Lagos State Governor, Akinwunmi Ambode has directed that funding rate for Retirement Benefit Bond Redemption Fund Accounts (RBBRF) of retirees be increased to 12.41 per cent from five per cent.
Director-General, Lagos State Pension Commission, Mrs Folashade Onanuga made this known in Lagos.
According to her, actuarial consultants appointed by the state government to value pension liabilities owed retirees of the state had stated that the funding rate should be 12.41 per cent.
She said with this development, the problem of inadequate funding has been addressed.
According to her, this will ensure that there will always be funds to use to pay the terminal entitlements of the retirees.
She explained that the state has consistently funded the RBBRF with an amount equal to five per cent of the total monthly personnel cost of the stste’s active workers.
According to her, this is the funding rate stated in the Pension Reform Law.
She stressed that this is aside the mandatory monthly contributory pension scheme contributions remitted directly into RSAs account.
She added that parastatals have been directed to henceforth ensure that contributions of their employees are credited into their RSA.
She said: “LASPEC will give reports to the governor on quarterly basis on the performance of parastatals of government. The position of the governor is that retirees from ministries, local governments, State Universal Basic Education Board (SUBEB), TEPO or parastatals have served in the state and as such must be given the same treatment.
“The governor has also promised that budgetary provisions to systematically clear outstanding pension shortfall.”
The National Pension Commission has said Contributory Pension Scheme was aimed at putting smiles on the faces of those who had laboured to serve the country.
Mrs Grace Uzoro of PenCom who made this known in Lagos, said the commission is happy with the Lagos State government for being at the forefront of championing the scheme.
She said Lagos State has made Nigeria proud as the government is a government of action in terms of retirees’ welfare.
Uzoro urged other state governments to emulate Lagos State to ensure their employees retire with peace of mind.
She said: “The desire of the Contributory Pension Scheme is to ensure that people who laboured to serve their country are happy and financially empowered after retirement.
“Lagos State has worked very closely with PenCom. The government has always been consultative and listening to advice.
“The state has made Nigeria proud and we call on other state governors to take a cue from what the Lagos State has done.”
The recent release of N11 billion in cash assets and the planned issuance of retirement benefit bond certificate to retirees are indicators of the Lagos State government’s determination to improve the fortunes of its pensioners. OMOBOLA TOLU-KUSIMO writes that these development represent a further consolidation of efforts of the previous administration in the state.
Governor Ambode
There is fresh hope for Lagos State retirees under the Contributory Pension Scheme (CPS) with the recent release of N11 billion by the Lagos State Governor, Mr. Akinwunmi Ambode, to offset pension liabilities in arrears since 2010. The pension cash assets is not only for Lagos State Government mainstream pensioners, but retirees in Local Governments, Parastatals and agencies.
The former Director-General of LASPEC, Mr. Rotimi Adekunle Hussain, disclosed that in the eight years of the previous administration in the state, a sum of N33.57 billion was to be paid to 6,441 workers, who retired from the State Public Service under the CPS.
He expressed optimism and confidence that the achievements of the former governor Babatunde Fashola’s administration in the Scheme will be consolidated by Ambode.
It was, therefore, instructive when Ambode, determined to tackle any challenge hindering the smooth operation of the scheme as it relate to the state and enhance workers’ welfare, directed that pension cash assets in the sum of N11 billion be immediately deployed to outstanding pension arrears, which dated back to 2010.
According to a statement by the Head of Service, Mrs. Shade Jaji, the development is part of efforts being put in place by the present administration, aimed at finding a holistic solution to the issue of outstanding accrued pension rights due to retirees under the CPS pensions payment, and payment of pension entitlements under the Pay-As-You-Go (PAYG) pension scheme. The PAYE pension scheme was discontinued in April 2007.
Jaji said the state government has developed a comprehensive payment plan to resolve all outstanding pension issues in the immediate short, medium and long terms.
According to her, pension payments would be made to retirees of Ministries, Department and Agencies (MDAs) and Parastatals. “Also, payments to retirees from Local Governments and State Universal Basic Education Board (SUBEB), which will be made monthly, will commence from this month,” it was learnt.
The Nation gathered that the efforts were outcome of painstaking deliberations by the Public Service Pensions Office, the Lagos State Pensions Commission, the Head of Service and the determination of Governor Ambode to reduce outstanding liabilities due to all retirees in the state public service.
