The Nation Newspaper

Category: Pension

  • ‘54m workers not registered with pension operators’

    ‘54m workers not registered with pension operators’

    The Chairman Pension Operators Association of Nigeria (PenOp) Misbahu Yola has said out of about 60 million workers in Nigeria, only six million workers are registered under the Contributory Pension Scheme (CPS).

    Yola, who is also the Managing Director Legacy Pension Managers Limited, said this creates a huge gap of over 50 million workers that are yet to be registered under the new scheme.

    He said the National Pension Commission (PenCom) and the Pension Fund Administrators (PFAs) have a lot of work to do to make sure that employers register their employees as required by the Pension Reform Act, 2004.

    Yola said it took some time for the operators to accumulate the N4.3 trillion pension assets.

    On how the funds are invested, he said they cannot invest all the money in infrastructure as expected by some people.

    He said: “If we invest all the money in infrastructure, then how will we pay the retirees when they come? There is also a structure laid down by PenCom on what percentage of the money is invested.

    “The CPS has an in-built safety mechanism that ensures adequate protection of contributors’ fund and we as the operators are properly regulated to ensure funds are invested in secured investment windows.

    Managing Director First Pension Custodian Limited, Kunle Jinadu, noted that the funds deposited with the custodians are safe.

    He said his firm’s priority is to ensure that contributors derive benefits from the scheme at retirement.

    He said as a custodian, they have deployed safety mechanisms in ensuring that good governance is implemented around the pension fund.

    ‘’This is something we have done under this pension regime that has brought some reduced noise about people and their pension contribution, he said.

    “The custodian with whom I work in the creation of the law which brought about creating safety verve for the funds is for us to make sure that the funds are available for investment and payment of pensions to retirees.

    “Our role is to ensure that the fund does not end up in wrong project or wrong hands. Every custodian is made to guarantee all the funds. At First Custodian, which is part of the First Bank Group, we hold a percentage of the funds and irrespective of the PFA who is in charge of managing the funds, we, as a PFC, is responsible for that portion of fund in our custody.

    “We guarantee lawyers and the general public that the primary objective in this current regime is to ensure the funds are safe. We don’t have a problem with creating investment windows but we insist that the number one principle is that the assets are safe. So, when the PFA is migrating into infrastructure, etc, there must be an enabling environment that will enable me as a custodian to hold control of the investment such that it does not disappear into wrong places”, he added.

  • Nigeria hosts World Pension Summit

    Nigeria hosts World Pension Summit

    For the first time, Nigeria will host the World Pension Summit (WPS) between July 7 and 8 in Abuja.

    The Acting Director-General PenCom, Mrs Chinelo Anohu-Amazu, said the World Pension Summit ‘Africa Special’ will bring together leading players from Africa’s pension industries, as well as key figures from across politics, business and finance to exchange expertise and increase international cooperation on the continent.

    He said the event will also mark the 10th anniversary of the enactment of the Pension Reform Act 2004 and the formation of the National Pension Commission (PenCom) as the regulator for pension matters.

    She said with an excess of $23 billion of pension funds, the pension industry will play a key role in Nigeria’s economic development.

    She said: “We are delighted to bring the World Pension Summit to Africa. A number of African nations are experiencing strong economic growth supported by the rising investment in natural resources and robust private consumption. As a result, the role of the pensions industry in providing a stable consumer savings vehicle for Africa’s growing middle classes, and the investment of capital from its pension funds, is of increasing significance.

    “The summit will be an opportunity for the continent’s pension professionals to share blueprints and practices with the aim of further developing Africa’s pension market over the next decade.”

    Many of Africa’s 55 countries will be represented at the event. They include South Africa, Botswana, Ghana and Kenya.

  • New pension scheme contributes 9.5% to GDP, says PenCom

    New pension scheme contributes 9.5% to GDP, says PenCom

    • Highlights new focus

    The contribution of the new pension scheme to Nigeria’s Gross Domestic Product (GDP) grew from 1.4 per cent in 2006 to 9.5 per cent in 2013, Acting Director-General of the National Pension Commission (PenCom), Mrs ChineloAnohu-Amazu, has said.

