The Nation Newspaper

Category: Pension

  • Why pension transfer window remains shut, by PenCom

    Why pension transfer window remains shut, by PenCom

    The National Pension Commission (PenCom) has identified the penchant by Retirement Savings Account (RSA) holders for registering more than once through their Pension Fund Administrators (PFAs) on the Commission’s database as the major challenge hindering the opening of the transfer of pension account from one  PFA to another.

    This was made known in a report by PenCom and obtained by The Nation.

    Section 13 of the Pension Reform Act, 2014 provides that, “Subject to the Guidelines issued by the Commission, a holder of a RSA maintained under this Act may not more than once a year, transfer his pension account from one PFA to another.”

    PenCom stated that for effective take off of the transfer window, the Commission is putting in place infrastructure and modalities that would enable the cleaning up of  existing registration database to eliminate multiple registration thereby facilitating the opening of the transfer window.

    The report reads in part: “In line with the provisions of the Act, the Commission has already released the regulations for the transfer of RSA to pension operators and also displayed same on its website.

    “A major challenge hindering the opening of the transfer window is the issue of RSA holders registering more than once through their PFAs on the Commission’s database.

    “For effective take off of the transfer window, the Commission is putting in place infrastructure and modalities that would enable the cleaning up of the existing registration database to eliminate multiple registrations thereby facilitating the opening of the transfer window.”

    The Commission however enjoined all stakeholders to exercise patience as the window would be opened as soon as possible.

  • African pension funds create investment capital pool

    With pension funds in some parts of Africa growing at a remarkable pace, the continent has become its own biggest investor.

    This is according to RisCura’s 2015 Bright Africa report, an on-going research effort aimed at assisting investors into the continent.

    Africa has experienced tremendous growth in pension assets over last five years. Assets in East Africa, for example, have grown in excess of 20 per cent on a consistent basis only overshadowed by Nigeria, which has seen growth between 25 per cent and 30 per cent.

    In much of sub-Saharan Africa where pension systems are older and more established, growth rates have been lower, but still strong, ranging between eight percent and 18 per cent over the previous five years. These trends are set to continue as this young continent moves towards increased coverage, and more inclusive and comprehensive systems.

    In line with global trends, the vast majority of retirement income in Africa is funded by governments, derived from taxes or other forms of government revenue (essentially a pay-as-you-go system or PAYG). With a large proportion of formal sector workers concentrated in the civil service, pension funds for public sector workers are well established and benefits are often more substantial compared to the private sector.

    Coverage on the continent however, is much lower compared to the rest of the world. Data from the Labour Office’s 2014, 2015 World Social Protection Report estimates that currently only 16.9 per cent of older people in sub-Saharan Africa receive an old age pension. Although this number is higher in North Africa at 36.7 per cent, it is still considerably lower than much of the developed world, 90 per cent in North America and Europe. A recent report on the pension sector in the East African Community estimates that between 80-90 per cent of the population is not reached via public or private pension fund schemes.

    In part, this is due to the unique circumstances in Africa including demographics, young population, a large informal employment sector, and migration with limited pension portability, and dependency on government finances. The pace of regulatory reform has also led to divergent coverage trends between countries and regions.

     

    Pension funds as investors

    Pension funds globally have become significant investors, both as fiduciaries in global capital markets and in their capacity as investors in local and international development projects. At the end of 2014, global pension fund assets were estimated at USD 36,119 billion, representing a 6.1 per cent rise from the 2013 year-end value. On average, these assets account for 84.4 per cent of these countries’ GDP.

    • Courtesy: RisCura analysis

  • Premium Pension preaches wellness

    Premium Pension preaches wellness

    premium Pension Limited has emphasised the need to adopt health-improving lifestyles to enhance the achievement of both organisational and industry goals.

    Its Managing Director, Wilson Ideva spoke at the company’s corporate forum for general wellbeing during the management retreat at the Eko Hotel, Lagos. The theme of the retreat was “Lifestyle Modification for Peak Performance.”

    Ideva said a positive balance sheet and consistent good returns on investment without a foundation of good health anchored on positive and healthy lifestyle is like building castle in the air.

    He recommended positive lifestyles and placement of high premium to the health of all the firm’s clients and retirees whose longevity would impact positively on their business.

