The Nation Newspaper

Category: Pension

  • PFAs invest N2.7tr in FGN bonds, bills

    PFAs invest N2.7tr in FGN bonds, bills

    About N2.7 trillion out of the N4.21 trillion pensions fund assets has been invested in FGN Securities as at March 31, 2014 by Pension Fund Administrators (PFAs), representing 63.39 per cent investment of the fund, The Nation has learnt.

    The PFAs also invested N602 billion in shares on the Nigerian Stock Exchange in the period under review. This represents a 14.3 per cent investment of the fund.

    The volume of traded shares in March was a little lower compared to the N619 billion traded as at February 28, 2014 out of the N4.12 trillion pension fund assets recorded in the month.

    This was revealed in a document obtained by The Nation from the National Pension Commission (PenCom) titled: ‘Summary of Pension Fund Assets as at March 31, 2014’.

    A breakdown of the report showed that a volume of Domestic Ordinary Shares of N548.7 billion was traded in March while Foreign Ordinary Shares of N53 billion was also traded.

    Similarly, N195.2 billion and N79.9 billion was invested in State Government Securities and Corporate debt securities respectively while N1.7 billion was invested in Supra-National bonds.

    A total of N228.4 billion was invested in the Real Estate Properties while N9.3 billion was invested in the Private Equity Fund.

    The report further showed that N335.2 billion was invested in the Local Money Market Securities, N286 billion in Foreign Money Market Securities and N22 billion in Open/Close End Funds.

    The Commission had N46.2 billion in cash and other assets during the period under review.

    The Acting Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, while speaking on Regulation on Investment of Pension Fund Assets said Pension Fund Custodians (PFCs) shall only take written instructions from licensed PFAs with respect to the PFAs investment and management of pension fund assets held in the custody of the Pension Fund Custodian (PFCs) on behalf of the Contributors.

    She said the PFCs, in discharging their contractual functions to PFAs, shall not contract out the custody of pension fund assets to third parties, except for allowable investments made outside Nigeria.

    Furthermore, she said that the PFC shall obtain prior approval from the Commission before engaging a global Custodian for such allowable foreign investments.

    She said: “The PFAs, in discharging their contractual functions to Contributors under the new Contributory Scheme shall not contract out the investment or management of pension fund assets to third parties, except for open or close end or hybrid funds and specialist investment funds allowed by the regulation.

    “The PFAs shall maintain RSA ‘Active’ and ‘Retiree’ Funds, as provided to govern the investment of pension fund assets until effective implementation of the Multi-Fund Structure. In addition to the requirements of other guidelines issued by the Commission on corporate governance, ethics and business practices, each PFA shall establish an Investment Strategy Committee as well as a Risk Management Committee, in compliance with Section 66 of the Pension Reform Act, 2004 (“the Act” or “PRA 2004”).

    “The Investment Strategy Committee, in addition to other functions specified in the Act, shall formulate internal investment strategies to enable compliance with this Regulation, taking into cognizance the macro-economic environment as well as the investment objectives and risk profile of the PFA Funds.”

    The PenCom boss said the internal investment strategies shall be approved by the PFA at a board meeting at least once yearly or as frequently as changes occur in the macro-economic environment that may affect pension fund assets.

  • AIICO Pension launches live smart radio programme

    The need for workers to make smart choices that would secure their future has become pertinent, Chief Operating Officer, AIICO Pension Managers Limited, Mr. Banjo Adedokun has said.

    Based on this, Adedokun said AIICO Pension, a Pension Fund Administrator (PFA), has launched the second season of a brand communication campaign on making smart choices and smart moves on a Radio Programme on the Morning Drive Time show to be aired on Classic FM.

    He explained that in the PFA had in 2012 launched a brand communication campaign on “making smart choices and smart moves”, an idea he said became the centrepiece of their ideology as a business.

    He said: “We have redefined our proposition to inspiring people to make those smart choices and smart moves to secure their future.

    “Among other initiatives that are being used to execute this proposition, the Live Smart Radio Programme was an integral part of delivering our proposition of Living Smart. It has afforded us the opportunity to address a wide range of audiences, while providing them with tips on those simple acts that help them live life better and smarter.

