The Nation Newspaper

Tag: PenCom

  • PENCOM, BPP and stakeholders’ trust

    Some recent events and developments should prove simultaneously instructive and rejuvenating for Nigeria’s pension industry. The situations being referenced undoubtedly bear consequence on the element of trust which is the most vital asset for such a sensitive and crucial sector of the economy.

    The matters and references under focus here include the on-going public hearing of the Ad Hoc Committee of the House of Representatives investigating the activities of the erstwhile Presidential Task Force on Pension Reforms. The inquiry is supposed to cover the activities of the task force from 2010 to the time of its dissolution and any other successor agency. Then, there is the initial response by the Acting Director General of the National Pension Commission (PenCom) Aisha Dahir-Umar to a recent invitation of the Economic and Media Forum of the Global Africa Journalists Association in which she remarked thus: ‘’I think that the entire pension industry in Africa’s largest economy is ready to embrace world class standard practices. But particularly for us at PenCom, we are determined to become a point of proud and envious reference in pension matters internationally’’. Then thirdly and equally significant was the recent report that the Bureau of Public Procurement (BPP) rejected the plan by PenCom to cancel the acquisition process for the building of a Pension Administration System (PAS) estimated at N3.9 billion.

    All of the three matters referenced trigger larger questions relating to one vital irreducible issue: the security and the life-savings especially of the ordinary Nigerian worker who has made painful and diligent contribution to pension schemes on which to depend particularly in their old age. This is the critical aspect of the entire matter that must never be trifled with or minimized by the powerful technocrats and political elites who sometimes treat pension funds as resources to be recklessly expended for other purposes. Too often, influential Nigerians who have appropriated and expropriated public funds safely tucked away in foreign financial institutions- the very elites who have taken care of their own future, have tended to treat the tearful savings from the starvation wages of the Nigerian workers as some funds that could be toyed with for selfish benefits-not by any means for the good of the contributors to the pension funds.

    The immediate foregoing discussion pointedly links us to the first of the three references underlying this article. The investigation by the Ad Hoc committee of the House of Representatives is a nightmarish reminder of the gross abuse and brutal rape to which pension savings were subjected under Abdulrasheed Maina. Maina was the head of the defunct Presidential Task Force on Pension Reforms beginning in 2010. The sheer mindlessness and systemic pillage causing the disappearance of billions in pension funds under the so-called reform task force was the definition of a grave tragic comedy-to have even situated Maina and the word reform in a single sentence was a violent contradiction of terms.  The story of Maina’s rapacious gang with the possible implication and collusion of very high federal civil servants and the banks remains a repugnant and indelible stain on the profile of Nigerian pension industry.

    The new zeal of some leaders of the various sub-sectors in the nation’s pension industry can only be catalyzed and strengthened with encouraging actions of the apex Nigeria’s political leadership, the legal institutions and parallel regulatory and supervisory agencies. The current matter involving the BPP and PenCom is thus organically sprouted in the environment where reform is gaining eminence in pension management. The action of the BPP definitely calls for clarity beyond the curious veil of hazy technicalities. For the sake of objectivity, one seeks to know if the BPP as an agency which is supposed to ensure probity and ethics in the process of procurement attempting to stifle a rigorous review of a contract by the same agency that initiated and owns the project. Is there something smelly and sinister in the contention by the BPP that the commission cannot review an approximately hefty N4 billion project if PenCom believes that there could be some substantial reduction in the cost of the same project? A considerable number of experts in the pension industry insist that the same project could be executed for about 70 per cent less of the approximate N4 billion. This is the encapsulated genesis of a disturbing story.

    Consequent on her appointment as the Acting DG of PenCom, Aisha Dahir-Umar, decided to conduct a review of the various on-going projects of the agency. It was under such consideration that Dahir-Umar cancelled the annual one-billion naira guzzling jamboree tagged World Africa Pension Summit. It was evident that her predecessor and the senior staff who ran the programme could not provide any credible memo or evaluation to justify the fiesta which had held consecutively in 2014, 2015 and 2016. It was clearly a drain on PenCom’s resources and unquestionably a stratagem for other purposes. DG Dahir-Umar is acting exactly as she remarked in her response to the invitation by the Economic and Media Forum of the global journalists’ association that, ‘’Nigerian pension industry must be awakened to global standards of ethics and transparency and thereby engender the trust and confidence of stakeholders in the industry’’.