    The high incidence of sudden death among executives in the country was decried during the retreat while workers were enjoined to adopt healthy lifestyle which encompasses healthy eating habit, physical exercises, relaxation and proper organisation of activities.

    He said Premium Pension has been carrying out medical checkup on retirees who attend retirees’ forums held across the country.

    “We render high quality pension fund administration with emphasis on technology, high return on investment and customer care and we believe retirees should be in good health to be able to enjoy pension. Our staff should also not be seen operating below capacity owing to poor health, Ideva said.

    President, Byron Institute, Dr. Charles Cudjoe, who facilitated the retreat dwelt extensively on the need for executives to modify their lifestyles to ensure peak performance.

     

     

  • Pension tax relief changes threaten public sector professionals

    Public sector professionals such as doctors, senior civil servants and university professors in line for pensions worth more than £43,000 a year face a steep increase in tax bills in 2016, with financial advisers encouraging high earners to protect themselves now.

    In the March 2015 budget, UK Chancellor, George Osborne cut the maximum anyone can save into a pension over their working life and still obtain tax relief from £1.25m to £1m, taking effect in April 2016.

    Many high earners in the public sector are likely to breach the £1m limit and then be subject to tax on the excess of up to 55 per cent. This is because the government puts a value on their total pension pot equivalent to 20 times their annual pension, plus their automatic tax-free cash entitlement – which in practice works out at 23 times their pension.

    For a GP or dentist in the NHS scheme, it means that if he or she has an expected final salary-related pension of more than £43,478 year, they will be potentially in breach of the new limits (because 23 x £43,478 is £1m). This compares to £53,347 under the current lifetime allowance cap of £1.25m.

    The government will impose a tax charge of 25 per cent of the excess above £1m, or 55 per cent if the excess money is taken as a lump sum.

    Jon Drysdale of chartered financial planners PFM Dental gives an example of a doctor or dental practitioner aged 60 who draws their NHS pension of £50,000 in May 2016 and who also has a separate personal pension valued at £250,000. Their NHS pension “value” is estimated at £1.15m, and once added to their £250,000 personal pension means they have an excess of £350,000. PFM Dental says this will result in an annual £4,375 tax charge taken off their pension every year by HM Revenue & Customs. The calculation of the charge is based on 25% of the excess, divided by 20.

    Before doctors, dentists and academics complain too much, Tom McPhail of investment firm Hargreaves Lansdown says the government is actually being very generous in its assessment of the value of their pensions.

    “Because defined-benefit [final-salary based] pensions are valued on a 20:1 basis, someone with a £10,000 defined benefit pension would be deemed to have a £200,000 pot for lifetime allowance purposes. This is generous compared with defined-contribution [stock-market based] pensions, as a £200,000 pot would only buy you an inflation-linked annuity income of perhaps £6,000 or £7,000 a year.”

    If valued on a more realistic basis, doctors retiring on pensions of £50,000 a year have a pension pot valued at nearly £2m and would be crippled by the new charge.

    In the March 2015 budget, George Osborne cut the maximum anyone can save into a pension over their working life and still obtain tax relief from £1.25m to £1m.

    In the March 2015 budget, George Osborne cut the maximum anyone can save into a pension over their working life and still obtain tax relief from £1.25m to £1m.

    • Culled from the Guardian

  • Warning for grandparents using their pension pots to help families

    Experts say grandparents must ensure that they have enough money left in their pension account to take care of themselves.

    According to research, a quarter of grandparents, who have given some form of financial help to their grandchildren, took the money from their pension.

    Substantial sums are being handed out at an average of £1,633, and grandparents are planning to give away £2,938 more in future, according to retirement specialists.

    One in seven plans to take money from a pension once they reach retirement age to give to grandchildren. Some are helping with university fees or deposits on a home, with about one in 20 handing over gifts of more than £10,000. More than a third said they gave cash as a “living inheritance”, with hopes of being around to see their grandchildren enjoy the money.

    The research indicates that due to the impact of rising cost of living, many grandparents have stepped in financially. However, experts warn that grandparents risk compromising their own standard of living by being over generous. “It’s important that grandparents ensure they have enough money left for themselves,” says John Perks of LV=.  “Even smaller outgoings like bills can become harder to meet later in life as the cost of living rises.”

