment of Additional Benefits Scheme was forwarded to Exco for approval; and Draft Guidelines on the Operations of Branch Offices and Service Centres by Licensed Pension Fund Administrators was forwarded to Exco for approval.

The imperative of a micro pension plan as a buffer against old age poverty cannot be overemphasised. The National Pension Commission (PenCom) has continued its drive to capture workers in the informal sector. Omobola Tolu-Kusimo writes.

The National Pension Commission (PenCom) has captured 93,225 informal sector workers on the Micro Pension Plan (MPP), with a contribution of N416.12 million from inception of the MPP three years ago.

However, the commission has called on entrepreneurs, artisans, among others, in the informal sector  to enrol in the MPP through any PFA.

According to PenCom, one of the major objectives of the Contributory Pension Scheme (CPS) is to assist  individuals by ensuring that they save  for their old age.

In a statement, the commission said at the inception of the CPS, only the formal sector employees were covered while persons involved in the informal sector  were not.

To address the situation, the commission conceptualised the MPP with the objective of expanding pension coverage to the informal sector in tandem.

The Plan enables workers in private sector organisations with no fewer than three employees as well as the self-employed and people in the informal sector to participate in the CPS.

The MPP is a voluntary financial plan aimed at providing financial stability to these workers in their old age.

The Director-General of PenCom, Mrs. Aish DAhir-Umar, said when an informal sector participant dies, their contributions are not lost. Rather, they are paid to their legal heirs.

She stated that the participant is required to complete the registration forms, and provide a valid means of identification such as the Passport, Driver’s Licence or National ID card.

On the requirements for registration, Mrs. Dahir-Umar,  said: “Such individual should be at least 18 years old and resident in Nigeria. Once the Retirement Savings Account (RSA) is opened, the Micro Pension Contributor (MPC) is issued with a Personal Identification Number (PIN) by the PFA. It is important to note that upon securing employment in the formal sector with any organisation that has three or more employees, the MPC will be eligible to participate under the mandatory CPS.

“However, once the MPC joins the mandatory CPS, they cannot convert back to the MPP.

“The non-homogenous nature of the informal sector participants with respect to regularity of income was considered in the design of the MPP. Under the MPP, contributions have been made easy. There is no stipulated minimum amount of contribution and the MPC can make contributions daily, weekly or monthly, as may be convenient.

“These contributions can be made by cash deposit, or electronically, through any payment platform/agent approved by the Central Bank of Nigeria. Micro Pension contributions are invested by the Pension Fund Administrators (PFAs) in safe investment outlets that are stipulated by the PenCom. The savings are expected to increase over time due to yields from the investments, thereby affording contributors to build up savings from which to draw retirement benefits and pension. MPP contributions are split into 40 per cent for contingent withdrawal and 60 per cent for pensions. The Contingent portion is available for withdrawal to ease financial pressures or needs of the contributor before their retirement.

“The MPC is qualified to access the contingent portion of the contribution three months after making the initial contribution. Subsequently, contingent withdrawals can be made once in a week. The retirement/fixed portion of the RSA balance, on the other hand, can only be accessed by the contributor upon retirement.’’

She continued: “PenCom’s Guidelines on MPP provides that the Micro Pension Contributor (MPC) is eligible to access his RSA for retirement upon attaining 50 years and/or on health grounds. The MPC can choose to convert the contingent portion of the RSA to retirement benefits at the end of every year, and may also transfer their RSA from one PFA to another in line with the RSA transfer regulations.

“Also, upon retirement, the MPC has the option of transferring part or all of his/her outstanding balance in the contingent portion to their retirement benefits portion.

“In the event of the death of an active or retiree MPC, the balance in the RSA shall be paid to the legal heirs of the deceased/contributor as may be appointed by a Will or Letter of Administration granted by a Probate Registry or as may be directed by a court of competent jurisdiction in the state of residence of the deceased contributor, as the case may be.This means that the MPP also offers financial security to relatives of deceased informal sector workers. The MPP has provided hope for millions of Nigerians operating in the informal sector. While they do not retire in the conventional sense, they, however, need to ensure their old age is lived-out in dignity.

“It is important that informal sector workers register for the MPP to secure their financial security at old age. It is never too early or too late to begin saving for retirement.” 

In an era marked by economic uncertainties and shifting demographics, the need for a robust and sustainable pension system has never been more critical. Omobola Tolu-Kusimo writes on why the Contributory Pension Scheme (CPS) remains best way to ensure retirement security.

Research has indicated that the Contributory Pension Scheme (CPS) is the best way to ensure retirement security as it offers a superior alternative to the traditional Defined Benefits Scheme (DBS).

For experts, the advantages of the CPS and its suitability for the challenges of the 21st century are huge.

