The Nation Newspaper

Category: Pension

  • Pension most regulated, says Rewane

    Pension most regulated, says Rewane

    The cumulative contribution of N4 trillion pension recorded by the National Pension Commission (PenCom) since its existence nine years ago, is contributing significantly towards the economic development of the country, Managing Director, Financial Derivatives Company Limited, Mr. Bismark Rewane, has said.

    He said the industry is one of the best and most regulated industries in the country, adding that the amount is remarkable.

    He said: “We have N4trillion as pension funds, and this is remarkable in terms of the growth rate. It is important to note that in spite of the financial crisis in 2008, the pension fund did not lose any money. There was a market crisis and none of the Pension Fund Administrators (PFAs) lost money.

    “The pension industry is one of the best regulated in the country today, and it is contributing significantly towards economic development in the country,” he said.

    On whether the contributors are getting good investment returns on their contributions, Rewane said the limitations on investment as provided by the Pension Reform Act is good enough to ensure that the workers and retirees pensions are safe.

    He said if contributors want higher returns, then they must be ready to accept higher risk.

    The PFAs are limited in terms of investments, but they like it because the regulations prevent and protect them from going to take risky bets. You don’t bet with people’s money, he added.

    The Regulations on Investment of Pension Fund Assets under the PRA Act states that PFAs shall invest pension fund assets with the objectives of ensuring safety and maintenance of fair returns.

    He continued: “PFAs shall recruit and retain highly skilled personnel in their investment departments, shall not invest Pension Fund Assets in instruments that are subject to any type of prohibitions, or limitations on the sale or purchase of such instrument, except for open, close-end or hybrid funds and specialist investment funds allowed by this Regulation.

    “PFAs shall not trade on margin accounts with pension fund assets. A PFA shall not engage in borrowing or lending of pension fund assets; shall not trade in financial instruments with pension fund assets at prices that are prejudicial to the pension fund assets.’’

    He added: “When investing in eligible bonds or debt instruments issued by state or local governments and corporate entities, pension fund assets shall be invested only in eligible bonds, or debt instruments issued by states or local governments and corporate entities that have fully implemented the Contributory Pension Scheme (CPS).

    “The Commission shall provide periodic lists of compliant state or local governments and corporate entities. PFAs are to ensure that appropriate legal and financial due diligence are undertaken on all prospectus, or offer documents of eligible bonds or debt securities and other allowable instruments prior to investment.

    “All primary market investments by PFAs in ordinary or preference shares of eligible corporate entities shall only be through public offerings approved by the Securities and Exchange Commission.”

  • Staco Insurance staff member is Miss Insurance

    Staco Insurance staff member is Miss Insurance

    Staco Insurance Plc staff member by Sarah Ogunsola has emerged the Miss Insurance for the year.

    The beauty queen emerged among other seven contestants from AIICO Insurance Plc; Guinea Insurance Plc; Equity Assurance Plc, African Alliance Plc and Scrib Insurance Brokers Limited during the yearly pageant organised by the Chartered Insurance Institute of Nigeria (CIIN) in Lagos.

    The second runner up position went to Miss AdeosunMotoyosi of AIICO Insurance Plc, while Miss Mogaha Joy, still of AIICO Insurance Plc emerged the first runner.

    Filled with joy after the keenly contested competition, Ogunsola said she was elated to have emerged as the industry’s queen, adding that she was prepared for the task associated with the crown.

    She said her programme would be released soon.

    The queen won a brand new Kia Picanto Car, donated by Sovereign Trust Insurance Plc.

    The Special Guest of Honour at the event, LanreLaoshe, urged the queen to be a good ambassador of the industry, urging her to take insurance literacy campaign to secondary schools across Nigeria.

    He promised to support efforts geared towards making insurance part of human existence, stressing that it was high time the industry operators began to do what would make the public give them recognition.