    New pension rules that came into effect in April are expected to increase grandparents’ generosity. Under the rules, retirees are allowed to take all of their pension savings as a lump sum. According to research from Saga Personal Finance, one in five of those, who are taking advantage of the freedoms choose to give cash to the family.

    A similar proportion using equity release to raise cash from their home say they give some of the money as a gift to loved ones.

    Alex Edmans, head of retirement at Saga Personal Finance, says: “The desire to help your children and grandchildren is part of human nature, whether that’s to give children a helping hand or so that grandchildren can get on the property ladder. But a word of warning: being the generous generation can have its downsides – as some, with greater longevity and increasing costs of care in later life, may find they have given away too much.”

    • Culled from the Observer

  • There is no contract staff in pension law, says PenCom

    The Nigerian pension law does not recognise anyone as a contract appointee, Director-General, National Pension Commission (PenCom), Mrs Chinelo Anohu-Amazu, has said. The Pension Reform Act (PRA) promulgated in 2004 was repealed and replaced by PRA 2014.

    Anohu-Amazu, who was  represented by Mrs. Opeyemi Abodunrin of the Public Sector Department of PenCom, made this known at a forum in Lagos. According to her, anyone working on contract or full employment, is entitled to be part of the Contributory Pension Scheme (CPS).

    She added that it is an obligation for an employee to open a retirement savings account and have contributions deducted from his or her salary and the employer to make same contributions.

    She stressed that the  new pension scheme does not recognise anyone as a contract appointee.

    Meanwhile, Lagos State and its Ministries, Parastatals and Agencies (MDAs) have been called upon to look for practicable ways of incorporating its contract or temporary staff into the scheme.

    The call was made at a forum organised by the state Pension Board (LASPEB) in Lagos. Participants at the event, who were drawn from the government, pension and insurance industries, expressed misgivings over the neglect of several casual workers by their employers.

    LASPEB Director-General, Folashade Onanuga, said the state has called on Heads of MDAs to discuss the way forward on contract staff within the state workforce.

    According to her, the state Pension Law states that the Scheme is applicable to pensionable employment. She said this means that contract staff are not covered and there is need to find how they can be absorbed into the scheme.

    She said: “The state law says it covers only those in pensionable employment, which is permanent staff. In Lagos State today, if you are employed and given a letter of employment, which states that your employment is contract for a temporary period of two or three years, the central processing unit where salaries are paid will pay your salary, but automatic pension contribution deduction will not apply to you.”

    A participant from one of the parastatals in the state, Mr. Sarumi noted that it is abnormal for an employee to have been engaged for numbers of years and allowed to go without pension.

    He said, though the Pension Reform Act 2014 encourages voluntary contributions, employers should ensure that casual employees, who have been engaged for long period, are covered in the pension scheme.

    Section 1 subsection 1 of the PRA 2014 states that the objective of the CPS is to ensure that every person, who worked in either the Public Service of the Federation, Federal Capital Territory, States and Local Governments or the private sector, receives his retirement benefits as and when due. It is also to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

    Section 2 subsection (1) states that the provisions of the bill 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 Government and the private sector.

    Subsection (2) further states that in the case of the private sector, the scheme shall apply to employees, who are in the employment of an organisation in which there are 15 or more employees.

    Subsection (3) adds that notwithstanding the provisions of subsection (2), employees of organisations with less than three employees as well as self-employed persons, shall be entitled to participate under the scheme in accordance with guidelines issued by the commission.

    Although the PRA 2014 did not address the issue of casual employees, Section 2 of the act expanded the coverage of the CPS in the private sector organisations with three (3) employees and above, in line with the drive towards informal sector participation.

  • ‘Ondo’s new pension law to be ready soon’

    Ondo State’s new pension law has gone through the third reading at the state House of Assembly. The law, when enacted, will enable immediate compliance with the pension contribution scheme stipulated in the new pension law, the Pension Reform Law (2014) .

    The Director General, Ondo State Pension Board, Jayeola Olowosuko, who made this known in Lagos said this makes the state to be ahead of many states in this regard.

    The PRA 2014 among other areas, reviewed the pension contribution rate from 7.5 per cent each by employers and employees to 10 per cent and eight per cent by employer and employee respectively.