    Other projects under Dahir-Umar’s predecessor, Chinelo Anohu-Amazu which has drawn the scrutiny of ethics and transparency groups include the establishment of a N2-billion PenCom TV and the acquisition of an approximate one billion-naira prostate cancer treatment machine. The medical equipment has reportedly been gathering dust and has also been inoperable since it was procured. It will be enlightening to know if the BPP gave certificates of “no objection” to the acquisition of the equipment involved in the aforementioned projects, and if so, what tests in prudence and transparency were the projects subjected to?

    Along the same trajectory of thought, I propose that the stakeholders particularly the contributing workers are entitled to know the crux of the matter in the current contention over a N4 biilion project between PenCom and the BPP.  And this is the matter: PenCom under previous D-G Chinelo Anohu-Amazu had selected a foreign company to build a Pension Administration System (PAS) estimated at N4 billion for the agency. But the current acting DG DahiR-Umar had requested that the BPP allow for a review of the contract citing unduly high estimates and security concerns. But the BPP insisted that the project must not be delayed for any reason despite the legitimate questions crying out for clarification.

    Why is the BPP engaging in bureaucratic acrobatics and beclouding a serious issue with arcane language-stubbornly taking a position as if the bureau’s certificate of “no objection’’ were a holy writ that cannot be subjected to common sense evaluation?  Is the BPP speaking for the foreign company regarding the cost of the project?  One should believe that the bureau has no other motives in this matter. The BPP should therefore let the contracting firm directly respond to the question of over blown estimates.  More intriguing is the fact that there’s no prohibiting provision which prevents PenCom from reviewing or cancelling the contract, except for the curious zealousness of BPP. Based on the reverent nature of the task for which it obligated, prudence and transparency should be the permeating mantra of BPP and not the current perception or misconception that the bureau is projecting in the current PenCom controversy.

    BPP must allow one of the agency at the summit of the nation’s pension industry to undertake necessary reforms and initiatives for the accelerated growth of the sector.

    In casting an overall look at the three dimensions of the focus of this discussion- if the Ad Hoc committee of the House of Representatives  can send a no-nonsense signal for the regime of supervision in the pension industry, if the new leadership at PenCom stays dedicated to its words and actions regarding ethics and professionalism and if such agencies as the BPP will allow new ideas like those of Dahir-Umar to flourish – then we might to be coming close to declaring the dawn of a new era in the nation’s pension sector and a rejuvenating  guarantee for the life-savings of ordinary Nigerian workers.

     

    • Prof Onoh-Stevenson writes from Edinburgh, Scotland.

  • Workers to PenCom: implement PRA 2014

    •Demand enforcement of 18% contributions

    Nigerian workers and other stakeholders have expressed displeasure over the non implementation of the Pension Reform Act (PRA) 2014 by the National Pension Commission (PenCom).

    The workers from both private and public sector are unhappy that despite the increase in rates of contributions by the Act, employers have continued to disregard the law with no enforcement by PenCom.

    It would be recalled that the Federal Government in 2004, enacted the Pensions Reform Act (PRA 2004), which introduced the Contributory Pension Scheme, CPS, and made it mandatory for employers and employees in both the public and private sectors to contribute towards the retirement benefits of employees.

    The 2004 Act as repealed by 2014 Act increased pensions’ contribution rate from 7.5 per cent employee rate and 7.5 per cent employer rate to 8 per cent employee rate and 10 per cent employer rate.

    Section 4 sub section 1 of the PRA 2014 states that the rate of contribution under the CPS shall be a minimum of 10 per cent by the employer and a minimum of 8 per cent by the employee’s monthly emoluments.

    Sub section 2 of the Act further states that the rates of contribution may upon agreement between any employer and employee be revised upwards, from time to time and the PenCom shall be notified.

    Sub section 4 also states that notwithstanding any of the provisions of the bill, an employer may agree on the payment of additional benefits to the employee upon retirement or bear the full responsibility of the scheme provided that in such case, the employer’s contribution shall not be less than 20 per cent of the monthly emoluments of the employee.

    A contributor, Abidemi Abiodun, chided PenCom over his contributions.