    The immediate past Miss Insurance, Sefiyat Sadit of Staco Insurance urged the new queen to be determined, humble and be focused in the pursuit of her objectives.

    She said her tenure was eventful, through the support of operators and her family members.

    She appreciated all the people who supported her during her reign.

  • Imo to join new pension scheme soon

    Imo to join new pension scheme soon

    HE Imo State government has set up a committee to work on the modalities of incorporating workers and retirees of the state into the Contributory Pension Scheme (CPS), its Deputy Governor, Prince Eze Madumere has said.

    Prince Madumere, who spoke with The Nation in Lagos, said the state was expecting the report of the committee soon so that it could kickstart the process of joining the scheme.

    On the recent protest by the pensioners of Imo Broadcasting Corporation (IBC) over arrears, he said the state experienced 12 years of bad pension management before the administration of Governor Rochas Okorocha took over.

    He said the state had met with the IBC pensioners, following their protest last week and was trying to find a solution to the problem, saying the state had been able to exceed what it met on ground and even surpassed it in terms of pension payment.

    Meanwhile, the Pensioners Association of IBC, has given the Government 10-month ultimatum to pay the 40-month pension arrears owed the corporation’s retirees.

    The retirees, who converged on the premises of the corporation in Owerri, urged the government to pay their arrears in four instalments from March to December.

    The Chairman of the association, Mr. Chidi Madu, said Governor Okorocha inherited five-month pension arrears from the previous administrations.

    He said seven members of the association had died due to lack of finance to access medical treatment, adding that the government constituted a technical team in 2012 to look into the issue.

    He said: “We will not relent in our agitation for payment of our entitlements until government meet s our demands. We will never stop to protest because the government is not doing anything to solve the problem.”

  • PHCN pensioners demand over N16b arrears, severance benefits

    PHCN pensioners demand over N16b arrears, severance benefits

    • May begin nationwide protest today

    About 20, 000 electricity sector pensioners of the defunct Power Holding Company of Nigeria (PHCN) have given the Federal Government up till midnight today to pay their N16 billion outstanding pension arrears, gratuities, death benefits, among others.

    The pensioners under the umbrella- body of the Nigeria Union of Pensioners (NUP), electricity sector, also want the government, through the Nigeria Electricity Liability Management Limited (NELMCO), to pay the monthly pensions of their members for January and last month.

    They warned that the failure to pay the outstanding areas would result in a protest.

    President, NUP, Comrade Temple Ubani, said they were aware that the government had paid for the same period, other pensioners through the Pension Transitional Administration Department (PTAD).

    He said they were informed by NELMCO that NEPA/PHCN Pension Fund is classified as Capital Budget and domiciled in the Central Bank of Nigeria, where it is released quarterly to make for the monthly payment of pensioners. They criticised the arrangement as cumbersome and unwieldy.

    He noted that it is common knowledge that salaries and pensions are overhead expenses normally classified as recurrent budget and released monthly as first-line charge.

    “We have repeatedly experienced delays in payments during the first month of each quarter of the year as a result of the uncooperative attitude between the Ministry of Finance, the Budget Office and the Accountant-General’s Office, thereby making payment of our stipends very rigorous and tasking for NELMCO, every month.

    “Our union and NELMCO management have sought the intervention of relevant authorities, including the presidency and the National Assembly to redress these anomalies to no avail.

    “It is also on record that many NEPA/PHCN retirees have not been paid their outstanding terminal benefits.These include gratuities, arrears of pensions, death benefits to the next of kin of deceased workers and retirees and monetisation arrears. Others are harmonisation entitlements, electricity rebate benefits, spanning over several years, and different forms of verification exercises conducted by different Federal Government agencies.

    “In 2013 the Minister of Power, Prof. Chinedu Nebo informed the whole world that government had set aside over N16billion for the settlement of these liabilities. Unfortunately all targeted payment dates did not materialise and some beneficiaries have since died without getting their benefits,” he said.