To further give hope to the retirees, the state , through its pension commission (LASPEC), will from tomorrow pay N2.2 billion Bond out of the N11 billion set aside for the outstanding benefits to 658 retirees, who retired from the mainstream of the civil service, local government, SUBEB and parastatals of government.
With these payments, the backlog of pension benefits owed by the state, leading to delayed payment of retirees benefits, is expected to be a thing of the past.
The Director-General, LASPEC, Mrs Folashade Onanuga, revealed that the 658 retirees to benefit from the N2.2 billion Bond will receive their bond from Governor Ambode at the 18th batch of Retirement Benefit Bond Certificate Presentation ceremony holding in Alausa tomorrow.
The Retirement Benefit Bond Certificate is a written acknowledgment by the state government of debt owed to employees for their years in service under the Pay-As–You-Go pension scheme, which was discontinued on March 31, 2007. The state had already redeemed the figures on the certificates into the Retirement Savings Accounts (RSA) of the 658 retirees.
She said: “This Retirement Benefit Bond presentation, the 18th consecutive one since the inception of the contributory pension scheme, signifies the strong commitment of the state government to the implementation and continued sustainability of the scheme. “
The LASPEC boss added that it is gratifying to note that Lagos State has been up-to-date in the remittance of contributions.
LASPEC Head, Corporate Affairs, Mukaila Sanusi further explained that Governor Ambode wanted to ensure that retirees are paid their benefits every month.
“The situation before now is such that there were backlog challenge in payment of pension benefits in the state. The target by the present government is that retirees get their benefits same year they retire. They are able to go home with their entitlement immediately they retire,” he said, stressing that “this is why the government is paying outstanding pension liabilities”.
“The N11 billion covers a huge chunk of the outstanding liabilities. More so, the fact that about 700 retirees will get their benefits tomorrow shows the seriousness of the current government to get things better than it has been before now,” he said.
Chairman, Association of Retirees, Lagos State Water Corporation, Mr. Leo Onayemi, in an interview, said the LASPEC DG has informed them that the current government has given them N150 million to pay to some of their members.
He said they are excited and hope that more of their outstanding benefits will be paid soon.
A retiree from a local government, who identified himself as Adeniyi, said he was happy that his benefits would be paid.
He said he has been struggling and saddened about the development before one of friends told him that government will soon begin payment.
The Lagos State Pension Reform Law 2007 was signed into law on March 19, 2007, established for the Public Service of Lagos State, a Contributory Pension Scheme for the payment of retirement benefits of employees in the service to whom the scheme applies. The scheme covers all pensionable employees in the public service of the state.
MYTH 5- I’d rather spend my money on something else
When intentions are good, this excuse occasionally sounds like the most compelling reason to avoid saving for the future. True, we sometimes cling selfishly to money, using our income to purchase superfluous trinkets of ostensible success, but frequently we want to use our money to contribute beyond ourselves like charities, nonprofits, and loved-ones in need. Contributing to others is certainly admirable, and I believe giving is living, so I want you contribute generously, but I’ve found the best way to help others is to help yourself first the best way to give generously is to have more to give. Investing in yourself ÀÛ+Ürst helps you ÀÛOÜex your giving muscle. There’s a reason airlines tell you to “secure your own oxygen mask before helping others”. If it’s easier to breath, it’s easier to help people in need.
MYTH 6- The Stock Market isn’t safe
Translation: You don’t understand the stock market. That’s okay. I don’t completely understand the stock market, either not intimately anyway (I am not a financial advisor, nor do I play one on the Internet). The only people who must have an advanced understanding of the stock market’s intricacies are stock brokers, day traders, and fund managers. Rather than allocating several hours a day to learn the nuances of mutual funds, index funds, and individual stocks, I choose to use an investing service that takes the guess work out of investing. It is true any investment introduces risk into the equation, but long-term investing in the stock market has proven to be the best way to grow your retirement savings: over the last 25 years, including 2008’s steep decline and subsequent Great Recession, the market has averaged a rate of return of nearly 11%. Even when you account for 1929’s Great Depression, the market has averaged greater than nine per cent growth over the past 100 years (source: Morningstar). Investing in the market is the most stable good-growth investment one can make in the long-term, especially when using online tools that help you outperform the market, many of which are discussed in this essay.
