The Nation Newspaper

Category: Pension

  • Emerging market stocks rise

    Emerging-market stocks advanced, led by the biggest rally in Turkey’s benchmark index in more than three months, amid speculation political tension in the country may ease. The lira strengthened, while Russia’s ruble declined.

    Bloomberg said Turkish stocks climbed 5.7 per cent, rebounding from a 14 per cent slide the previous two weeks spurred by a corruption probe embroiling Prime Minister Recep Tayyip Erdogan’s government.

    The Ibovespa climbed, paring the worst yearly drop among the world’s 20 biggest stock indexes, as Brazilian President Dilma Rousseff pledged to keep up the fight against inflation. The ruble slipped after suicide bombers killed at least 30 in the southern city of Volgograd.

    The MSCI Emerging Markets Index added 0.4 percent to 1,001.95 as of 10:01 a.m. in New York. The gauge is valued at 10.5 times projected earnings for the next 12 months, a 29 percent discount versus the MSCI World Index, the biggest gap in five years. Investors are betting on a “calmer period” in Turkish politics, according to Emre Balkeser, the head of sales and trading at Garanti Yatirim Menkul Kiymetler AS.

    “With emerging-market equities having had a very weak year, in particular compared to developed-market equities, I would assess the price movement over the last couple of days as picking up cheap paper, and Turkey in particular, buying into bombed-out equity,” Michael Ganske, head of emerging markets at Rogge Global Partners Plc in London, said.

    Nine of the 10 industry groups in the MSCI Emerging Markets Index rose. The measure has lost 5 percent this year, compared with a gain of 24 percent for the MSCI World Index.

    Turkey’s Borsa Istanbul National 100 Index (XU100) rebounded from the lowest level since August 2012, increasing the most among 94 global equity gauges tracked by Bloomberg. Erdogan, facing allegations of corruption within his government, accused a “gang” within the police and judiciary of treason as he addressed supporters in a series of rallies over the weekend. The graft investigation prompted him to replace ministers in his cabinet about three months before local elections on March 30.

    “There were expectations of some bad news over the weekend on the political side,” Arda Kocaman, the head of treasury at Finans Invest in Istanbul, said by phone. “It didn’t happen. So there’s a relief rally or some short covering. It’s just a no-news-is-good-news bounce.”

    Discount retail chain BIM Birlesik Magazalar AS surged 74 percent after Chairman Mustafa Latif Topbas said in an e-mail Dec. 28 that he has never broken the law and that he is ready for the scrutiny of all personal and company ties.

  • U.K. considers raising pension age to 68 by Mid-2030s

    Prime Minister David Cameron’s government may bring forward an increase in the age at which Britons take their pensions by a decade as life expectancy rises.

    The government said in a statement that the planned age increase to 68, originally estimated to be introduced in 2046, may be brought forward to the mid-2030s, and the pension age could rise to 69 by the late 2040s.

    The changes will affect people currently in their 40s or younger and will save about 400 billion pounds, it said.

    According to the announcement issued before Chancellor of the Exchequer George Osborne’s Autumn Statement to Parliament, the government will use the principle that people should spend, on average, up to one third of their adult lives in retirement to inform future changes in the state pension age. This is part of the government’s long-term economic plan to secure a responsible recovery.

    Proposals to raise the age at which Britons are eligible for a state pension were first brought in last year. The Pensions Bill, currently being debated in the House of Lords, is likely to become law early next year. It will also introduce a single-tier pension to replace the current basic means-tested allowance.

  • ‘28 states yet to fully embrace CPS’

    ‘28 states yet to fully embrace CPS’

    Twenty-eight states are yet to fully adopt the Contributory Pension Scheme (CPS), the Managing Director, AIICO Pension Managers Limited, Longe Eguarekhide has said.

    He told The Nation in Lagos that the benefits of the new scheme over the old one are enormous to both the states and the economy.

    He advised state governments in to comply with the scheme to solve the problem of ghost workers.

    He said there is a huge market yet to be tapped in the states that have not complied with the CPS.

    Eguarekhide reiterated that by subscribing to the CPS, both the states and retirees will enjoy some benefits, adding that it is an incentive for serious states to end ghost workers in civil service.

    He said: “Firstly, if they do their calculations properly, they will find out that they are short-changing their workers for not subscribing. This is because their pension liabilities will continue to grow graduallyand if they don’t fund their pension liabilities, they will continue to face problems with their retirees.