    Ubani pointed out that they have taken notice of the concerned intervention of some critical stakeholders, like the Chairman, Senate Committee on Power, Senator Phillip Aduda and the Director-General of PTAD, Ms. Nellie Mayshak, who have pleaded through the Managing Director of NELMCO, Dr. Samuel Agbogun, to give them some time.

    He said it is expected that their intervention shall facilitate the payment of their January and February Pensions by that date, and address other outstanding and residual matters.

    “Nonetheless, this memo shall serve as due notice to Government and NEPA/PHCN retirees, that in the event that arrears of pensions are not paid by 12 midnight on Wednesday, March 12, 2014, Government should hold its relevant agencies responsible for whatever reactions the pensioners, the widows and orphans of deceased power sector workers may decide to embark on,” he said.

  • ‘Life insurance operators, PFAs help retirees on best retirement option’

    Licensed life insurance companies providing Life Annuity and the Pension Fund Administrators (PFAs) providing Programme Withdrawal to retirees as the two retirement options under the Contributory Pension Scheme (CPS), are working to ensure they get the right plan for retirement.

    The Managing Director, LASACO Life, Dimeji Olona, who said this, explained that Section 4 of the PRA allows an employee to use the amount accumulated in his Retirement Savings Account (RSA) to buy either programmed withdrawal or life annuity at retirement, or attaining the age of 50 years, whichever is the latter.

    Olona said the contributor is also allowed to take a lump sum at age 50, or at retirement whichever is the latter from the RSA balance, provided that the amount left after the withdrawal shall be sufficient to procure Annuity for life, or fund Programme Withdrawals that will provide an amount not less than 50 per cent of his annual remuneration as at the date of his retirement.

    He praised the efforts of the regulators, the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom), for ensuring that the retirees are well protected.

    He said the Lagos State Pension Commission (LASPEC) has, on its part, also ensured that the PFAs and insurers compete in a healthy environment.

    He affirmed that both the PFAs and Annuity providers are partners in progress as there cannot be an effective administration of annuity without the involvement of PFAs who are supposed to accumulate the fund to use in purchasing the annuity for life.

    Olona explained that annuity is a series of payments made at equal intervals of time in conservation of a lump sum, or a regular contribution made over a pre-defined period.

    He said: “We have different types of annuity, but the type being made popular in Nigeria through the Pension Reform Act (PRA) 2004, is called Immediate Annuity.

    “The Programmed Withdrawal is provided by the PFAs, while the annuity for life is provided by licensed life insurance companies in Nigeria. The Programmed Withdrawal and Annuity are two distinct options available to the retirees. Both options, although have clearly distinct features, have been carefully chosen by the regulators to protect the interest of the retirees.

    “The process of selecting the providers of either option is also stringent to ensure that only the companies that are adjudged by the regulators to be capable are licensed.”

    Olona said some of the advantages of annuity are: “That the product is used to take care of the basic fear of an intending retiree at risk of outliving his income which is called longevity risk. This risk is borne by the insurance company if the retiree lives very long. For instance, a retiree that leaves service at the age of 60 and lives up to perhaps 90 years can buy annuity for life which can be used to solve the financial burden at old age.

    “Life Annuity authorised under the PRA 2004, is guaranteed for 10 years but if the annuitant dies before 10 years, the balance would be paid to the named beneficiary. If the annuitant survives the guaranteed period, the annuity is payable thereafter as long as the annuitant lives.”

    Another advantage, Olona mentioned, is that the investment risk is borne by the annuity provider and not the annuitant, as a guaranteed sum is given to him or her on a regular basis in spite of harsh investment climate that might be experienced by the company.

    He said PenCom and NAICOM collaborated in 2006 to jointly regulate Life Annuity and Group Life insurance policy under the CPS. Both regulations have been implemented for six years and three years.