    Abiodun who said his employer has been deducting his 7.5 per cent from his salary but has failed to remit both his deduction and the employer part of the contribution.

    He believes his employer is able to do so because the regulator is weak and has failed to sanction his employer.

    Another contributor, Chinedu Nwoke lamented that his employer has not remitted his contribution for six years.

    He expressed fear if he would be able to recover the deductions from his employer, needless say increase his contributions to 18 per cent.

    Mrs Victoria Arinze on her part urged PenCom to live up to expectation and demand compliance from employers.

    She said the CPS will remain unattractive if the pension benefits paid after retirement is not sustainable, noting that retirees under the Defined Benefits Scheme receive good benefits as against those under the CPS.

     

  • PenCom yet to implement transfer window law

    •Contributors cry out

    Fourteen years after the commencement of the Contributory Pension Scheme (CPS), the National Pension Commission (PenCom) is yet to open the transfer window platform that will enable pension contributors and retirees change their Pension Fund Administrator (PFA) when they feel dissatisfied with service rendered.

    This means that the Commission has failed to implement its own law, precisely Section 13 and Section 106 subsection 1 to 4 of the Pension Reform Act 2004 as repealed by PRA 2014.

    The Pension Reform Act 2004 as repealed by PRA 2014 stipulates that a contributor will be allowed to move his or her RSA account from one PFA to another in not more than once in a year.

    But the law is yet to be implemented by PenCom 14 years after the enactment of the PRA 2004.

    Section 13 states that subject to the guideline issued by the Commission, a holder of RSA maintained under the Act may not more than once in a year transfer his account from one PFA to another.

    Section 106 stipulates that an employee or beneficiary of a Retirement Savings Account (RSA), who is dissatisfied with a decision of the PFA or employer in respect of pension matters under this Bill, may request, in writing, that such decisions be reviewed by PenCom with a view to ensuring that such decision is made in accordance with the provisions of this Bill or any regulations made.

    It further stated that a copy of any request under subsection (1) shall be served on the relevant PFA or employee.

    The Commission shall in reviewing a request of a PFA or employer, conduct its proceedings in such a manner to avoid delay.

    Where either party is dissatisfied with the decision of the Commission on any matter referred to it, such party may refer the matter to arbitration in accordance with the Arbitration and Conciliation Act or to the National Industrial Court.

    Insider source, who spoke with journalists under the condition of anonymity, however, revealed that the Pension Application System (PASS) meant to digitalise the pension industry and allow the transfer window to be open has been put aside by the new administration of PenCom.

    One of the source said the transfer window is billed to commence on June 1, this year, but all the processes put in place to ensure that the window is open has been put away.

    He said the new management is considering starting the process all over again rather than continue with the processes that were on ground.

    Meanwhile, contributors and retirees have, however, cried out to the government to intervene and relieve them.

    A contributor, Mr Amadi lamented that his PFA has continued to serve him poorly.

    He said he wanted to change, but was trapped with the PFA as he was told that he will neither collect his contributions nor change to another PFA.

    Similarly, a retiree, Mrs Oladipo said her PFA refused to send her statement account, failed to transfer her to her chosen insurer for the annuity plan, which she opted for after every retirement on time.

    She believed that if retirees and contributors are allowed to change their PFAs to another, the PFAs will improve on their services, bearing in mind that they could be dump at anytime.

     

  • PenCom: No fund to pay 2017 pension

    PenCom: No fund to pay 2017 pension

    •Retirees demand payment

    The Federal Government is yet to release money for payment of pension benefits to its former workers who retired from March 2017, the National Pension Commission (PenCom) has said.

    Retirees under the Contributory Pension Scheme (CPS) across the country are demanding for their pension payment.

    The Commission’s Head of Corporate Communications, Peter Aghahowa, reacting to retirees’ agitations, said they would be paid as soon as the Federal Government releases money to the Commission.

    He, however, stated that the Federal Government has released money for pension payment to retirees, who retired between January to February 2017, adding that the Commission was prepared to pay the retirees few weeks from now.

    The Pension Reform Act 2014 as repealed by PRA 2004 established the CPS, whose objective is to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory, states and local governments or private sector receives his retirement benefits as and when  due.