    “Secondly, while they are trying to make provision for their workers’pension, they will solve the problem of ghost workers. This is because a worker has to register under the CPS to collect his or her pension and the process will cut off any ghost worker in the system. The payroll is organised in such a way that you make payments to people who have registered.

    “With this, a lot of people who are not registered on the payroll would have been streamlined, thereby reducing the liabilities of ghost workers just by subscribing to the CPS. If you ask some of the states where the CPS have been embraced, you find out that that is an added benefit they have been able to get. At present, we have about eight states that have subscribed fully to the CPS while the remaining 28 have not subscribed to it.”

    The AIICO Pension boss further described the CPS under the Pension Reform Act, 2004 has a revolution when compared with the old pension scheme, the Defined Benefit Scheme.

    He said under the old scheme, government retirees or pensioners were paid based on a specific calculation after retirement and even though some pensioners knowhow much they will be paid, the scheme was not properly funded by the government and the private sector.

    “This led to pensioners’meeting in long queues and, sometimes, there is no record of their pension is or it’s difficult for them to access the pensionbecause there is no money to pay.

    “But the arrangement is contributory by both the employer and employee.There is a contribution that happens every month and that contribution goes to the Pension Fund Administration (PFA) which AIICO is one. The PFA does not actually receive the money. It goes to a Pension Fund Custodian (PFC), who then informs the pension administrator that money has been contributed for its management by its contributor, and then the pension fund goes and invests the money in approved investment areas or sectors. This further shows that there is a separation of rules in the scheme.”

    Eguarekhide added that the regulator, the National Pension Commission (PenCom) has been working since the inception of the PRA2004.

    He said there is structured contribution management, well supervised investment management, adequate regulation and an organised process of the contributor accessing their benefit at the time the benefit becomes due.

     

  • British Airways launches legal action against its pension trustees

    British Airways has launched a legal action to try to block the trustees of its deficit-laden pension scheme increasing the amount the airline must pay into the scheme.

    The airline is attempting to prevent a rise in the cost of the scheme, in a dispute that traces its history back to BA’s privatisation in the 1980s.

    BA’s Airways Pension Scheme (APS), which accounts for some 29,000 former and current staff, had its inflation-linked annual increase to payments changed in 2011.

    Instead of using the retail price index (RPI) measure of inflation, the scheme is now linked to the consumer price index (CPI), which generally rises by a smaller amount. CPI in September 2012 – the month the rise in pensions is linked to – was 2.2pc, against 2.6pc for RPI. The change to CPI was introduced by the Government for state pensions, but the APS, which was phased out in 1984 as the formerly state-owned airline prepared for privatisation, follows the same index.

    The move was met with anger by BA pensioners on the scheme, who claim they had been promised increases at RPI in 1984, when they rejected offers of a one-off payment of around a year’s salary to join a new scheme.

    In response to the change, the APS’s trustees added 0.2pc on to the annual rise. BA claims the trustees do not have the authority to implement the rise, given the APS’s £680million deficit.

    The airline filed papers in the High Court on Friday. It says that raising the pension above CPI puts the scheme at risk. “British Airways is concerned to ensure that its company pension schemes should act in the best long-term interests of scheme members,” the airline said.

    “The deficit means that the existing benefits of APS members are some way off being fully funded, even before the trustees’ decision to increase those benefits above the level promised under the scheme rules.”

    BA says the cost of the trustees’ additional increase amounts to £12m. While this is relatively insignificant compared to the total pension deficit, the airline claims that allowing the increase could set a precedent for future rises above the CPI rate.

    “We do not believe the long-term security of members’ benefits should be put at risk for the advantage of retirees who already enjoy more generous pensions than the vast majority of current employees can look forward to,” the airline said.

    “In these circumstances, we are left with no alternative but to pursue legal action with the objective of preventing the additional increase going ahead.”

  • AIICO pension funds hit N45b

    Apension fund administrator, AIICO Pension Managers, has said it has recorded pensioners’ fund to the tune of N45 billion.

    Head, Marketing and Sales Development, MrTunde Ottun disclosed this while speaking to journalists in Lagos on the 2014 campaign of the firm.

    Ottun said the firm has nine legacy fund with existing retirees of over a thousand and 200,000 contributors registered under it comprising persons from the government and private sectors.

    He pointed out that the PFA adopted the philosophy called “Live Smart,” because it wants its pensioners to adopt a good lifestyle where judicious usage of their funds can be attained.