  • ‘Life insurance operators, PFAs help retirees on best retirement option’

    Licensed life insurance companies providing Life Annuity and the Pension Fund Administrators (PFAs) providing Programme Withdrawal to retirees as the two retirement options under the Contributory Pension Scheme (CPS), are working to ensure they get the right plan for retirement.

    The Managing Director, LASACO Life, Dimeji Olona, who said this, explained that Section 4 of the PRA allows an employee to use the amount accumulated in his Retirement Savings Account (RSA) to buy either programmed withdrawal or life annuity at retirement, or attaining the age of 50 years, whichever is the latter.

    Olona said the contributor is also allowed to take a lump sum at age 50, or at retirement whichever is the latter from the RSA balance, provided that the amount left after the withdrawal shall be sufficient to procure Annuity for life, or fund Programme Withdrawals that will provide an amount not less than 50 per cent of his annual remuneration as at the date of his retirement.

    He praised the efforts of the regulators, the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom), for ensuring that the retirees are well protected.

    He said the Lagos State Pension Commission (LASPEC) has, on its part, also ensured that the PFAs and insurers compete in a healthy environment.

    He affirmed that both the PFAs and Annuity providers are partners in progress as there cannot be an effective administration of annuity without the involvement of PFAs who are supposed to accumulate the fund to use in purchasing the annuity for life.

    Olona explained that annuity is a series of payments made at equal intervals of time in conservation of a lump sum, or a regular contribution made over a pre-defined period.

    He said: “We have different types of annuity, but the type being made popular in Nigeria through the Pension Reform Act (PRA) 2004, is called Immediate Annuity.

    “The Programmed Withdrawal is provided by the PFAs, while the annuity for life is provided by licensed life insurance companies in Nigeria. The Programmed Withdrawal and Annuity are two distinct options available to the retirees. Both options, although have clearly distinct features, have been carefully chosen by the regulators to protect the interest of the retirees.

    “The process of selecting the providers of either option is also stringent to ensure that only the companies that are adjudged by the regulators to be capable are licensed.”

    Olona said some of the advantages of annuity are: “That the product is used to take care of the basic fear of an intending retiree at risk of outliving his income which is called longevity risk. This risk is borne by the insurance company if the retiree lives very long. For instance, a retiree that leaves service at the age of 60 and lives up to perhaps 90 years can buy annuity for life which can be used to solve the financial burden at old age.

    “Life Annuity authorised under the PRA 2004, is guaranteed for 10 years but if the annuitant dies before 10 years, the balance would be paid to the named beneficiary. If the annuitant survives the guaranteed period, the annuity is payable thereafter as long as the annuitant lives.”

    Another advantage, Olona mentioned, is that the investment risk is borne by the annuity provider and not the annuitant, as a guaranteed sum is given to him or her on a regular basis in spite of harsh investment climate that might be experienced by the company.

    He said PenCom and NAICOM collaborated in 2006 to jointly regulate Life Annuity and Group Life insurance policy under the CPS. Both regulations have been implemented for six years and three years.

  • No official can steal N4tr pension fund, say PenCom, PeNop

    The N4trillion workers and retirees’ contribution under the Contributory Pension Scheme (CPS) cannot be stolen by any individual, or organisations owing to its structure, the Acting Director-General of the National Pension Ciomision, Mrs. Chinelo Anohu-Amazu, has said.

    This is coming on the heels of claims by the Chairman of Independent Corrupt Practices and Other Related Offences Commission (ICPC), Mr. Ekpo Nta that a junior staff member of the Commission was arrested with 50 bank accounts with others involved in fraud running into billions of naira.

    The discovery resulted in a public outcry from Nigerians who could not hide their disappointment following the development which painted all the assurances of safety of pension fund under the contributory pension scheme in bad light.

    Part of the setback for CPS is the negative impression of the residual scheme from the Defined Benefits of Non-Contributory Pension Scheme in the country, which is fraud prone. This has continued to pose serious challenge to the nine-year old contributory pension scheme in the country.