    The new pension scheme has N4.13 trillion in assets.

    Mrs Anohu-Amazu revealed this yesterday while presenting a paper with the theme: The Contributory Pension Scheme as a catalyst for economic development in Nigeria at the Eighth Annual Business Law Conference of the Nigerian Bar Association (NBA).

    According to her, the GDP grows at an average of 30 per cent yearly.

    She said the most significant proportion, about 63 per cent of the assets, equivalent to N2.64 trillion was invested in Federal Government Securities.

    She said assets were invested in authorised markets with portfolio limits.

    She added that it has generated appreciable pool of long term investible funds for the first time in Nigeria.

    On the benefits of the administration under the CPS, the  PenCom chief, however, noted that pebsioners receiving their benefits under the CPS as at March, this year were 95, 840.

    Of this figure, 86, 628 pensioners opted for programme withdrawal, while 9,212 opted for life annuity, she said.

    She further highlighted the outlook and the next steps of the commission.

    She said the enactment of the new bill, the Pension Reform Act 2014, that will facilitate compliance and enforcement, enhance supervisory powers of the Commission, expand coverage of the contributory pension scheme and create enabling environment for investment in the real sector, will be the focus of PenCom.

    She said other areas that the Commission will focus on is repositioning of the pension industry for the next decade, building capacity in the industry and engaging the services of skilled and experienced financial advisers for deal structuring.

    She said: “The Commission would sustain support for initiatives to provide affordable housing and infrastructure development. We will deploy strategies for increased compliance by employers, ensure participation by the informal sector and adoption of the Contributory Pension Scheme (CPS) by states and local governments.

    “We will also collaborate with other regulators and stakeholders in the financial services sector to create enabling environment for investment in infrastructure and housing.

    “There will be continual review of extant laws and regulations and reorganisation of the administration of public sector pensions and repositioning of the Pension Transition Arrangement Department (PTAD).”

  • Canada Pension Plan CEO seeks assets like Telesat

    Canada Pension Plan Investment Board (CPPIB), the country’s biggest pension fund manager, said it would be interested in adding more infrastructure assets such as Loral Space & Communications Inc.’s (LORL) Telesat Holdings Inc, Bloomberg has said.

    “The type of assets Telesat represents, generally, which are let’s call them critical infrastructure type assets with monopolistic characteristics, are the type of assets at the right price that CPPIB would be interested in owning,” Canada Pension Chief Executive Officer Mark Wiseman said in a phone interview. “I think it’s safe to assume that any transaction like that is one that we would explore.”

    Another pension fund, Ontario Teachers’ Pension Plan is the front-runner to acquire Telesat, people with knowledge of the matter said last month. Canada Pension has also been in talks with Telesat’s owners, the people said.

    A Telesat purchase would come in two pieces: buying publicly traded Loral, which owns 63 percent of the company, and acquiring the rest from Canada’s Public Sector Pension Investment Board, which co-owns the satellite operator, the people said last month.

    A price disagreement has kept the deal with Ontario Teachers from being completed, the same people said more recently. One alternative being discussed is for Public Sector Pension (PSP) to roll over its stake, maintaining its ownership, or sell only a portion of its holdings, the people said.

    A deal could be finalised in June, they said.

    New York-based Loral could be bought for more than $80 a share, said the people, who asked not to be identified because the talks are private. That would value Telesat at about $7 billion, including debt.

    Loral fell 0.7 per cent to $70.94 in New York at the close, giving the company a market value of $2.19 billion.

    Public Sector Pension owns about 37 percent of Telesat and controls about 67 percent of the voting rights. As a result, both Loral and PSP must agree to a deal for a full sale of Telesat.

    Michael Bolitho, a Telesat spokesman, declined to comment, as did Deborah Allan, a spokeswoman for Toronto-based Ontario Teachers’, and Mark Boutet, a spokesman for Public Sector Pension Investment.