    “Sequel to a successful first season on the Breakfast Jam Show with Dan Foster on Inspiration FM, we are launching the second season of our Live Smart Radio Programme on the Morning Drive Time show with Sly and Bukola, to be aired on Classic FM.”

    He noted that the first season of the Live Smart Radio programme was a series of inspirational and educative talks on the important issues that affect the quality of people’s lives.

    “By providing useful tips, audience gets to reflect on those simple acts that help them live life better. The second season of the Live Smart Radio Programme is taking our audience from the point where they are reflecting to the point where they are making achievements. This season is a series of educative and inspirational talks that will empower our audience to act and enable them accomplish their goals and objectives.

    “The Live Smart Radio programme will be aired every Monday between 9:00 and 9:30am starting from May 12. The topics range from finance, health, fashion, relationships and so on.  There will also be guest appearances of industry experts and professionals,” he added.

  • Non-remittance of pension deductions worries employees

    Some employers’ reluctance to remit pension contributions deducted from employees to Pension Fund Administrators (PFA) as required by the Pension Reform Act, 2004 is disturbing employees.

    Pension Reform Act (PRA 2004) provides that the employer shall not later than seven days from the day the employee is paid his or her salary, remit an amount comprising the employee’s and employer’s pension contributions to the custodian specified by the Pension Fund Administrator (PFA) of the employee.

    Section 11 (7) of the PRA 2004 further provides that any employer who fails to remit the contributions within the time prescribed shall, in addition to making the remittance already due, be liable to a penalty to be stipulated by the Commission provided that the penalty shall not be less than two percent of the total contributions that remains unpaid for each month the default continues.

    Some employees, who spoke with The Nation on condition of anonymity, lamented the non-remittance of their pension with their former and present employers.

    An employee, who simply identified himself as Stanley and works in a construction company, lamented how his former employer did not remit his pension for two years.

    He said the experience with his new employer too was bad, adding that his pension is not remitted to his PFA until after four months.

    Mrs. Ogundele said her employer, who is into manufacturing business, has not joined the Contributory Pension Scheme.

    She said he told them that he would pay in bulk anytime they leave the company.

    Director-General, the National pension Commission (PenCom), Mrs Chinelo Anohu-Amazu, said 498 employers have been with Certificate of Compliance for complying with the provisions of the Pension Reform Act, 2004.as at May 2, 2014, has fully complied.

    Mrs Anohu-Amazu noted that two weeks after default, payment of not less than two per cent of unpaid contribution should be paid to Retirement Savings Account (RSA) account, stressing that continuous default for one month after issuance of letter of advice, a letter of caution will be issued to the erring employer.

    She said after one month of failure to adhere to the letter of caution, a letter of warning, will follow and thereafter, one percent of the outstanding payable will be paid as monetary penalty if the default persists after three months. It said continuous violation after monetary penalty, will attract naming and shaming and thereafter legal action if violation persists.

    Chief Operating Officer, AIICO Pension Managers Ltd, Banjo Adedokun, said the defaulting employers would be penalised by PenCom.

    He however said the new bill which has been passed by the National Assembly when implemented would bring stricter conditions on erring employers.

    He said: “We have issues where we have delay in payment or nonpayment. This is why PenCom started working with recovery agents a year ago. The agents have been going around companies to work on the records and ensure they remit outstanding pension.

    “PenCom did a test run with the agents for three months and have gone back to its Board to modify a few things and see how enforcement can be done faster.

    “On our part as PFAs, we attend quarterly meeting with PenCom on issues like this and also engage the employers on quarterly basis talking to both the employer and ensuring that pension desk officer are set up in the companies.”

    Head, Risk and Compliance, Stanbic IBTC Pension Managers, Idu Okwuosa, said defaulting employers sanctioned.

    She added that one of the important parts of the new bill is penalties for people that embezzle pension fund. It is now clearly stated of what will happen to anybody that still pension fund.

  • Just Retirement to cut jobs, target new revenue

    Just Retirement Group Plc (JRG) said it’s cutting jobs as part of a 14 million pound ($23.7 million) cost-saving initiative in the wake of government plans to overhaul the annuities market.