MYTH 7- I don’t have enough time or knowledge to manage my retirement savings
It’s true you and I will likely never have as much financial wisdom as the experts, but that’s precisely why we must seek out tools developed by trusted, reputable experts. Although I’m usually a do-it-yourself kind of guy, I don’t DIY my investment strategy; rather, I did my research and found online investment tools that allow me to control my money without being overly controlling. I don’t want to constantly scrutinize my investments tweaking and reacting out of fear every time the market goes up or down but I don’t want to ÀÛOÜy blind, either. Rather than flying the plane myself, I put the best possible pilot in the cockpit.
A safe and workable system must be designed to channel the $25 billion pension funds, (approximately N4.925 trillion) accumulated by the pension industry for real economic development, Chairman, Pension Fund Operators Association of Nigeria (PenOp) Misbahu Yola has said.
He made this known at the 2nd forum of PenOp, organised in Nigeria by Africonomie for African Pensions.
Aside from investment of the pension funds, Yola highlighted regulation, enlightenment of the general public and collaboration of major stakeholders as key areas that need to be worked on to facilitate and build a strong and sustainable pension system that works for the Nigerian environment.
He disclosed that as at May 31, 2015, Nigeria’s Contributory Pension Scheme (CPS) had approximately 6.6 million contributors and assets in excess of USD25 billion.
He said that as impressive as this may sound, they have only just started.
According to him, much more remains to be done as they have covered less than one tenth of the working population.
He added that the assets are less than five per cent of the nation’s GDP and the effect on economic development is still at embryonic stage.
He said: “To effect significant changes, it is imperative that the regulator, pension operators and other key stakeholders work together to build a strong and sustainable pension system that works for our environment.
“Nigeria has drawn a lot of international attention in recent years due to the success of its CPS. The scheme has been in existence for only 10 years and is therefore relatively young when compared to some of its counterparts in Africa.
“The common vision shared by all the players in the Nigerian Pensions industry is to see this contributory pension system grow to its full potential. This is by no means an easy task especially when we consider the size of our economy, our population and a lack of proper understanding and often mistrust at all things pensions. Nevertheless, a lot has been done since then by the National Pension Commission (PenCom) and pension operators to develop and improve the new pensions system.”
Speaking on regulation, Yola said the secret behind any solid structure is its foundation.
“For the pension system in Nigeria, the foundation is the law and by extension the Regulator that is custodian of this law, PenCom. In order for the system to succeed and be sustainable, the regulator must remain focused and continue to be innovative in its guidelines, regulations, codes and various other rules of operations.
“While being consultative, it must continue to be firm in monitoring and supervising the management and administration of the funds. It must also enforce compliance by employers in accordance with the law and sanction those who contravene any section of the Act. Fortunately the PRA 2014 has conferred more powers on PenCom in this regard. In addition, PenCom must continue to engage regulators in other industries that have a bearing on pension funds management.
“Similarly, there is a strong need to re-orientate the general public on the need for pensions and assure them of the effectiveness of the CPS. The states and local governments and indeed the informal sector should also be encouraged to join the scheme as required by law. The mistrust from the past experiences still lingers and this must be dealt with by assurances of the safety of the current CPS structure if we want to move forward in building a strong and sustainable pension system.”
In the same vein, the PenOp chairman said collaboration of key stakeholders namely SEC, CBN, FIRS, FMDQ, NASD, Private Equity and Infrastructure Funds etc is extremely important in achieving sustainability.
On investment of pension funds, he said that an enabling environment that facilitates the creation of quality investible products and alternative asset classes through which the pension assets can be invested safely but with relatively high returns for the contributors must be encouraged.
CUSTODIAN Group has appointed Mr. Wole Oshin as its Group Managing Director (GMD) at a Board meeting of the company, The Nation has learnt.
An indigenous investment holding company quoted on the Nigerian Stock Exchange (NSE) comprising Custodian and Allied Insurance Limited (CAIL), Custodian Life Assurance Limited (CLA) CrusaderSterling Pensions Limited, Custodian Trustees Limited and Crusader Properties Limited.
Until his appointment, he was the Managing Director of Custodian and Allied Insurance Limited (CAIL), the General Insurance business subsidiary and a non-Executive Director of Custodian and Allied PLC.