    Section 11 subsection  6 states that any employer, who fails to deduct or remit the contributions within the time stipulated in addition to making remittance already due, be liable to a penalty to be stipulated by the Commission.

    Subsection 7 further states that the penalty shall not be less than 2 per cent of the total contribution that remains unpaid for each month or part of each month the default continue and the amount of the penalty shall be recoverable as a debt owed to the employee’s retirement savings account as the case may be.

    Meanwhile, in a letter by retirees under the auspices of the Association of Federal Contributory Scheme Pensioners, Oyo State chapter, to PenCom, which demanded to be paid their pension, they said the commission with the Federal Government had promised them prompt payment of pension immediately after retirement or at most, three months after.

    The retirees lamented that they have stopped paying  them upon retirement, noting that the bad old days of retirement is back.

    President of the Associationj, Chief Amao Shittu and its Secretary, Prince E.A. Akingbade, stated that the promise ought to be kept in order to preserve the life of pensioners and those of their family members and dependants.

     

     

  • Implement Minimum Pension Guarantee, group urges PenCom

    The Centre for Pension Right Advocacy (CPRA), has called on the National Pension Commission (PenCom), to put in place modalities for the full implementation of the Minimum Pension Guarantee in the Pension Enhancement Framework, which PenCom introduced recently.

    The group said the introduction of the Pension Framework by PenCom aimed at enhancing pension of those who are on Programmed Withdrawal under the Contributory Pension Scheme(CPS) might not meet the expectations of pensioners.

    The Group’s Executive Director, Ivor Takor, in a statement made available to reporters, however,  applauded the commission’s initiative to enhance pension.

    He noted that what had been introduced through the Framework was a palliative.

    Eaelier, PenCom said the move was to provide uniform modalities for the implementation of periodic pension enhancement for the affected pensioners, using the surpluses generated from the return on investment, and the Retirement Savings Account (RSA) balance as at December 31, 2016 as the basis of the enhancement.

    However, Takor said the initiation resolves around Programmed Withdrawal, arising from misinformation.

  • PenCom queries two PFAs

    PenCom queries two PFAs

    Two Pension Fund Administrators (PFAs) have been investigated by the regulatory authority, the National Pension Commission (PenCom) on the allegation of unjust termination of appointment of some workers and alleged untowards practices, The Nation has learnt.

    This was made known in the third quarter of 2016 Regulatory and Supervisory Activities report of the commission obtained by the newspaper.

    Although PenCom did not mention the name of the PFAs, it stated that it continued its consultative philosophy in regulating and supervising the industry.

    The commission said it also uncovered major issues from the review of the compliance reports forwarded by the operators during the quarter.

    They are un-credited pension contributions, delay in the payment of retirement benefits to the retirees.

    There was also the issue of delay in the transfer of approved Nigeria Social Insurance Trust Fund (NSITF) Contributors’ Balances to their Retirement Savings Account (RSAs).

    According to the commission, the risk-based examination approach was implemented as a way of promoting transparency and providing early warning signals as well as encourage pension operators to regularly self-evaluate their positions.

    The report read: “The commission had conducted Routine Examinations on  nine operators during the third quarter of 2016.

    “During the quarter under review, two target examinations were conducted on two PFAs on the allegation of unjust termination of appointment of some staff and alleged wanton practices.

    “The commission had forwarded letters to the operators involved on the issues and had been working towards resolving the issues. In addition, some of the issues were also raised and discussed with the operators during the on-site examination’’.

     

  • PenCom mulls pension increase

    PenCom mulls pension increase

    •33% arrears for CPS pensioners

    The National Pension Commission (PenCom) will ensure that Federal Government pensioners under the Contributory Pension Scheme (CPS) have their pensions increased every five years or when salaries are increased as stipulated in Section 173 of the 1999 Constitution, The Nation has learnt.

    The pensioners will also receive 33 per cent increase just as delays in pension payment to new retirees under the new scheme will stop.

    A source at the Commission, who spoke on condition of anonymity, said only pensioners under the old scheme, Defined Benefit Scheme (DBS), were enjoying this privilege.

    The source said the Commission has met President Muhammadu Buhari on the matter with a view to rectifying the shortcoming.

    He said: “There is a major issue bordering on pensioners under the CPS before the Commission and the Presidency. Under Section 173 of the 1999 Constitution, it is stpulated that pension should be increased every five years.