    According to Bloomberg, the insurer, which reported a 50 per cent drop in annuity sales since the government unveiled its plan in the March budget, announced cost savings for the next financial year, according to a statement. The shares rallied.

    “It will include redundancies,” Chief Executive Officer Rodney Cook said on a conference call with journalists, without giving details. “Activity levels appear to be stabilising at around half of pre-budget levels. That is not good, but it’s not nearly as bad as the forecast of the death of the annuity industry.”

    Shares of Just Retirement have slumped 39 per cent since Chancellor Exchequer George Osborne scrapped rules in his 2014 budget that pushed retirees to buy annuities with their pension savings. The shares rose as much as 5.9 percent and were up 2.7 per cent to 161.5 pence at 11:25 a.m. today in London trading as the Surrey, England-based company said it will look to other retirement products to recapture lost revenue.

    As with U.K. competitors including Legal & General Group Plc (LGEN), Just Retirement reported higher revenue from the de-risking market. This is where it assumes liabilities from defined-benefit pensions on companies’ balance sheets.

    The insurer today reported 37 million pounds of revenue in the third quarter from such de-risking and said it remains confident that it will write at least 80 million pounds of defined-benefit premiums for the full year.

    “There is huge number of small defined-benefit schemes that need to de-risk, and we see that as being a much larger portion of our sales” going forward, Cook said

    The company still reported a 34 per cent increase in individual annuities in the third quarter and a 128 per cent jump in life time, or reverse, mortgages to 159 million pounds.

  • PenCom explains new Police PFA

    PenCom explains new Police PFA

    •Says N4tr assets safe 

    The National Pension Commission (PenCom) has explained the rationale behind the establishment of the NPF Pensions Limited, a Pension Fund Administrator (PFA) recently granted an Approval-in-Principle by the Commission.

    PenCom also reiterated that the N4 trillion pension asset is safe.

    This is coming on the heels of arguments trailing the establishment of the new NPF Pensions Limited by stakeholders.

    Head, Communication Unit, Emeka Onuora, who made this known in a statement, said there is lack of understanding of the circumstances surrounding the establishment of NPF Pensions Limited.

    He said contrary to insinuations by some stakeholders that the Federal Government has granted approval to the Nigeria Police to pull out from the Contributory Pension Scheme,  the Nigeria Police Force are still under the CPS by virtue of Section 1 of the Pension Reform Act, 2004.

    He said the Whitepaper recently issued by the Federal Government on the Report of the Orasanye Committee on the Rationalisation of Federal Government Institutions, clearly indicated that the Federal Government has accepted the recommendation that, with the exception of the Military which has already been granted exemption, no Federal Government Institution, or Force should be exempted from the CPS.

    He said: “It would be recalled that following the enactment of the Pension Reform (Amendment) Act 2011, which exempted the personnel of the Military and State Security Services from the CPS, the Nigeria Police and other agencies agitated for exemption from the Scheme.

    “However, the Federal Government decided after careful consideration of the submission made by the Nigeria Police, that the Police personnel should remain under the CPS and that the Nigeria Police Force should seek administrative solutions to the grievances of their personnel within the framework of the Scheme.

    “Accordingly, after extensive consultations with the Commission, the authorities of the Nigeria Police Force decided to incorporate a limited liability company (NPF Pensions Limited) and apply to the Commission for license to operate as a Pension Fund Administrator exclusively for the Nigeria Police personnel in order to address their peculiar concerns”.

    Onuora explained that following a rigorous and thorough review of that application, the NPF Pensions Limited was found to have satisfied all the normal stringent Approval-In-Principle conditions without any concessions.

    He said the Commission consequently granted the NPF Pensions Limited an Approval-in-Principle for a license to operate as a PFA.

    “It is pertinent to note that the NPF Pensions Limited, which is incorporated as a Private Limited Liability Company, will be managed independently by professionals who must satisfy the fit and proper persons due diligence requirements and approved by the Commission in line with the Guidelines for Appointment to Board and Top Management Positions of PFAs and PFCs.

    Furthermore, although the NPF Pensions Limited will be exclusively for police personnel, every police officer will, in line with section 11(2) of the PRA 2004, be at liberty to transfer to another PFA of his/her choice as soon as the transfer window is opened by the Commission.

