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Tag: pension fund

  • 2025 Pension Fund Administrators Games begin in Abuja Nov. 25

    2025 Pension Fund Administrators Games begin in Abuja Nov. 25

    No fewer than ten top Pension Fund Administrators (PFAs) will compete in the 2025 PFA Games as the race for prestige, pride and corporate supremacy would ignite Abuja from Tuesday, November 25 to Saturday, November 29.

    Over five electrifying days, athletes will square off in Football (7/9-a-side), Co-Ed Volleyball, Table Tennis, Snooker, Scrabble, Chess, Team-Bonding Activities, and eSports (FIFA) — a full-scale showcase of physical grit, mental sharpness, and team spirit.

    Read Also: Play-Offs:  NFF tips Super Eagles to subdue Panthers  after pay dispute

    At the  draw ceremony at the weekend, organisers reiterated strict rules: no NYSC Corps members or interns will be allowed to participate. Staff verification will be carried out via RSA PIN to ensure integrity across all events.

    Speaking at the event, Promise Onyedikachi Moses, Executive Assistant at Turf Arena Sports Centre (TASC), said the 2025 edition is designed to raise the bar.

     “The camaraderie and family atmosphere at the last edition were beautiful. This year, we’re adding new twists to make the games more competitive, engaging and memorable.”

    From the contenders’ corner, confidence is already running high.

    Trustfund Pension’s   Modestus Amaefule, champions in 2023, made their intentions clear: “We’re here to reclaim the title. With our preparation and management support, we are the team to beat.”

    But they face stiff resistance from FCMB Pension, the reigning champions and two-time winners (2022 & 2024). Representing them,  Isah Kabir Umar said: “We’re not relinquishing the title. We remain relentless, focused, and far from complacent.”

    The challenge is also coming from PenCom, whose representative, Najib Shehu, boldly declared: “To win, we must beat everyone — and we’re ready. Our staff made sacrifices to be here, not to make up the numbers but to compete fiercely.”

    FCMB Pension won the 2024 edition after a dramatic five-day battle in Abuja. With rivalries renewed and ambitions soaring, the 2025 PFA Games are shaping up to be the most intense edition yet.

  • Roles of Pension Fund custodians in safe custody of Pension Funds, assets

    Roles of Pension Fund custodians in safe custody of Pension Funds, assets

    The birth of the Pension Reform Act (PRA), 2004, which introduced the Contributory Pension Scheme (CPS) for both the Public and Private Sector employees, was a direct outcome of the efforts to address the challenges that bedevilled the various pension schemes in Nigeria before 2004.

    These challenges included unsustainable outstanding pension liabilities, weak and inefficient pension administration, and low coverage of workers in the private sector.

    Establishing a supervisory and regulatory framework superintended by the National Pension Commission and licensing Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) were essential steps in implementing the CPS. 

    The main functions of the PFA are to open Retirement Savings Accounts (RSA) for employees, invest and manage pension fund assets, payment of retirement benefits and accounting for all transactions relating to the pension funds under their management.

    The PFCs, on the other hand, are responsible for keeping safe custody of pension assets on trust on behalf of contributors.

    It follows therefore, that PFCs are essential to the safety of pension assets with various functions under the CPS.

    Custodian of Pension Funds and Assets

    PFCS are solely responsible for keeping the pension funds and assets in safe custody on behalf of the PFAs and the trust of Retirement Account Savings (RSA) holders. At this juncture, it is essential to state that PFCs undergo rigorous licensing requirements issued by PenCom before they are licensed as pension custodians.

    Receiving Pension Contributions

    PFCs receive the total monthly contributions that are deducted and remitted by employers for the credit of the RSA of the employee. PFCs are mandated to inform the PFA of the receipt of such contributions within 24 hours.

    Read Also: PenOp unveils pension fund managers’ sentiment report

    Settlement and Clearing on Behalf of the PFAs

    PFCs are responsible for executing investment decisions on behalf of the PFAs. When a PFA decides to invest in a particular asset, it advises the PFC to make payment to the counterparty. In addition, where a PFA chooses to sell investments to realise a profit, the PFC will receive the consideration on behalf of the PFA. Furthermore, the PFC is also responsible for benefit payments to beneficiaries as advised by the PFA, accompanied by the requisite approval of PenCom.

    Corporate Action Administration and Proxy Voting

    The PFC is responsible for protecting the interests of the PFA in corporate actions declared by companies in which pension funds are invested. PFCs advise PFAs on Annual General Meetings of such companies, represent the PFA at such AGMs, and ensure that PFAs’ voting instructions are carried out.