The Custodian Group which celebrated its 20th anniversary in June, 2015 has achieved great success over the years due to its commitment to ideals such as outstanding service and dedication to customers, innovation and comprehensive systems, processes and operations integration.
As Chief Executive of CAIL and founder of the group, he was instrumental to the growth and development of the company, having led it through successful mergers and acquisition in the last couple of years.
With his appointment as GMD, it is expected that it will leverage on his vast and rich goodwill and experience to further propel the Custodian group to achieve greater success.
Oshin is a graduate of Actuarial Science from the University of Lagos and a Chartered Insurer by profession. He is a Fellow of both the Chartered Insurance Institute of Nigeria and the Association of Investment Advisers and Portfolio Managers. He is current President of the Lagos Business School Alumni Association (LBSAA) and an alumnus of the Harvard Business School.
Whilst he assumes the position of GMD of the Custodian Group, Toye Odunsi , the erstwhile Deputy Managing Director of Custodian and Allied Insurance Limited will assume the position of Managing Director of CAI.
The knowledge gap in the insurance industry remains high just as professional indiscipline, Commissioner for Insurance, Fola Daniel has said.
He made this statement at the inauguration of the Chartered Insurance Institute of Nigeria, (CIIN) Insurance College located at the Lagos/Ibadan Expressway, Ogun State.
The NAICOM boss who said the commission is concerned, said the situation is totally unacceptable.
He said the situation calls for a cllective effort if the industry is to attain the professional height and standards we all crave to enable the industry occupy its rightful position in the financial services sector.
He said: “As a prudential regulator, the quality of and technical capacity of insurance practitioners in the country is a major concern to the commission. We will continue to support efforts at ridding the profession of indiscipline while entrenching a culture of professional discipline and adherence to rules and ethical standards.
“It is our desire in NAICOM to superintend over an insurance industry that is flourishing, financially strong and viable but with the right mix of professionals.”
This notwithstanding, Daniel said the inauguration of the College of Insurance marks a watershed in the history of not just the Institute but the entire insurance sector.
“This landmark accomplishment symbolises growth and key to future accomplishment. The CIFMS is a value addition to the quest to better position the CIIN in the industry and, herald a new era of improvement on services rendered by the institute not only for its future growth, but more importantly, for the growth and development of the Nigerian insurance sector practitioners.
CIIN President, Bola Temowo, said the commissioning follows four years of giant strides in actualising their dream of a college, conceived to change the face of insurance and financial management education in Nigeria.
He explained that prior to the commissioning, so much had been put in place to justify the development of a full-fledged college.
The Contributory Pension Scheme (CPS) is undersubscribed owing to lack of adequate public awareness, Managing Director, Premium Pension Limited, Wilson Ideva has said.
Ideva, who made this known while speaking with journalist in Abuja, said this is why the scheme remains at less than 10 per cent penetration level more than 10 years after its commencement.
He stated that a vast majority of Nigerians including the supposedly enlightened community lack information on the workings and belief in the workability of the scheme.
He said: “How else can one explain the less than 10 per cent penetration of the market more than 10 years after the commencement of the scheme?
“Less than seven million workers in Nigeria have subscribed to the new pension scheme out of the estimated more that 70 million working population while a total of 4.9 trillion Naira has been amassed as pension assets under management in the pension industry.”
Ideva lamented the lukewarm attitude of some Nigerians to the scheme.
“It is inexplicable considering the ugly past of the Defined Benefit Scheme which we have all been striving to break away from.
“Workers looked up to retirement with so much fear and trepidation because of the inherent uncertainties. The old scheme was fraught with corruption and bureaucratic bottlenecks that occasioned the ugly sight of long queues of aged citizens waiting to be paid pension that oftentimes never came.”
He, however, noted that the contributory scheme is a huge success and the most impactful government initiative in recent times, adding that there is the need to applaud the initiators of the scheme in the country.
He pointed out that while the old scheme which operated before 2004 left a huge pension deficit two trillion naira within the economy, the new scheme has accumulated pension asset of over 4.7 trillion naira and an enrolment of over 6.5 million people.
He noted that when these figures are put together, it would show that it has been a success story and this pool of funds is already playing a critical role in national development.
The scheme, he said, has already begun to improve the lives of retirees in the country and also becoming a critical contributor to national development.