Significantly, the CPS has ensured timely payment of pension, which was one of the objectives of the pension reform in Nigeria.

From the inception of the CPS to March 2023, a total of 326,248 pensioners on Programmed Withdrawal have been paid N941.66 billion as lump sum and N14.66 billion as monthly pension.

Similarly, within the same period, a total of 108,552 pensioners on Retiree Life Annuity have been paid N16.66 billion as lump sum and N6.54 billion as monthly pension.

DBS, CPS fundamental difference

Under the defined benefits scheme, retirement benefits are predetermined based on factors such as years of service and final salary.

In contrast, the CPS requires employees and employers to make regular contributions to an individual Retirement Savings Account (RSA). The accumulated funds are then invested, and the retirement benefit is determined by the value of the account at the time of retirement.

The Director-General, National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar, in a statement, pointed out that one of the primary advantages of the CPS is its sustainability in the face of demographic shifts.

She stated that as life expectancy and birth rates increase in Nigeria, the burden on traditional defined benefits systems becomes unsustainable.

With a contributory system, she said the retirement benefit is directly linked to the individual’s contributions and investment returns. This ensures that the pension system remains financially viable, even as the population ages.

She said: “Moreover, the CPS empowers individuals to take control of their retirement planning. It offers greater transparency and flexibility, allowing workers to monitor their retirement funds actively. Pension Fund Administrators (PFAs) send Statement of Accounts to RSA holders periodically, entrenching the culture of transparency in the CPS. In addition, RSA holders are allowed to transfer their accounts from one PFA to another once in a year, giving them control over their pension funds.

“In contrast, the defined benefits scheme often provides little information or control to employees, leaving them uncertain about their future financial security. The CPS instils a sense of ownership and personal responsibility, encouraging individuals to make informed decisions and adjust their savings accordingly. The Pension Reform Act 2014 (PRA 2014) allows employers and employees to make additional contributions and even increase the minimum 10 per cent employer and eight per cent employee contribution. These flexibilities do not exist under a defined benefits arrangement.

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“Another compelling advantage lies in the portability and mobility offered by the CPS. In today’s dynamic job market, where career changes and relocations are increasingly common, individuals require flexibility in managing their retirement savings. With contributory pensions, employees can seamlessly transfer their accumulated funds when changing jobs, ensuring continuous growth and uninterrupted savings accumulation. This mobility empowers workers to pursue new opportunities without sacrificing their retirement security”.

The Head, Corporate Communication, PenCom, Abdulqadir Dahiru further explained that the CPS promotes a fair and equitable distribution of retirement benefits.

According to him, under the defined benefits system, the pension pay-outs are often heavily skewed in favour of long-tenured employees.

“Under the defined benefits arrangements, sacked employees and those who worked less than certain number of years end up without retirement benefits under. This creates disparities and inequities within the pension system.

“In contrast, the contributory system ensures that retirement benefits are based on the individual’s contributions and investment returns, eliminating biases and promoting a more egalitarian approach to pension provision”.

Meanwhile, the PenCom DG  said Commmission developed strong investment guidelines underscoring fair returns and safety of pension funds.

She stated that PFAs strictly adhere to these guidelines, ensuring steady growth of pension assets.

“As of March 2023, total pension assets stood at N15.58 trillion and still growing. Noteworthy is that the defined benefits system carries its own risks, as demonstrated by numerous cases of pension funds facing significant shortfalls and delay in payments to retirees due to non-release of budgeted funds. Government is already overburdened with the payment of pensions under the DBS. There are competing demands on the Federal Government, which limited revenues cannot meet. By embracing a contributory approach, individuals have the opportunity to harness the potential growth of their retirement funds, ultimately leading to more substantial and sustainable benefits.

“The DBS exposes retirees and employees nearing retirement to endless verifications. There are risks of inefficiencies and malpractices in pension administration under defined benefits arrangements due to lack of transparency. On the contrarily, the CPS has sufficient safe guards to protect pension fund”.

Mrs. Dahir-Umar stressed that the CPS represents a progressive and adaptable approach to retirement security, tailored to the needs of the modern era. Its sustainability, transparency, portability, and equitable distribution of benefits make it a superior alternative to the traditional defined benefits system.

“As Nigeria navigates the challenges of an evolving economic landscape and changing demographics, it is imperative that public and private employers and employees embrace innovative solutions that empower individuals and ensure their financial well-being in their golden years.

“The CPS offers precisely that, heralding a new era of retirement security for all,” she added.

ADEDAMOLA: My name is Adedamola. I retired from the Nigerian Railway Corporation (RSA) in 2014.

 Kindly help me find out why the NRC failed to pay my pension empowerment training allowance. Also, my pension allowance was not fully paid by my pension administrator, Premium Pension. Why?

  Also, since the Federal Government had announced a new minimum salary wage, I have not been paid it.