    “In order to ensure the smooth take-off of the NPF Pensions Limited, the Commission has developed an Operational Framework that will guide the reassignment of Personal Identification Numbers (PINs) and transfer of records of all Nigeria Police contributors to the NPF Pensions Limited, which would be spread over an 18 month period.”

    The Commission has engaged and would continue to engage other licensed operators and stakeholders regarding the modalities of reassignment of PINs and transfer of records of officers and men of the Nigeria Police, with a view to ensuring a smooth exercise for the benefit of the pension industry.

    Onuora noted that the issue of threat to pension assets does not arise under the Contributory Pension Scheme because the management and custody of pension assets are respectively undertaken by separate licensed operators, namely the Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs), under the strict supervision of the Commission.

    Accordingly, the NPF Pensions Limited will operate like any other licensed PFA where the pension assets under its management will be held in custody by licensed PFCs under the supervision of the Commission.

  • Ontario pension plans to double retirement income, budget

    Ontario pension plans to double retirement income, budget

    Ontario will create a provincial pension plan designed to double retirement income as savings fail to keep up with the swelling ranks of seniors in Canada’s largest province.

    According to Bloomberg reports, the proposed Ontario Retirement Pension Plan, modeled on the federal Canada Pension Plan, would be the first of its kind by any province, according to the 2014-15 budget released on Sunday.

    Ontario said it’s forging ahead with a public plan after the federal government decided against enlarging the CPP.

    More than 35 per cent of households won’t have sufficient savings to maintain similar living standards in their retirement, Ontario Finance Ministry studies show, while seniors will account for 24 per cent of the province’s population by 2035, up from 15 percent now.

    “Unless we take action, future generations of retirees will be left with a lower standard of living,” Finance Minister Charles Sousa said, according to the text of the budget speech.

    “Since the federal government won’t lead, Ontario will lead by developing a made-in-Ontario solution.”

    The province plans to introduce the program in 2017 with an initial target of three million employees, taking in annual contributions of about C$3.5 billion ($3.2 billion), which would be invested. The program could be integrated into the CPP at a later date. Those participating in a comparable workplace program would not be required to enroll.

    “There’s always been a long-standing concern about people in the workforce who don’t have a plan,” Mary Webb, senior economist at Bank of Nova Scotia said in the budget lock-up. “It’s very hard for households to save. The government is focused on the middle.”

  • PenOp begins campaign on workers’ right to RSA

    PenOp begins campaign on workers’ right to RSA

    The Pension Fund Operators Association of Nigeria (PenOp), has kicked off a campaign programme to boost employers and employees awareness on the need to open Retirement Savings Account (RSA).

    The campaign, which commenced with a rally at the May Day celebration at Onikan Stadium, Lagos, was a follow up to seminars and interactive sessions held with employers and employees.

    The Secretary, PenOp, Susan Oranye, who made this known,  said the theme for the campaign, ‘Every worker deserves an RSA,’ was instructive and  urged workers to leverage on the Contributory Pension Scheme (CPS) to secure their future.

    She said the National Pension Commission (PenCom) and pension operators, are working hard to tackle the problem of non-remittance of monthly pensions by employers.

    She stressed that the Contributory Pension Scheme remains one of the best things to have happened in country in recent years, adding that the scheme has instilled blighter future for workers.

    She noted that the scheme was introduced to eradicate the ugly sights where workers queue, cry and beg for their pension, stressing that the new scheme is transparent, fully funded, safe and should be embraced by very worker.

    She said: “PenOp is here to honour and support Nigerian workers, which is what the workers’ day is all about. The underlying concern for all pension fund administrators is for the workers, to prepare them for when they would not be able to work again.

    “Workers are indeed working hard, but they should also understand that after work, they still have bills to pay and how to pay these bills should be planned now that they are in active service. We are calling on workers who are yet to embrace the contributory pension scheme to do so now.”

    She said the pension industry has done exceedingly well, given the level of awareness, adding that since the scheme started, about N24 .6 billion has been paid to over 84,000 retirees.