    Income Collection

    The PFC is responsible for collecting all incomes from pension fund investments made by the PFA. The PFC is expected to calculate, collect, and track all outstanding income on behalf of the PFA. Regarding fixed-income investments such as time deposits with banks, FGN and Corporate bonds, the PFC ensures that interest and coupon incomes are accrued daily and redeemed as and when due. It also collects dividends when declared.

    Reporting to PenCom and the PFAs

    The PFCs maintain proper books of account and render periodic returns to PenCom, which ensures adequate supervision. In addition, the PFC also renders reports to the PFA on the custodial services it provides. These reports enable a reconciliation to be carried out between the records of both operators.

    It is important to note that the PFCs are the only licensed bodies that can perform the functions stated above under the strict supervision and monitoring of PenCom. Currently, there are three licensed Pension Fund Custodians in the pension industry: First Pension Custodian, UBA Pension Custodian and Zenith Pension Custodian.

    The structures put in place to ensure the safety of pension assets through the PFCs have re-defined Nigeria’s pension landscape.

     As of 30 September 2024, registered contributors have grown to over 10 million. Furthermore, the total pension fund assets under the CPS have grown to N21.379 trillion.

    • Culled from PenCom on behalf of PFAs
  • Nigerians must say no to government’s intent to borrow from Pension Fund

    Nigerians must say no to government’s intent to borrow from Pension Fund

    I know government was targeting pension funds when it moved against Pencom. Instead of increasing the pension of retired workers in these difficult times,  the best the government can do is  deep its hands in the purse of poor pensioners. Soon and very soon, there will not be enough money to fund the pension scheme and pensioners will be back to square one” – Esther Bolade on Facebook.

    Only this past week, President Bola Ahmed Tinubu acted the statesman, once again, when he stopped the commencement of the harebrained cybersecurity levy which the National Security Adviser, not the Central Bank of Nigeria as was initially wrongly believed, was eagerly trying to inflict on all Nigerians, even those now living on palliatives.

    But here we are again, this week, with another of their endless schemes targeted at  poor Nigerians.

    Wale Edun, the Finance and Coordinating Minister of the Economy, at the end of last week’s meeting of the Federal Executive meeting on Tuesday, 14 May, announced to Villa correspondents, “a move by the Federal Government to rev up economic growth by unlocking N20 trillion from the nation’s pension funds and other funds to finance critical infrastructure projects across the country”.

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    These are like the same sweet words with which President Muhammadu Buhari sent us all into slumber, amassed tonnes of  loans from China, and built a Nigerian railway from Kano all the way to Marafi in Niger Republic so that, in his words, “the people of Niger Republic will enjoy affordable transportation”, even if today Nigeria alone is encumbered with the debt.

    As should be expected,  Nigerians are already talking, warning government not to dare touch that fund; that sole remaining hope of millions of Nigerians who have nowhere else to turn in an era of a rampaging cost of living palaver.

    The following intervention accurately, even if not completely, sums up the umbrage of Nigerians at the mere suggestion:

    “My attention has been drawn to a disturbing disclosure by the Finance Minister and Coordinating Minister of the Economy, Wale Edun, as he addressed State House correspondents after the Federal Executive Council (FEC) meeting at the Presidential Villa on Tuesday, 14 May.

    There is, according to the Minister, a move by the Federal Government to rev up economic growth by unlocking N20 trillion from the nation’s pension funds and other funds to finance critical infrastructure projects across the country. The Minister has indicated that although “the initiative is expected to attract foreign investment interest over time”, domestic savings are his ‘immediate focus’ for now.

    He provided no useful details, such as the percentage of the funds to be mopped up from the Pension Funds, for example. Even at that, this move must be halted immediately!  It is a misguided initiative that could lead to disastrous consequences on the lives of Nigeria’s hardworking men and women who toiled and saved and who now survive on their pensions having retired from service.

    It is another attempt to perpetrate illegality by the Federal Government. The government must be cautioned to act strictly within the provisions of the Pension Reform Act of 2014 (PRA 2014), along with the revised Regulation on Investment of Pension Assets issued by the National Pension Commission (PenCom).

    In particular, the Federal Government must not act contrary to the provisions of the extant Regulation on  investment limits to wit: Pension Funds can invest no more than 5% of total pension funds’ assets in infrastructure investments. I note that as of December 2023, total pension funds assets were approximately N18 Trillion, of which 75% of these  are investments in FGN Securities.