    PenCom Acting Director-General, Mrs. ChineloAnohu-Amazu told The Nation, that she was miffed by the report, noting that the Commission had been working hard to gain the confidence of Nigerians.

    She said the junior officer mentioned by the ICPC is not a PenCom staff member and the ICPC had recanted that the man is a civil servant.

    She said there are safeguards protecting the pension funds from misappropriation, with the functions of custody and administration of the funds clearly delineated in the Pension Reform Act, 2004.

    Mrs. Anohu-Amazu stressed that while the Pension Fund Custodians (PFCs) are in custody of the funds; the PFAs manage and administer the contributions, adding that the PFAs and PFCs are also mandated by the Commission to maintain high levels of transparency and accountability and to give contributors unfettered access to any information relating to their accumulated pension savings.

    She said: “PenCom has in place strict regimes, which include daily monitoring of the investment activities of PFAs and the institution of strict pay-out authorisation requirements. These ensure that PFAs are not reckless in their investment decisions, while ensuring that only the right beneficiaries would have access to the pension funds

    “Some other measures include the guarantee to the full sum and value of the pension fund and assets held by Pension Fund Custodians as mandated by the regulator as well as risk rating for instruments that pension funds could be invested in.

    “In addition to the engagement of a Compliance Officer (CO) who is saddled with ensuring compliance with the provisions of the law regarding pension matters as well as the internal rules and regulations of any operators, PenCom keeps track of the activities of pension operators. Every PFA is also required to maintain a Statutory Reserve Fund, into which shall be credited annually with 12.5 per cent of the net profit after tax, or as stipulated by PenCom to meet claims.”

    Mrs. Anohu-Amazu said the Commission also imposes legal and administrative sanctions for non-compliance with the rules and regulations as any operator found wanting would be sanctioned in line with the law, among other things.

    These checks and balances, she noted, were embedded in the law to give the contributors rest of mind and encourage workers not to be skeptical about the new contributory pension scheme. The pension reform has addressed problems of past pension schemes to a large extent, she stated.

    Also, Chairman, Pension Fund Operators Association of Nigeria (PenOp), Mr. MisbauYola, said it would take the collusion of PenCom, PFA and PFC officials to loot the fund.

    He assured the six million employees who are listed in the CPS of the safety of their contributions.

    He said the law establishing the CPS has an in-built mechanism that guarantees safety of the funds and its availability at the point of retirement of the worker, adding that the funds are protected and would be available to them at their point of retirement.

    Yola added that since the coming on board of the Scheme about eight years ago, it has not recorded any form of fund mismanagement, saying, “The system is watertight and no one can have access to the money except the contributor at the point of retirement,” he added.

  • Old pension scheme under CPS begins

    Old pension scheme under CPS begins

    The newly established Pension Transitional Arrangement Department (PTAD) for the administration of public service pension under the old scheme has started operations, the National Pension Commission (PenCom) has said.

    The PTAD was established under the new Contributory Pension Scheme to continue to administer the affairs of existing pensioners in the old pension order, as stipulated in the Pension Reform Act, 2004.

    PenCom Acting Director General, Mrs Chinelo Anohu-Amazu who made this known to reporters, said the PTAD took off in November, last year.

    She said PenCom will supervise the Department, while the responsibilities, funds and assets of the relevant pension boards, or offices would be transferred and vested in the respective Departments.

    It is anticipated that the Departments shall cease to exist after the death of the last pensioner, she said, adding that the establishment of the Department was intended to address the lingering issues in the administration of pension in the public service.

    She said: “In order to address the lingering issues in the administration of pension in the public service, the Commission forwarded a proposal to the Federal Government seeking the approval for the establishment of a PTAD as provided for under Section 30 of the PRA 2004.

    “Already, a Director-General has been appointed for the PTAD in the person of Ms. Nellie Mayshak and the Head of Service of the Federation, has directed the directors of the Civil Service Pension Department, Police Pension Department and Customs, Immigration and Prisons Pension Department to report to the director-general of PTAD.”