    “This is a new dispensation; it is not like the old scheme where people line up, cry and beg for their money. The new scheme is really working and focused on workers. It is transparent, fully funded and safe. Hence, every worker should embrace it, as it provides decent living for retirees,” she said.

    “We have been educating them on the need to understand that the funds are for their employees and that they should also consider the system as a corporate social responsibility which helps in boosting the morale of workers.

    “When employers provide secured future for their employees through pension, they will be happy to give their best, which will raise the bottom-line of the employer. This is why all employers of labour, both in public and private sector must support their staff to open an RSA with any PFA of their choice so they can benefit when they retire”. She said the industry has come up with names of defaulters and is working on their level of compliance.

    Head, Risk and Compliance, Stanbic IBTC Pension Managers, Idu Okwuosa, said the event provided an opportunity for PenOp to let workers know how important it is to have a retirement savings account.

    She added that as at February, the pension assets stood at about N4 trillion from about 5.9 million contributors from the 20 Pension Fund Administrators (PFAs) operating in Nigeria.

    She said: “The pension asset under the contributory scheme is projected to peak at about N4.3 trillion by end of December 2014 from projected 6.2 million contributors.The growth rate of industry contributions nationwide is about $2 billion annually which is over N300 billion apart from market returns.

    Under the contributory pension scheme, employers deduct 7.5 per cent of individual workers monthly salary and contribute at least the same amount which is credited into the workers’ Retirement Savings Account in any of the PFAs chosen by individual workers. The PFA manages the accumulated funds, which is under the custody of the PFC chosen by the PFA, she noted.

  • Retirees receive N235.5b lump sum, monthly pensions on PW, says PenCom

    Retirees receive N235.5b lump sum, monthly pensions on PW, says PenCom

    • Get N19.95b annuity

    A total of N210.78 billion and N24.63 billion has been paid to 84, 097 retirees who opted for Programme Withdrawal under the new pension scheme, the Contributory Pension Scheme (CPS) as lump sum, and monthly pensions as at February, this year.

    Similarly, N19.52 billion and N425.53 million has also been paid respectively as lump-sum and monthly annuities to 8,479 retirees in return for N41.63 billion premium payment during the period under review.
    This was made known by the Acting Director-General of the National Pension commission (PenCom), Mrs. Chinelo Anohu-Amazu, in a paper titled: “Retiring under the Contributory Pension Scheme” when she presented at an on-going nationwide sensitisation forum.

    She explained that actual retirement by Programmed Withdrawal commenced in 2007, while actual retirement by Annuity, commenced in 2010, acknowledging that as impressive as this may be, there are challenges on the new pension scheme.

    This, she noted, include limited public awareness of the workings of the CPS and inadequate communication enlightenment of Retirement Savings Account (RSA) holders/retirees by Pension Fund Administrators (PFAs).
    She said there was an absence of home grown Mortality Table which necessitated the Commission to adopt the A(55) and A49/52 Mortality Tables, published by the Institute of Actuaries of the United Kingdom (UK).

    “There is the challenge of different interpretation of some provisions of the Act by retirees, comparison of benefits under the old and new scheme by retirees; comparison of benefits by colleagues on similar position and different variables/data; relatively small RSA balances of some retirees pending the implementation of Minimum Pension Guarantee, and challenges of authenticity/modification of recorded ages by retirees.

    “Others are challenges of alteration of pay slips to collect a higher lumpsum; customer service challenges of PFAs leading to influx of retirees into the Commission to obtain clarifications on trivial issues; misinformation of retirees by the PFAs and insurance companies in order to gain patronage and over/under remittance of entitlements leading to delays/double processing of payments.

    She also said the absence of home grown Mortality Table has also necessitated the Commission to adopt the A(55) and A49/52 Mortality Tables published by the Institute of Actuaries of the United Kingdom (UK).
    Setting the records straight, she noted that the choice of mode of withdrawal of benefits which is either Program Withdrawal or Annuity belongs to the retirees.

    “Your RSA balance determines your pension under Define Contribution system (DC). Pension calculator allows for minimum and maximum pension and corresponding maximum and minimum lump sum.
    “The benefits under Define Benefits (DB) & Define contribution (DC) cannot be compared because they are different systems. A retiree should get proper enlightenment from Pension Fund Administrators before taking decision Challenges,” she added.