He recalled that initially, when the idea was presented, a lot of people did not believe in it.
“This is understandable considering where we were coming from. Such skepticism has been dissipated with the successes recorded by the new scheme since inception.
“The pathetic situation of pensioners before the scheme was introduced is different from the current situation where workers are partners in the management of their pension funds. He urged Nigerians to note the difference between the new scheme and the old defined benefit system under which some pensioners are still being managed.
He noted that under the new scheme entitlements are being paid regularly. He also advised workers and retirees to notify their Pension Fund Administrator (PFA) six months before retirement and submit all the necessary documents.
Once this is done, within one or two months upon retirement you will be paid your lump sum.
Retirement not preceded by proper planning and preparedness could spell disaster for both the retiree and the society, Managing Director, Premium Pension Limited, Wilson Ideva has said.
Ideva made this assertion in Asaba, Delta State while delivering a paper on second edition of the Delta State Bureau of State Pensions Annual Lecture Series. The paper was titled: “Towards Sustaining Stronger Relations between State and Local Government Bureaux of Pensions and Pension Fund Administration.”
He said enjoying a hitch-free retirement goes beyond receiving a lump-sum and regular programmed withdrawal from one’s Retirement Savings Account (RSA).
According to him, it requires in-depth planning and profound mental and psychological conditioning of the retiring worker to equip him to seamlessly adjust to a different kind of life after decades of service to society.
Ideva dwelt extensively on the consequences of lack of understanding of the basic requirements for a happy life in retirement and associated ill-preparedness for it.
He said: “A retirement ill-prepared for could spell disaster both for the retiree and the society and consequently give the Contributory Pension Scheme (CPS) a bad name and erode the initial gains.”
He said the onus falls on the Bureaux of Pensions and the pension operators to run preparatory programmes for workers, especially those on the verge of retirement.
According to him, the economically, socially and psychologically stable retirees are the most effective advertisement for the CPS.
He called for synergy of all stakeholders in the CPS to ensure that the gains of the industry in the past decade are sustained.
He said partnership of relevant government institutions, especially the Bureaux of Pension and the pension operators in the country is the sine quanon for sustaining the gains of the Contributory Pension Scheme and even expanding its scope and proliferating its inherent opportunities. He also called for the prioritisation of awareness creation on the importance and workings of the CPS.
To ensure that many more workers are covered by the pension scheme, Ideva advised that every government plans to expand its programmes even as it relates to the private sector must incorporate in-built strategies to accommodate the pension requirements of participants, beneficiaries and key actors as the case may be.
“Expanding the CPS to the informal sector of the economy as permitted by the Pension Reform Act 2014 requires some measures of creativity and professionalism on the part of key actors to actualise. The CPS is one of the most successful government initiatives that still harbours even greater potential,” he said.
He noted that it requires ingenious and concerted approaches to take it to the next level.
•To raise workers under CPS from 6.5m to 20m by 2019
The National Pension Commission (PenCom) is committed to the vision and ideals of the AU Agenda 2063 to promote the investment of accumulated pension fund assets of over N4.7 trillion within the African continent, Director-General of the Commission, Mrs. Chinelo Anohu-Amazu, has said.
She made this known while addressing participants during the 3rd International Conference on Financing for Development in Addis Ababa, Ethiopia with the theme: ”Leveraging Pension Funds for Financing Infrastructure Development in Africa”.
She also said the Commission hopes to raise the number of workers covered under the Contributory Pension Scheme (CPS) from 6.5 million this year to 20 million by 2019, using the Micro-pension initiative.
The Commission, according to her, is committed to promoting sustainable pension fund investments in Africa and welcomes the AU Agenda 2063 as well as the Programme for Infrastructure Development (PIDA).
She said it would project same through the annual World Pension Summit (WPS) ‘Africa Special’ in collaboration with the WPS Amsterdam.
She said: “The AU Agenda 2063 is both a vision and action plan; a call for action to all segments of African society to work together to build a prosperous and united Africa based on shared values and a common destiny.”
According to her, the Comission is expected to translate this vision and ideals into concrete objectives, milestones, goals, targets and actions/measures and it is supposed to enable Africa remain focused and committed to the ideals envisaged in the context of a rapidly changing world.