    She explained that while all Boards of Trustees of pension schemes are being operated by parastatals, report to the director-general PTAD, the Act provides that PenCom supervises the PTAD.

  • Retirement: No cause for worry, says pensions manager

    Retirement: No cause for worry, says pensions manager

    The Managing Director, Stanbic IBTC Pension Managers, Demola Sogunle has allayed fears of workers who develop cold feet on the eve of their retirement, saying there should be no cause for alarm.

    He said all that is required is for the workers to work as diligently as they could and ensure that employers join the Contributory Pension Scheme (CPS) and contribute to the scheme on their behalf, adding that the scheme has helped to provide a secured future for workers on retirement.

    Sogunle, who spoke with journalists in Lagos, explained that workers, whose employers are contributing into their Retirement Savings Account (RSA), should not be apprehensive, and need not manipulate their ages, as there is something to sustain their lifestyle in retirement.

    He said the CPS is one of the best things that the government has done calling on workers to demand compliance from their employers as their future is determined by what they contribute now.

    He said: “Those who are contributing are in good companies, their future is assured because some people are working on their behalf to ensure that when they stop receiving salary, they can maintain their living standards.

    “It is because of the contributors that we do investment strategies, work hard daily, so that they can have something to fall on when they stop working. It is when people stop working they become more vulnerable and that is when we come in. Contributors should be rest assured, for they have nothing to fear.”

    He said the new pension system has a strong internal mechanism, adding that on monthly bases, contributors collect their pension without hassles.

    “Those who have witnessed the scheme recognised that the scheme is one of the best things to have happened in Nigeria. This scheme is one of the unsung reforms former President Olusegun Obasanjo bestowed on Nigerians. People are yet to come to the full realisation that it takes a lot to come from N2 trillion unfunded pension liability, to over N4 trillion assets in a period of eight years.

    “Those working should make sure that their employers are contributing so that when they retire they will be able to sustain their lifestyle.

    “With the scheme, once you are 50 years, you should retire. People need not adjust their age anymore. People adjust their ages because they are not sure of their future, but with the scheme, once a worker is tired, he or she should retire,” he said.

    The Managing Director Fidelity, Pension Managers Limited, Mrs. Amaka Andy Azike, called on employers to align with the scheme, adding that it remains one way they can motivate their workers.

    She noted that when workers realise that their future is secured due to the contributions made by their employers, they will give their best and work towards the well-being of their employers.

  • ‘Pension bosses must disclose costs’

    Pension fund managers will be forced to come clean about hidden costs which can wipe tens of thousands off the value of retirement savings pots under plans being set out by the government.

    Ministers will announce that fund managers of defined contribution workplace schemes must in future disclose full details of all their costs to the public, The Times reported.

    The Office of Fair Trading (OFT) warned last year that there was “insufficient visibility and comparability of charges” to ensure that competition in the market was fully effective.

    A Department for Work and Pensions spokesman said: “We’re taking action to ensure consumers have access to good quality pension schemes so they have the confidence to plan for their futures.

    “A lack of transparency around the true cost of schemes can prevent savers from having value for money. We will outline our proposals to tackle this issue shortly.”

    The Times reported that the announcement on disclosure of charges had been brought forward to avoid a damaging Lords revolt led by former chancellor Lord Lawson.

    Speaking during debate on the Pensions Bill last month, Lord Lawson said: “In a competitive market, compulsory disclosure will go a very long way towards removing the mischief.”

    Pensions Minister Steve Webb promised a “full frontal assault” on pension scheme charges, with the Government consulting on a cap of around 0.75 per cent a year.

    Small variations in charges can make huge differences over time to the eventual size of the pension pot that someone ends up with.

    The government said someone who saves £100 a month over a typical working life-time of 46 years could lose almost £170,000 from their pension pot with a 1 per cent charge and over £230,000 with a 1.5 per cent charge.