    On the way forward, Mrs Anohu-Amazu said the commission increased public education and awareness campaigns, and discouraged de-marketing in the industry.

    She added that she and her team would ensure commitment to establishing strong corporate governance in the industry and improve quality of service delivery, noting that there is need to manage retirees’ expectations.

    She urged retirees to seek professional advice from their PFA Ministries, Department and Agencies (MDAs), and update the records of prospective retirees six months before their retirement.

  • PFAs, PFCs to pay N10m fine over unprotected funds

    PFAs, PFCs to pay N10m fine over unprotected funds

    A fine of not less than N10 million will, henceforth, be paid by Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) who fail to protect the funds under their management.
    This was contained in a circular titled, “Revised Regime of Sanctions and Penalties for Non-Compliance with the Provisions of the Pension Reform Act 2004”, released by the National Pension Commission (PenCom).
    The circular stated that in line with Sect. 58 (3), external auditors of PFAs or PFCs shall have responsibility to for the protection of pension funds.
    It further added that a letter of advice will be written to an operator one month upon discovery that the pension fund is not well protected to correct the anomaly.
    PenCom said: “If two weeks after the letter of advice, nothing is done, a letter of caution, will be issued. “Thereafter, a letter of warning, and if the firm refuses to take action, a fine not less than N10 million will be slammed on the firm as monetary penalty.
    “If violation continues after monetary penalty, the Commission will proceed to naming and shaming; and if the firm failed to heed, imprisonment of a term not less than three years will be imposed on the responsible partner or principal officer.
    “In line with remittance of contribution as stated in Section 11(5B), Sect. 11(7), employers should remit employees’ contributions not later than seven working days from the day salary is paid.
    “Two weeks after default, payment of not less than two per cent of unpaid contribution should be paid to Retirement Savings Account (RSA) holder(s) and in case of continuous default for one month after issuance of letter of advice, a letter of caution will be issued to the erring employer.”
    The Commission added that after one month of failure to adhere to the Letter of Caution, a letter of warning will follow and thereafter, one per cent of the outstanding payable will be paid as monetary penalty if the default persists after three month.

  • Pensioners to get advice on life span

    Pensioners to get advice on life span

    Pensioners will be given estimates of how long they have left to live to help them manage their savings, the British Pensions Minister, Steve Webb, has disclosed.
    Steve Webb said that the Government wants to provide pensioners with a rough life expectancy guide when they reach retirement to allow them to make better financial decisions.
    Experts will take into account factors including gender, where a pensioner lives or whether they smoke, thepensions minister said.
    Life expectancy should be part of “guidance” given to help people decide how much to save.
    In last month’s Budget, George Osborne announced the scrapping of rules that force most Britons to use their pension savings to buy an annuity.
    From next year it will be much easier and cheaper to withdraw money directly from a pension savings pot for other purposes.
    But critics fear that people could end up struggling financially if they spend all their money soon after retiring.
    Mr Webb said that individuals often underestimated their life expectancy.
    “The idea is that you come to think about retiring, [but] you don’t know how long that retirement is going to be,” Mr Webb said.
    “What we do know is people get it wrong and they underestimate how long they’re going to live.
    “At 60 most people will have parents still alive so the best guide they’ve got about how long they are going to live is their grandparents. That is two generations ago so they tend to underestimate how long they are going to live.
    “My idea … is to say to somebody, ‘look, someone of your generation, living in this part of the country, you’ve not smoked, someone like you could easily live for 27 years’.”
    Newly released figures show that life expectancy is rising steadily in the UK with females born now projected to live 82.7 years on average. Average male life expectancy is now 78.9 years.
    However, for those who reach the age of 65, life expectancy is considerably higher, as the overall figure is an average brought down by the numbers who are likely to die young.
    The new figures, from the Office for National Statistics, also suggest that young people with healthy lifestyles from poorer parts of the UK are moving to more prosperous regions.
    Mr Webb said the guidance would be given face to face by savings advisers to any pensioner who requests it.
    •Culled from The Telegraph, London