  • Lecturers decry inadequacies in CPS

    College of Education lecturers have called on the Senate to ensure that their retirement benefits from the computation of the old scheme are incorporated into the proposed amendment of the Contributory Pension Scheme.

    This is to ensure that the wide gap between old and new schemes are reasonably reduced through proper legislation, to save the dying souls of retirees from mutilated pensions.

    The call is contained in a paper presented to the Senate by the Committee of Chief Lecturers of the Federal College of Education (Special), Oyo, Oyo State, which was made available to The Nation.

    The paper is the committee’s contribution to the ongoing debate towards the amendment of the 2014 Pension Act.

    It stated that though motives behind the establishment of the contributory pension scheme are commendable and laudable, its  implementation as it affects retiring officers now, has put them into  penury, as they have  been grossly short-changed considering what they would have collected if the old scheme had been used to compute their retirement benefits.

    The committee said: “A situation where Pension Fund Administrators (PFAs) have been empowered to pay pension for 10 years under the 2014 Act, is very inhuman to retiring civil servants. Simply put, it means that retired officers are expected to die before 10 years. It is particularly disheartening when it is realised that colleagues in the state civil service that does not  subscribe to the scheme do not  have same problem.’’

    Observing disadvantages of the contributory pension scheme, the committee asserted that officers that retired from 2009 till date after 35 years of service with 28 to 32 years  service under the old pension scheme are  receiving 15 to 25 per cent  of their last salary as monthly pension, whereas the old scheme  stipulated 80 per cent of the last salary as pensions.

    ‘’Even, sub-section 4[c] of the 2014 Act stipulates a monthly pension that is not less than 50 per cent of monthly remuneration at the date of retirement. Neither the commission nor the administrators have been doing this. In the old scheme, pensions are paid for life, but in the new contributory scheme, pensions are paid for only 10 years.  In the old scheme, workers did not contribute directly because it was solely funded by the employer, but in the contributory scheme workers contribute 72 per cent of their salaries.’’

    It added that this is the major reason why monthly pensions of some junior officers   in the old scheme are far above those of their senior officers that  retired under  the  new scheme.

    ‘’Since our colleagues that retired from 2009  till today under the contributory scheme have been collecting monthly pensions that cannot guarantee  minimum comfort at  old age, we request  that terms and conditions of service when we  entered  the service be maintained still. While some government  parastatals and establishments have opted out, others who have seen the deficiencies are about to do so.”

  • Premium Pension holds AGM today

    Premium Pension Limited, one of the Pension Fund Administrators (PFAs) in the country, is holding its Ninth Annual General Meeting (AGM) today at 10am.

    The event is slated for the company’s corporate headquarters in Abuja.

    Chairman of the company, Mr. Aliyu Dikko, said the company  has over N330 billion under its management and has so far paid almost N63.2 billion as retirement benefits while 13, 350 retirees receive pension every month through the company.

    According to him, the company has continued to maintain its enviable position as one of the leading PFAs in Nigeria despite the declining employment opportunities that negatively impacts business generation drives.

    He said the company has expanded its horizon in terms of funds under management and number of Retirement Savings Accounts (RSAs).

    Managing Director, Wilson Ideva also said the company and by extension the industry has virtually overcome its teething challenges and is now striding to great heights.

  • Premium Pension assets hit N330b

    Premium Pension assets hit N330b

    •Returns on investment to retirees above 12%

    Premium Pension Limited  has  over N330 billion pension assets since 2005, the Managing Director, Wilson Ideva, has said.

    Ideva, who made this known at a retirees’ forum organised by the firm in Owerri, Awka and Enugu, said they have paid about N63.2 billion as retirement benefits, while 13, 350 retirees receive pension monthly.

    He expressed satisfaction with the  growth in pension payment, adding that the development has impacted on the fortunes of the firm.