    “When the new scheme commenced in 2007 with movement of workers into the scheme, there was salary increase. Corresponding increase was also made later. Pensions of pensioners under the DBS were increased, but those under the CPS were not.

    “The issue of 33 per cent will also be addressed. The Commission wants CPS pensioners to also enjoy the 33 per cent, the same way DBS pensioners are enjoying it.

    He said Buhari was alarmed on hearing the discrepancies and asked the Commission to write a formal letter to the Presidency.

    “The president also directed the Ministry of Finance to follow up the request for it to be granted. He has asked for reasons for the delays in pension benefits to retirees after retirement. As a result of this, the government is presently paying accrued benefits and the payments to pensioners will now be regular,” the source added.

    PenCom has, in recent times, been working to administratively improve on the benefits of the CPS.

    Its Acting Director-General, Aisha Dahir–Umar in a paper presentation on the scheme to Senate Committee on Pension, had said: “As it is the case with every human endeavour, the pension reform had its own share of challenges.

    “These challenges, however, could all be addressed within the framework of the CPS. Indeed, there had been many challenges that were over years addressed administratively by PenCom and recently through legislative action under the PRA 2014.

    “There is, therefore, a dire need to consolidate the gains of the CPS and avoid policy reversals as this would undermine public confidence and negatively impact the Nigerian economy, Federal Government’s change agenda and economic recovery plans.”

     

  • Retirees to get increment on monthly pension

    Retirees to get increment on monthly pension

    • PenCom rejects proposed 75% pension lump sum Bill

    About 70 per cent of retirees receiving monthly pension through the Programme Withdrawal mode will from this month receive an increase in their monthly pension payments, The Nation has learnt.

    This is coming on the heels of findings by the National Pension Commission (PenCom), that earnings of retirees under the Contributory Pension Scheme (CPS) have grown more, based on investment of their pension fund made by their various Pension Fund Administrators (PFAs).

    As a result, the commission sought approval from the Presidency to increase pensions of retirees in the country.

    It was also gathered that PenCom has kicked against Senator Wammako’s proposed “Bill to Amend the Pension Reform Act (PRA) 2014 to Provide for Definite Percentage a Retiree Can Withdraw from His RSA and or Other Matters Related Thereto.”

    PenCom’s Acting Director-General, Aisha Dahir–Umar, affirmed the pension increase plan in a memo submitted by PenCom to the Senate Committee on Establishment and Public Service at the Public Hearing made available to journalists in Lagos.

    She said: “Indeed, the Commission has just concluded an exercise to increase the monthly pensions of all retirees on Programme Withdrawal due to the income earned on investing their pension assets. The outcome of this exercise showed that 30 per cent of the retirees would not benefit from the increase due to insignificant income earned on the small balances in their respective RSAs.

    “The payment of enhanced pension would apply only to those retirees that left reasonable balances in their RSA, which has earned income over time. The payment will commence in December, 2017. This indicates that indeed the return on investment of pension fund is being utilised for the benefit of RSA holders.”

    On the Bill seeking for 75 per cent lump sum, Aisha Dahir–Umar said: “Section 2 (b) of the Bill  seeks to amend Section 7(1) of the PRA 2014 by inserting the words “of up to 75 per cent” immediately after the words “a lump sum.”

    She said the import of the proposed amendment, is to allow the retirees of all categories to withdraw up to 75 per cent of the balance in their Retirement Savings Account (RSAs) as lump sum, irrespective of whether or not the balance would be sufficient to procure a programmed fund withdrawals, or annuity for life.

    She pointed out that the commission considers the proposal for payment of 75 per cent of RSA balance as lump sum to a retiree, as faulty due to many reasons.

    “The proposal is based on a misunderstanding of the concept of pension payment under the CPS. It is trite that lump sum should not be fixed. Rather, what should be implemented is a minimum replacement ratio as monthly pensions. Accordingly, the retiree should keep an amount of monthly pension as replacement of salary over an expected life span. Whatever remains over that amount, may be taken as lump sum. The current replacement ratio under the CPS is 50 per cent of last pay by virtue of the provisions of the PRA 2014, and regulations issued by the Commission.