    Olowosuko said the state is ready to comply with the new law. He also restated that the government will soon commence full implementation of the scheme.

    He explained that full deduction of monthly pension contribution will commence when October salaries are paid, noting that a circular had earlier been sent to staff to this effect.

    He said: “Ondo State government has commenced the implementation of the Pension Reform Act 2014 in phases. The first phase has commenced with employees employed in 2014. We have been deducting and remitting monthly contribution of these set of employees since last year.

    “The state has put in place necessary arrangements to ensure smooth running of the scheme. We have been sensitising the staff on the scheme. They understand the benefits of the scheme and are now ready to join.

    “We have, therefore, set October date as when we would begin deductions from their salaries while we also remit same to their chosen Pension Fund Administrators,” he added.

  • Lagos MDAs, state government agree on PRA 2014 implementation

    Lagos MDAs, state government agree on PRA 2014 implementation

    Lagos ministries, departments and agencies (MDAs) last week reached an agreement with the state government on how to implement the Pension Reform Act 2014, especially the pension contribution increase, Omobola Tolu-Kusimo reports.

    In what can be described as a public hearing between an employer and employee, Lagos State government last week met with public servants on workable ways to implement the Contributory Pension Scheme (CPS) guided by the new pension law, the PRA 2014.

    The meeting, a one-day seminar on the Provisions of the Pension Reform Act 2014 for the State Chief Executive Officers, Directors, Administration and Human Resources and Pension Desk Officers in MDAs also threw light on grey areas of the CPS in relation to the Civil Service Rules of the State Public Service. Representatives of the National Pension Commission (PenCom) were also present at the meeting.

    It would be recalled that Lagos State began the implementation of the CPS in March 2007 guided by the PRA 2004. However, the PRA 2014 has introduced some new provisions that is expected to be absorbed in the operation of the Scheme.

    According to the Director-General, Lagos State Pension Board (LASPEB), Mrs Folashade Onanuga, the state wants to consolidate on the strides already made in implementation of the CPS and wants to ensure it retains the position it has occupied.

    She stated that the State Governor, Akinwunmi Ambode however, wants an all-inclusive agreement from parastatals and agencies to avoid partial or faulty implementation of the PRA 2014 especially pension contribution increase .

    The PRA 2014 increased pension contribution rate from 7.5 per cent employee rate and 7.5 per cent employer rate to eight per cent employee rate and 10 per cent employer rate.

    Section 4 sub section 1 of the PRA 2014 states the rate of contribution under the CPS shall be a minimum of 10 per cent by the employer and a minimum of eight per cent by the employee’s monthly emoluments.

    Sub section 2 of the Act further states that the rates of contribution may upon agreement between any employer and employee be revised upwards, from time to time and the PenCom shall be notified.

    Sub section 4 also states that notwithstanding any of the provisions of the bill, an employer may agree on the payment of additional benefits to the employee upon retirement or bear the full responsibility of the scheme provided that in such case, the employer’s contribution shall not be less than 20 per cent of the monthly emoluments of the employee.

    Onanuga further disclosed that the state has made a recommendation to government to increase the funding rate of accrued rights from five per cent to 12.41 per cent recommended by our actuaries, Alexander Forbes.

    She added that the interactive session is to further instil, better understanding of CPS, how it works and the technicalities involved.

    She said: “In as much as we know that PRA 2014 is now operational in the private sector and at the Federal level with effect from July 1, 2014, it is important for us to come together and look at it closely in order to understand it better, how it will affect public servants and how to resolve the issues inherent in it.

    “The purpose of this forum is to ensure efficient management of our pension system, which in essence called for this seminar, which its main objective is to give indepth analysis of what the PRA 2014 entails. The purpose of this is to enable decision makers in MDAs have clearer and better understanding of the provision of the new law and the implications for pension administration in the state public service, most especially on the issues relating to pension contribution increase.”

    She noted that the current administration has from inauguration, emphasised a commitment to the welfare of the people of Lagos State.

    She pointed out that before the state will domesticate the provisions of the new Act into the Lagos State Pension Law, critical stakeholders will look at the increase in financial obligation arising from the 2014 Act.