    He called on people to live right,plan well in advance their retirement years,get financial education and avoid flamboyant lifestyles.

    The need for the philosophy,he said,is borne out of the fact that as PFAs, they not only want to manage their customers’ pension funds, but to also enable the attainment of positive aspirations in ways that create value in their lives.

    This ideology guides our work at AIICO Pension and largely informs the way they do business, he added.

    Commenting on the workability of the philosophy, Head of Benefits, Mr TundeAdebari, said “At AIICO Pension, we have thought long and hard about what truly makes for a desirable future and comfortable retirement. Taking on this responsibility, we have developed several platforms to enable us achieve this objective”.

    He said: “Aside communicating our message to our customers, we are also currently running several radio programmes that provide audiences with information and useful tips with the aim of subtly getting the audience to reflect on those simple acts that can help them live life better.”

    To sustain this new ideology, Acting head,Investments,Mrs Susan Ifashe said the firm has upgraded their service delivery system and redefined its processes more efficiently as it has also invested a great deal in their people, inducting them in the true spirit of the brand.

    “By this, we can successfully achieve both our objectives as a business and our customers’ retirement goals. We believe that by inspiring and enabling people to live smartly, we are helping them store up value in all areas of their lives; value which they can access in future. When this happens, we have successfully done good business”.

  • ‘New pension scheme is infallible’

    It would be difficult for the new pension scheme to fail, the Chairman of Pension Fund Operators Association of Nigeria (PenOp) Mr. Misbau Yola, has said.

    He said it would take the collusion of the regulatory body, the National Pension Commission (NAICOM), Pension Fund Administrators (PFAs), Closed Pension Fund Administrators (CPFA) and the Pension Fund Custodian (PFCs) for the new pension scheme to fail.

    Yola, who spoke in Lagos, said it would be impossible for one or all the players to conspire and manipulate the system, adding that the regulation and operation of the pension industry makes the new scheme infallible, as against the old scheme.

    He said: “It is impossible for the new scheme to fail going by the way it is structured. The role of PenCom, PFAs, PFCs and the contributors, the Retirement Savings Account (RSA) are distinct. The structure of the new scheme is such that employers and employees are required to make monthly funded contributions throughout the working life of the employee towards the employee’s retirement benefits.

    “The Act establishes PenCom as the single body responsible for the regulation of the pension industry in Nigeria with a cardinal objective to regulate, supervise and ensure the effective administration of pension matters in Nigeria.

    “The PFA’s/CPFAs are the key operators under the scheme and as such, are responsible for the administration and management of pension funds under the Act. They deal directly with the contributors or Retirement Savings Account (RSA) holders and their beneficiaries on continuous basis.

    “They are also responsible for opening RSAs for all customers, and are to issue them with PenCom’s personal Identification Number (PIN), invest and manage pension funds and assets, mantain books of accounts of all transactions relating to pension fund under its management, provide customer service support to employees, including access to RSA information and account statements on the demand and calculate and pay retirement benefits.

    He explained that the PFCs on their part are subsidiaries of licensed financial institutions responsible for the custody and safe keeping of pension assets. They are to notify the PFA’s within 24 hours of the receipt of the contributions, settle transactions on behalf of the PFAs and collect dividends and other income accruing to the fund on the PFA’s behalf. They would also report to PenCom on all matters relating to the pension fund, he added.

    Yola said these distinct roles by all players in the pension industry makes it difficult for any one player or all players to manipulate.

    Speaking on the rationale for pension reform in the country, Yola said most schemes in the past in the private and public sector, were either under-funded or unfunded, and unsustainable.

    He recalled that there were unsustainable outstanding pension liabilities, especially in the public sector. It was also characterised by weak and inefficient administration of pension schemes while most private sector employees were not covered by any form of retirement benefits.

    The Acting Director-General of the Commission, Mrs. Chinelo Anohu-Amazu said the cardinal principle of separation of custody of funds from management and supervision has resulted in a pension scheme with sound internal mechanism for the transparency and accountability.

    She said whereas the PFAs manage the funds, they do not have access to same as custody is vested in the PFCs and the Commission ensures both parties adhere strictly to regulations governing the funds.

    This ring fencing of pension fund asset and regulatory non-interferencehas resulted in the consistent growth in a large pool of pension Assets of N3.8 trillion which are invested in structured and safe financial instruments, she said.