    According to him, the  collaboration between Premium Pension Limited and the retirees whose pensions are managed by the company continue in the Southeast geopolitical zone of the country.

    He said the retirees are healthy, noting that there is no better testimony to the success of the Contributory Pension Scheme (CPS) than the good life of the retirees.

    He added that the return on investment by Premium Pension has continued to be above 12 per cent, despite inflation in the past three years.

    He said: “We salute the vision of those who set up the CPS in Nigeria. This is one government policy that has been consolidated and begun to yield dividends in a short time. With the continued increase in the return on investments, retirees would have to benefit more in the near future.”

    Head, Southeast Zonal Office, National Pension Commission (PenCom), Mr. Eneh Ejiofor, described the forum as reflective of industry’s best practice and demonstration of the high premium placed on retirees by Premium Pension and the scheme.

    He told the retirees that it is their right for their various Pension Fund Administrators (PFAs) to enlighten them on developments in the management of their Retirement Savings Account (RSA) and the industry.

    The industry is growing and would even grow bigger in the next few years, he added.

    Funds in the CPS is one of the most protected in the world, he said

    The events were attended by the Enugu State Head of Service, Mr. Chidi Ezema; Acting Director of Pensions, Office of the Head of Service, Imo State, Mrs. De Nwigwe Ezioma; and Regional Executive, Southeast, Union Bank, Mr. Peter Aliogo.

    Officers of the Nigeria Police representing the Mechanised Salaries Section and Pension Unit in Owerri; DSP Rufai Ahmed Magayaki and ASP Obi Chukwujekwu, among others also attended the event.

  • Pension tax breaks favours the rich, minister claims

    The Pension’s Minister, Steve Webb, is calling for a flat rate of tax relief on pension savings, claiming tax breaks favour the wealthy.

    According to The Telegraph,Webb, the Liberal Democrat MP, said  there should be a flat-rate of tax relief on pension savings set between 20pc and 30pc.

    This would end a system in which savers get relief at their highest marginal rate which effectively means higher rate taxpayers pay just 60p to put each £1 into a pension.

    The Treasury spends £54billion a year on this relief and both the Labour Party and Liberal Democrats have suggested they will seek to reform it, should either enter government following the 2015 general election.

    In an interview with financial publication Money Marketing, Webb said this would help reduce Britain’s deficit.

    “We know the cost of pensions tax relief is a very large number and the benefits are heavily skewed towards high earners,” he said.

    “In the real world a government will want to spend less rather than more on pensions tax relief.”

    Successive governments have tinkered with pensions, clawing back the incentives handed to savers through lower allowances.

    Webb said this would continue “as long as we fail to address the unfairness of the current structure”, which he said would be solved by introducing a flat rate for all.

    The Pensions Policy Institute (PPI), a think tank, has suggested a 30pc flat-rate of relief would be cost-neutral to the Treasury. The effect would be redistribution of the incentive to save to the less wealthy, taking the tax on contributions to pensions made by higher earners and effectively putting it into the funds of those who pay 20pc tax only. In retirement, three-quarters of the fund would still be subject to income tax on withdrawal.

    Webb said the think tank’s research “just shows you how skewed ( the tax relief system) is towards the higher earners”.

    His proposed level of flat-rate tax relief would “a standard rate north of 20pc but south of 30pc.”

    It is the second time since the Budget Webb has spoken out on pensions tax relief, which has become a pre-election battleground. In doing so, he has commented on legislation for which his government department is not responsible. The Treasury, which is headed by the Conservative Chancellor, George Obsorne, is ultimate responsibility for changes to the way pensions are taxed.

    A spokesman for the Treasury said: “Pensions tax relief provides strong incentives for everyone to save; however this needs to be balanced against the need to protect the public finances from the growing cost of pensions tax relief.

    “Although the Government keeps all taxes under review, there are no plans to make any changes to pensions tax relief.”