PENCOM: Good day. Please provide more details on this complaint. Such as the status of your employment, and your RSA PIN.

CHUKWUEMEKA: My name is Chukwuemeka. My wife passed on on March 25, 2019. I have submitted the documents required. But  her gratuity has not been paid.

PENCOM: Kindly provide more details, such as the name of the Pension Fund Administrator and PIN of your late wife, her former employer and other information that will assist the Commission respond to your  complaint adequately.

ANNONYMOUS: Thanks a lot for reposting my request for intervention with PenCom on payment of pension enhancement by the PFAs.

Since my retirement in 2014, I received enhancement only once in 2017 and this has not been addressed by PenCom.

I have been excluded for the second time, which means I won’t enjoy any enhancement until 2026, a period of nine years.

This is unacceptable. I retired as a Director of Finance, so I have knowledge of investment. I believe PenCom should pay more attention to the reason most pensioners depend on  monthly payments. Therefore, we expect enhancements monthly.

PENCOM: Dear Sir, kindly visit your Pension Fund Administrator (PFA) for more information on the status of your pension enhancement.

DAMILOLA: My name is Damilola. I lost my dad in July 2021, but we started processing his death benefit in January 2022. We submitted the required documents, including Letter of Administration to PAL Pension in September 2022.

Each time I requested to know what was going on with the processing, they kept saying they were on it. This has been going on for the past four months. How long does it take for them to clear documents?

I have sent emails and SMS to the company and to the official in charge, but they kept saying they were on it. They said it would take about six months to check the documents. I don’t know what else to do.

My mum is sick and the family is financially down. Also, my siblings need to return to school. I am really depressed. Kindly help me.

PENCOM: Kindly provide the PIN number of the deceased to enable the Commission treat the complaint.

HAMADU: Greetings to the Director-General of PenCom. My name is Hamadu. I retired from Independent National Electoral Commission (INEC), Abuja in November 2017 as Deputy Director on Grade Level 16/9.

My pension administrator is Stanbic Ibtc. My complaint is on the non-payment of 2.5 per cent and arrears.

PENCOM: Please provide your PIN to enable the Commission expedite  cation on the issue.

ADOGA: Dear Omobola, my name is Adoga from Makurdi, Benue State. I retired from the Nigerian Railway Corporation (NRC) in February 2015. My PFA is Premium Pension.

In 2016, I joined Leadway Pensure for Annuity. Till now, my 2.5 per cent is yet to be paid. When l visited premium office in Makurdi, I was asked to apply for the payment which I did in July 2022. Please I want you to help me.

PENCOM: Payment has been made into your Retirement Savings Account (RSA). Please contact your Pension Fund Administrator (PFA).

ANNONYMOUS: I am a police officer. My pension has not been paid  since 2017. I have been on this matter in the past three years. I have been moving from one office to another, but all my efforts prove abortive. Kindly help me.

PENCOM: Kindly provide your name and PIN.

ABUBAKAR: Hello, my name is Abubakar, a next-of-kin. May I draw your attention to the president’s approval of outstanding pension, which included the 2014 retirees.

But, my father died in 2013. Will his  benefit be paid? How long does it take on average? Thank you.

PENCOM: Please note that for your late father’s death benefits to be paid; you must submit some documents to his Pension Fund Administrator (PFA) for processing.

If you have done this, please forward to the commission the following details: his RSA PIN, full name, name of PFA as well as other vital information to enable the commission investigate further. Thank you.

ANNONYMOUS: I am Inspector Isah (rtd). I retired on January 15, 2020 at the Niger State Police Command  upon attaining 60 years. I was paid only 25 per cent of my savings (N1,665,000) on February 2021, out of  N5,100,000.

I was also put on monthly pension of N31,758 from March 2021. My complaint is that I deserved to be paid at least 50 per cent of my total amount. I am really aggrieved.

PENCOM: You are entitled to only 25 per cent of the lumpsum.

MOHAMMED: Dear sir, we are the administrator of our late father Mohammed. He started work at the Nigerian Immigration Service (NIS) in 1987 but was kicked out by the Presidential Taskforce in 2006.

Since then, we have not collected one Kobo from National Pension Commission or NIS. We don’t know where to go or what to do. Help us out. – Bawa.

PENCOM: Please provide the PFA and PIN number to enable the Commission investigate your complaint.

DENNIS: Dear Sir, My name is Dennis. My Pension Fund Administrator (PFA) is FGPL.

I retired from the Nigeria Police Force on June 1, 2008 on a monthly pension of N26,451.84. I have been receiving this amount for 14 years and six months. Painfully, it has not been enhanced. Could you please tell me why? Thank you.

PENCOM: The pension enhancement is only for Retirement Savings Account (RSA) holders who have received significant growth due to return-on-investments over the years.