     

  • LASPOTECH student gains employment as CHI essay winner

    Miss AtinukeTitilayo, a student of the Lagos State Polytechnic has emerged winner of the 2013 Consolidated Hallmark Insurance (CHI) Essay competition earning her an automatic employment with the company.

    Aside from the employment, Titilayo received a N100, 000 cash prize. JamiuOladokun of Ibadan Polythecnic who emerged as the 1st runner up received N60, 000 while NinyaChukwuemeka of University of Lagos emerged as second runner-up and received N40, 000.

    Managing Director, Consolidated Hallmark, Mr Eddie Efekoha while speaking at the award presentation of gifts to the best students from some tertiary institutions in Lagos said the award was part of efforts of the firm to promote insurance practice and professionalism in the industry.

    He stated that the firm will continue to reward best students in the essay competition organised by the firm with job opportunities and other cash prizes.

    He said, “This is the third series in the essay competition. The intention is to encourage insurance as a subject and profession and make the world know that we also have so much to give back to the society.

    For the industry to grow, we need to continuously grow and update the talent. Those who had been in the system for long are leaving, we want to continue to ensure constant inflow into the process, because as there are exit. If we don’t have enough input, then you will find out that over time the process will run dry.”

    Efekoha said Atinuke has an automatic employment in the company when she graduates as the winner of the essay competition.

    He noted that the company contacted 10 schools to enter for the competition out of which four schools participated.

    He explained that the six long strike embarked upon by the Academic Staff Union of Universities (ASUU) affected the participation of some of the schools.

    The company also extended the competition to its internal staff, by giving them the opportunity to write on a topic.

    In the category, the first prize went to Nike Nihintola; the second prize went to JamiuOladokune and third prize was received by David Ibeabuchi.

    The students wrote on the topic, “Impact of No Premium, No Cover on the society”, and “Terrorism Insurance in the Country”.

  • Avoid delay on CPS, SIGMA’s boss urges

    Workers and retirees under the Contributory Pension Scheme (CPS) should be versatile and avoid things that could delay their access to pension benefits, the Managing Director, Sigma Pensions Fund Administrator, Mr Umar Modibbo, has advised.

    Moddibo, who spoke in Lagos during the firm’s Customers/Retirees’ Forum on how to have easy access to their pensions, said there was the need to provide information on how to access their benefits as at when due.

    He said they should also have documentation requirements that will ensure easy and prompt payment of their entitlements, and payment options available under the Pension Reform Act 2004.

    While explaining those entitled to full or partial access to their Retirement Savings Account (RSA), he said that the retirement age differs from employer to employer.

    He said: “It depends on the employee’s terms and conditions of employment as the Pension Reform Act does not stipulate any particular age for retirement, but employees who retired by mandatory age (60 years) or years of service (35 years).

    “Though a retiree under this Scheme will have to attain the minimum age of 50 years to qualify and access his or her entitlement where an employee retires on medical grounds or incapacitation, he or she is entitled to full access irrespective of his or her age

    Speaking further, he noted that options available to every retired employee under the PRA 2004 are Programmed Withdrawal which is offered by the PFA and annuity plan to be purchased from an insurance company.

    The managing director said that all payments to be made have to be approved by the National Pension Commission and every payment is done to the bank account of the RSA holder or to the beneficiary of a deceased’s Eestate.

    For this purpose, he added that an accurate Nigeria Uniform Bank Account Number (NUBAN) account details are necessary to ensure hassle free payments.

    He pointed out that incomplete or inaccurate documentation could delay access to pension benefits such as where Letter of Administration details is not in agreement with payment details and pay slips not in agreement with retirement letter from the employer.

    He cited other reasons as delay in remittance of accrued rights and or outstanding contributions from the employer; Reconciliation issues such as incomplete remittances or over remittances from the employer; Inability to contact the customer or family as a result of missing or inaccurate contact details; Non agreement during negotiation on lump sum/ programmed withdrawal payment amounts; and discrepancies in documentation with initial information provided during registration.

  • PenCom heightens supervision on Old Pension Scheme

    The National Pension Commission (PenCom) is refocusing greater attention on the Old Defined Benefit Scheme of the public service to stem its inefficiencies, the Acting Director-General of tMrs. Chinelo Anohu-Amazu, has said.

    This, the PenCom boss said, would be carried out through the Pension Transitional Arrangement Department (PTAD).

    Mrs. Anohu-Amazu, who made this known at the opening of the Northwest zonal office of PenCom in Kano, said the office was opened as part of the Commission’s continued determination to decentralise its activities and bring it closer to the contributors and retirees.