    In April, another think tank, the Centre for Policy Studies, said pension tax breaks were “ineffective” and “inequitable”, and should be replaced with a state handout of 50p for every £1 saved. Michael Johnson, the academic behind the report, said his proposals would also cap the amount of income tax refunded on pension savings at £4,000 a year. At this level savers would only need to pay £8,000 to put £12,000 into a pension equivalent to a relief of 33pc.

  • PenCom urges workers, retirees to use call centres

    PenCom urges workers, retirees to use call centres

    The National Pension Commission (PenCom) has urged workers, retirees, beneficiaries and other stakeholders in the industry to take advantage of its Call Centres whenever they need to communicate with the Commission.

    Its Acting Director-General, Mrs. ChineloAnohu-Amazu, said the Commission embarked on some initiatives to enhance the quality of service delivery to its stakeholders.

    Prominent among these initiatives, she said, is the completion of automation of its basic internal processes.

    She said this had not only enhanced the effectiveness of these processes, but also improved the response time to customers’ complaints and enquiries.

    She stressed that the call centre was established during the last quarter of last year for prompt resolution of all complaints and enquiries on various pension issues.

    She added that service delivery standards have been established for implementation by the pension operators.

    She said: “These measures have been put in place to ensure significant improvement on the level of customer satisfaction in the services provided by the pension industry.

    “The call centre has been commissioned to provide an easy means of contacting the Commission to lodge complaints or make enquiries on issues relating to pension.The Centre operates during working days from 8.00 am to 5.00 pm”.

    Mrs. Anohu-Amazu added that trained agents will be available to answer to calls and attend to issues. Alternatively, written messages can be sent while timely responses shall be providedto complaints, she said.

  • Detroit creditors seek to defend pension debt in lawsuit

    A bond insurer wants the chance to fight Detroit’s effort to cancel $1.4 billion in pension debt, while the city is asking a judge to take a bus tour of its blighted areas before ruling on its $18 billion bankruptcy plan.

    The insurer, Financial Guaranty Insurance Co., along with investors who would be wiped out by the plan, wants to take part in a lawsuit Detroit filed to cancel the debt, which was issued in 2005 and 2006 to prop up public worker pensions. FGIC and the investors claim that a trustee now opposing the suit won’t represent their interests adequately, Bloomberg reports.

    FGIC faces $1 billion in claims over pension bonds if the city succeeds in throwing out the debt, Edward Soto, an attorney for the bond insurer, told U.S. Bankruptcy Judge Steven Rhodes in Detroit.

    Cancelling the debt will free up money to pay other creditors, said Chris DiPompeo, one of the city’s attorneys. Letting FGIC and the investors participate in the lawsuit would make the case more complex and may disrupt the city’s plan to seek approval of its debt-adjustment proposal in July, he said.

    DiPompeo said keeping the lawsuit narrowly focused would allow key issues in the bankruptcy to be resolved before the July plan-approval trial.

     

    Service corporations

    Two service corporations that the city set up to issue the debt and send the money to the city’s pension systems have asked Rhodes to dismiss the lawsuit. Rhodes said he would issue written decisions on whether to allow FGIC and the investors to join the bond-cancellation lawsuit and whether to dismiss the two service corporations from the case.

    Detroit filed the largest U.S. municipal bankruptcy last July, raising alarms over the sanctity of municipal bonds and state-protected pensions.

    The city has begun sending creditors ballots and documents explaining its debt-adjustment plan, soliciting votes through July 11. The plan is the product of agreements with retirees, employee unions and some bondholders.

    State lawmakers have yet to approve Republican Governor Rick Snyder’s plan to give $350 million over 20 years — or $195 million in a lump sum — to Detroit’s employee pension systems. The money is necessary to secure an additional $466 million from private foundations and the Detroit Institute of Arts to bolster pensions while shielding the museum’s art collection from sale to pay creditors.

     

    September deadline

    Rhodes yesterday told a lawyer for the state, Matthew Schneider, to ask lawmakers to avoid imposing a Sept. 30 deadline for him to approve the debt-adjustment plan.