    “It is noted that one of the objectives of the CPS is to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age. The proposed amendment would mean leaving only 25 per cent to be spread over lifespan of retiree, which may be longer than 20 years, thus giving a meagre monthly pensions below the current replacement ratio of a minimum of 50 per cent of last pay. It is doubtful if the 25 per cent balance in a retiree’s RSA, after deduction of 75 per cent lump sum, would, if spread through the retiree’s expected life span, be adequate to reasonably cater for his livelihood during old age. This proposal is never the case in ALL jurisdictions operating the Contributory Pension Scheme the world over.”

    She noted that rather than canvass for payment of 75 per cent lump sum, we believe that the remedy lies in the implementation of the provision of Section 4(4)(a) of the PRA, 2014 dealing with payment of additional benefits upon retirement.”

    According to her, it provides that “notwithstanding any of the provisions of this Act, an employer may then agree on payment of additional benefits to the employee upon retirement”. This would enhance the amount that employees may receive as lump sum upon their retirement.

    She submitted that the proposed Bill appears to undermine the essence of pensions as enshrined in the Constitution of the Federal Republic of Nigeria 1999 (as amended), as it would deny the retirees an adequate periodic income in retirement.

    She urged the Senate Committee to disregard the Bill and, instead, seek for the implementation of the provision of Section 4(4)(a) of the PRA 2014 on the payment of additional benefits by the employer as well as the institution of the Zero Pillar pension in Nigeria.

  • SEC partners CBN, NIBBS to eliminate fraudulent investment outfits

    SEC partners CBN, NIBBS to eliminate fraudulent investment outfits

    The Securities and Exchange Commission ( SEC ) on Wednesday said that the commission was partnering with other regulatory bodies to get rid of fraudulent investment outfits in the Nigerian capital market to boost investors’ confidence.

    Mr Mounir Gwarzo stated this at the 2017 World Savings Day and Financial Literacy Week held in Lagos.

    Gwarzo said that the commission was working with other regulatory bodies to combat proliferation of fraudulent investment outfit in the nation’s capital market.

    Gwarzo, who was represented by Mr Henry Rowland, Director Investment Services, SEC, stated that the commission was committed to ensure zero tolerance to fraudulent activities in the market.

    “We are partnering with CBN, NIBBS, PENCOM, CSCS and other regulatory bodies to combat the negative effect of fraudulent investment outfit in the market.”

    He, however, stressed the need for prospective investors to seek the help of financial advisers while investing in the capital market to confirm those financial outfits that were registered with the commission.

    According to him, these advisers would help ascertain the true position of any investment outfit before any financial transaction can be carried out.

    On the importance of savings, he said that savings played an important role in determining the one’s future and urged students and youths to embrace savings culture.

    Mrs Oluwatoyin Sanni, the Chairperson, Financial Literacy Committee, called on investors to ensure that the companies they want to buy shares from file returns and records of their performance, profitability and dividend payment on  quarterly basis.

    “Prospective investors must check the quality of board of companies, the directors, the profile of the chairman and other corporate governance issues relating to the firm.

    “Again, check the business model of the company you want to invest in, how does the business plan work, how does the plan translate to profit.

    Look at the past, present and future of the company if the business lines, products and services is relevant in today’s world,” Sanni said.

    NAN

  • PenCom: PRA 2014 review ’ll scare foreign investors

    PenCom: PRA 2014 review ’ll scare foreign investors

    A mendment to the Pension Reform (PRA) Act 2014 will scare foreign investors from investing in the pension industry and the country, the National Pension Commission (PenCom), has said.

    This is arising from calls for exemption of some agencies of Government from Contributory Pension Scheme (CPS).

    Acting Director-General, Mrs. Aisha Dahir-Umar who made this known while speaking with journalists in Abuja said any policy somersault in the industry would result in loss of confidence in the pension reform and other reform initiatives of government.

    She said if the amendment is allowed, the growing culture of national savings built within the last decade would be destroyed.

    She  stated that due to the successful implementation of the pension reform, the discipline with which the industry players have been discharging their responsibilities and the resultant impact on the Nigerian economy, foreign investors have invested heavily in some major Pension Fund Administrators.

    She said: “There are still some expressions of interest by foreign investors to obtain stakes in the pension administration business in Nigeria.