    She said the mandate of the office is to extend the Commission’s services to the seven states in the zone, namely, Kano, Jigawa, Kebbi, Kaduna, Kastina, Sokoto and Zamfara states, adding that four zonal offices located in Calabar, Awka, Lagos and Ilorin had earlier been opened. She said the Northeast zonal office in Gombe has been established and would be inaugurated soon.

    She said: “The establishment of zonal offices in the six geo-political zones of the country is a deliberate attempt to encourage and facilitate compliance with the Contributory Pension Scheme (CPS).

    “We expect the states in the Northwest zone to renew their commitment by ensuring the speedy implementation of the CPS in order not to shut out their citizens from the benefits of a hassle-free retirement”.

    She appealed to Governor Rabiu Musa Kwankwaso to spearhead the compliance of the states in the Northwest zone with the CPS.

    Kwankwaso while declaring the office open, expressed delight at the siting of the Northwest zonal office in Kano. He assured the Commission of the state government’s support in its pension reform activities and promised to re-examine the status of the state in terms of the CPS such that they can fully embrace the scheme.

    In a message, the Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi, said the apex bank has been collaborating with PenCom for the success of the pension reforms, noting that the reforms guarantee a secured future for workers.

    He pointed out that the industry has generated funds that could be invested in infrastructure.

    Senate Committee Chairman on Establishment and Public Service Matters, Dr. Alloysius Etok, advised the Commission to ensure that only the states that key into the scheme benefit from its funds.

    He assured the Commission and the industry that National Assembly would soon pass the Pension Reform Bill 2013 to enable the Commission work more effectively.

    The House Committee’s Deputy Chairman on Pensions, Mr. Samson Okwu, commended the Commission for opening zonal offices in the country thereby bringing its activities closer to people.

    He also assured the industry that the National Assembly would make laws that would empower the Commission to make workers’ retirement pleasant.

    President of the Pension Operators Association of Nigeria (PenOp), Misbahu Yola, who pledged the operators’ continued subscription to the rules and regulations of the industry, urged the states to embrace the Scheme as this would give them the opportunity to access pension funds for infrastructural developments.

    Others who delivered goodwill messages, were the Vice-President, Nigerian Labour Congress (NLC), Mr. Issa Aremu, represented by Mrs. Fumi Elesho; Trade Union Congress (TUC) represented by Musa Lawal, President, National Union of Pensioners, Dr. Abel Afolayan, and representatives of the governors of Jigawa, Kebbi, Kaduna, Katsina, Sokoto and Zamfara states.

  • PHCN retirees decry irregular payment

    Rresident, Nigeria Union of Pensioners (Electricity Sector), Chief Temple Ubani has said the non-payment of monthly pensions to some pensioners every other month by Nigeria Electricity Liability Management Company Limited (NELMCO) has become a recurrent decimal and a huge challenge.

    Ubani, who stated this at the Mid-Term Special National Executive Committee and Central Working Committee meeting of the sector, in Benin City, Edo State, also said the administration was working with NELMCO to correct the anomaly.

    He added that the payment of monthly pensions is not done at the purview of the National Secretariat but by NELMCO.

    He said the continued delay by NELMCO in payment of 120 per cent arrears of pension arising from various increases, has posed a big challenge to the union, but noted the union will not rest on its oars.

    He further disclosed that the administration has in the last 748 days achieved the payment of 50 per cent pension increase with arrears of three months.

    Speaking further on the activities of the union during the year, he said the union has tried to give the union its best within the limit of human endeavour.

    He said: “This administration, sensing danger of non-payment of August 2012 pension by PHCN Management quickly addressed the press at the Union Secretariat, in September, last year and directed them to carry out a peaceful protest at all pension pay-centres nationwide to drive home their demand.

    “The action worked out by September of same year, as NELMCO took over payments of our pensions and the takeover was seamless. The administration further received the Managing Director of NELMCO, Dr. Samuel Agbogun at the Secretariat in March, 2012 for a meeting that deliberated on the welfare and future of the members.

    “Furthermore, during the period under review, the administration collaborated with other sister unions within PHCN such as NUEE & SSAEAC, which culminated in various joint actions in 2012 and subsequently released a joint statement entitled violation on negotiated agreement which was jointly signed by the leadership of the unions”.

    Ubani said the decision became necessary to save members from the challenges posed by government’s decision to privatise PHCN even as the battle to save their pensioners was still on.