In operational terms, the Agenda 2063 would be a rolling plan of 25 years, 10 years, five years and short term action.
Heads of State and Government of the African Union (AU) in its 50th Anniversary Solemn Declaration, rededicated themselves to the continent’s accelerated development and technological progress and laid down the vision and eight ideals to serve as pillars for the continent in the foreseeable future.
They mandated the Chairperson of the African Union Commission (AUC) to collaborate with the UN Economic Commission for Africa (UNECA), African Development Bank (AfDB) and New Partnership for African Development (NEPAD) Agency to develop Agenda 2063 through a people-driven and extensive consultation process.
Speaking on the Contributory Pension Scheme, the Director-General, who expressed dissatisfaction with the level of coverage of the scheme 11 years after it was established, said the Commission hopes to raise the coverage using, the Micro-pension initiative, which it planned to launch very soon.
She stressed that the current position of 6.5 million contributors is low relative to estimated working population.
“There is plan to expand it to at least 20 million by 2019 through Micro Pensions. This is pertinent also due to inadequate social safety nets. This is a Pan-African issue that should provoke ideas sharing,” Anohu-Amazu said.
The Nigerian pension reform represents a major action in Domestic Revenue Mobilisation (DRM), an AU policy that stemmed from the realisation that Africa should take responsibility and indeed, possess the resources, if properly mobilised, for its own economic development.
The reform is mobilising funds, which hitherto were untapped, Anohu-Amazu stressed.
She said applying pension funds to economic development is being pursued through initiatives on infrastructure and real estate investments domestically. “There is also ample room in the near future for same to be extended to viable African investments,” she assured.
George Osborne is preparing a controversial pensions revolution that could cost higher-rate taxpayers as much as £15,000 over their working lives, Budget analysis shows.
Experts said cuts to the tax breaks received by middle-class workers, who pay into pensions, would be the “inevitable” result of a 12-week consultation announced by the Chancellor.
In the first analysis of how the reforms are expected to work, calculations showed that more than four million people were likely to lose out.
Lawyers, accountants, consultants and other private sector professionals in their forties and younger will be worst affected if the government scraps higher-rate tax relief.
Someone earning £55,000 and paying the recommended 15 per cent of their salary into a pension for 20 years will be £16,000 worse off by retirement, figures from Hargreaves Lansdown showed.
Although Mr Osborne says he is approaching the consultation with an “open mind”, he is understood to be intent on cutting the escalating £50billion cost of allowing savers to defer tax on pension savings until retirement, when wealthy pensioners often pay only basic-rate tax.
Michael Johnson, research fellow at the influential Centre for Policy Studies think-tank, which was set up by Margaret Thatcher in the 70s, said the review would “end private pensions as we know them”.
“This has been coming for many years and is now inevitable,” he said, adding: “Even among those in the pensions industry, who have a vested interest, there are not many who believe tax relief can survive.”
Currently, savers receive relief at their highest income tax rate, whether 20 per cent, 40 per cent or 45 per cent. Three-quarters of the money is then taxed on withdrawal after age 55.
In its consultation document, the Treasury said it would consider making pensions “like Isas” and taxing them “upfront”.
To incentivise retirement savings, people might be given a top-up from the government and withdrawals made entirely tax-free.
Such a move has the support of 40 of Britain’s biggest pensions and investment companies, trade bodies and consumer organisations that are part of The Savings and Investment Policy (TSIP) lobby group, alongside think-tanks such as the Centre for Policy Studies.
A “flat-rate” 30 per cent top-up for all savers would effectively redistribute money from higher-earners to basic-rate taxpayers.
In its impact calculations, Hargreaves Lansdown said a high-earning 45-year-old paying £11,000 into a pension each year would have £261,000 by age 65 under the flat-rate scheme, down from £281,000 under the current system.
The Chancellor could save £10billion a year by giving every saver 50p for each £1 they put into a pension and capping contributions at £8,000, Mr Johnson said. The effect would be the same as providing tax relief at 33 per cent, but offer the “simple” solution for which the Treasury says it is searching.
The £12,000 total allowance was “more than adequate”, Mr Johnson said, as those who could afford to save more “don’t need the incentive”.
“This is one of the few areas in which George Osborne can still save money,” he added. “At the same time, it would help secure the future of the public finances by getting young people saving so they don’t fall back on the state in old age