    “We will look at whether we can go into it taking into consideration the happenings in the economy.

    Commissioner for Establishments, Training and Pensions, Dr. Akintola Benson Oke representd by the Permanent Secretary, Civil Service Pensions Office, Mrs. Olabowale Ademola stated that the government remains committed to consolidating on policies that would help in promoting its performance on the CPS administration.

    Meanwhile, a representative of the Lagos State Lottery Board Micheal Folarin said the agency is already contributing 23 per cent rate, which represents eight per contribution by employee and 15 per cent contribution by employer.

    He also believes that it is necessary for other government agencies to increase the rate from the present 15 per cent to minimum 18 per cent.

    Another representative from the Lagos State University, Mrs Oyele on her part said they support the pension contribution increase of 18 per cent.

    According to her, the CPS stands for the sustainability of employees after retirement and the increase is justified based on their recent standard of living.

    She added that the state is buoyant enough and can pay the increase.

    Adewale Shoyele from the Lagos State Public Service staff Development Centre, believes that the state can pay the increase if it puts proper planning in place.

    “We need to plan effectively with the pension fund. Lagos is number one state in Nigeria and in Africa.”

     

  • Ondo to begin CPS with 18% contribution increase

    Ondo State is set to begin the implementation of the Contributory Pension Scheme (CPS) with 18 per cent pension contribution increase, Director-General, Ondo State Pension Commission, Jayeola Olowosuko has said.

    Olowosuko made this known in an interview with The Nation in Lagos.

    According to him, the state has set October as the month when deduction of monthly contribution will commence.

    He explained that the state had partly joined the scheme as it has been deducting and remitting monthly contributions of its employees of 2014.

    He said the state was not able to implement the scheme before now due to economic challenges, adding that the Pension Reform Act (PRA) 2014, which repealed the PRA 2004 was also promulgated when the economy had issues.

    He added that it became necessary for the state to plan how to join the scheme in phases so that workers are not put in financial crisis.

    He said that overtime, the state has been owing staff and has been paying salaries in arrears.

    He noted that the problems of nonpayment of salaries has come to an end as the state has just paid September salaries in October.

    He said: “The new pension law was promulgated when the economy had issues and so we had issues implementing the scheme fully. Workers already had financial pressures and we didn’t want to put them through any financial crisis.

    “We have however been sensitising them on the scheme. Presently, things are getting back to normal and they are now ready to join the scheme.

    “We have therefore, pegged October date as when we will begin deductions from their salaries while we also remit same to their chosen Pension Fund Administrators”, he added.

  • Premium Pension grows assets to over N380b

    Premium Pension Limited has  grown its pension assets to over N380 billion, its Managing Director, Wilson Ideva, has said.

    Ideva, who made this known while speaking with reporters in Abuja, said the company has in 10 years paid out at least N81 billion in terms of retirement benefits in monthly withdrawal.

    He also said the company has funded Retirement Savings Account (RSAs) of over 400,000, noting that the registration is well over 500,000.

    He added that in terms of retirement, the company is managing over 16,000 retirees and pays them as and when due, on the 19th of every month, to be precise.

    He said: “We have funded RSA of over 400,000 and so far, we are in all the states of the federation. We have what we call approved branches, which are in about nine locations and we have recently opened up six branches awaiting the approval of our regulator, the National Pension Commission (PenCom).

    “We also have what we call Pension Centres, which are all over the 36 states of the federation and in some states we have more than one or two Centres. “

    He said the idea is that they have to be widespread because they are dealing with both the public and private sectors and they don’t want clients to be looking for them.

    “Anywhere we are, we want our clients to see us. The issue of pension is a very serious issue. It is highly emotive. Our past in Nigeria with regard to pension management, has not been pleasant. But I will beg to say that we are determined to let the world know that Nigerians can do it and we can do better and that is why you will see that money and time have been spent on this corporate headquarters in terms of structure and working technology.

    “In line with the Pension Reform Act 2004, all the Pension Fund Administrators (PFAs) were licensed by PenCom and Premium Pension was one of the very few that were licensed in 2004. We are in our 10th year as PFAs. But I will say that in the last 10 years, we have been able to distinguish ourselves in the pack of all the PFAs and we have made tremendous impact both on our clients and on the economy.