    There is NO free Pension Funds that is more than 5% of the total value of the nation’s pension fund for Mr. Edun to fiddle with. 

    There are no easy ways for Mr. Edun to address the challenges of funding infrastructure development in Nigeria. He can’t cut corners. He must introduce the necessary reforms to restore investor confidence in the Nigerian economy and to leverage private resources, skills, and technology”.

    Although the above quote almost says it all, there are many reasons Nigerians must tell the Tinubu government to simply perish the mere thought of tampering with the fund.

    For one thing, the minister did not come clean with Nigerians on the real reason for this proposed foray into a fund which for the sanity, if not the very life, of millions of Nigerian workers, active and retired, must be strictly protected from the government. It appears to be the same reason several officials of this administration are coming up with all manner of taxes and levies on the citizenry.

    However, what he failed to tell Nigerians, both the IMF and the Bank of America have since done when IMF, in a release corroborated by the latter, released the following statement:

    “Nigeria’s reintroduction of  fuel subsidy is expected to guzzle almost half of its projected oil revenue this year.

    The implicit subsidy will cost Africa’s largest crude producer an estimated 8.43 trillion naira ($5.9 billion) of its projected 17.7 trillion naira of oil revenue for 2024″.

    The above is why Mr Edun wants to borrow from a fund that must always be kept far from  government because the history of the unreliability of successive Nigerian federal government is unmatched.

    Wrote Jide Oluwajuyitan only this past week in his column in The Nation:”But in truth, no one can blame incredulous Nigerians. They have in the past been serially betrayed by false prophets. Prime Minister Tafawa Balewa adored for his simplicity and golden voice betrayed promise of nationhood of “Our dear native land where tribe and tongue may differ but in brotherhood we stand with our flag serving as a symbol that truth and justice reign”. Aguiyi Ironsi was a master of mischief and intrigue. Gowon thought he was fighting a war to keep Nigeria one. Murtala Mohammed and Obasanjo destroyed the foundation of society – the academia and bureaucracy.  Babangida laid the foundation for our current socio-economic travails by opening our country to the labour of other nations.  Abacha, besides stealing the country blind waged a five-year war against us. Obasanjo, in spite of his “I only listen to God and not advisers” turned out to be obsessed by term elongation. Buhari, a prophet worshipped by some unquestioning 12 million ‘talakawas’ from the north left Nigeria worse than he met it because of his cronyism and provincialism.The paradox however is that despite serial betrayal, our survival as an organised society depends on politician’s versatility, brinksmanship and skilful exploitation of man’s infirmities. Who else can reconcile private affluence with public squalor or give ‘hope which rises eternal in the human breast’ but the politician”.

    If Oluwajuyitan wrote that of past governments, it is a truism that government is a continuum and there’s no reason to believe that with regard to reliability, Tinubu’s government will be any different from its forebears.

    Without a doubt what PBAT is presently dealing with is largely the consequences of President Muhammadu Buhari’s profligate government, but unfortunately, the Tinubu government itself has demonstrated only a little  difference. Otherwise, how come it thought nothing of wasting about N40B buying exotic cars for a people already being extravagantly overpaid for a job that should ideally have been part- time, and in a single chamber?

    Thank God a change to a parliamentary system is under serious consideration. For one thing, that will not have within it persons who are under serious investigation by anti- corruption agencies especially for fiddling with their state’s finances.

    Still intent on sending us to sleep with sweet  words, Wale Edun intoned, “the Tinubu government has

    “unveiled a strategic plan to harness the N20 trillion pension fund and other locally available resources for infrastructure development in Nigeria”. As shown above, however, Nigerian history, ancient and modern, has taught us that  these are nothing but mere words.

    We must, therefore, all in one voice, rise and stand ramrod against government tampering, in any manner or shape, with what remains the last hope of millions of Nigerians.

    It is,  therefore, apposite to repeat that the minister must brace up and “introduce the necessary reforms to restore investor confidence in the Nigerian economy”, rather than eye a pension fund which should be treated as sacred for the well- being of the millions whose entire livelihood depend upon its invulnerability.

  • ‘Pension fund managers to invest more in shares’

    ‘Pension fund managers to invest more in shares’

    Pension fund administrators (PFAs) now have opportunities to deepen their participation at the equities market with the launch of a market gauge to track pension investments at the market.

    Acting Chief Executive Officer, Nigerian Exchange (NGX), Mr. Jude Chiemeka, yesterday said the launch of the NGX Pension Broad Index enhances opportunities for pension investments as the index provides a broader benchmark for tracking equities investment by the pension industry.

    He said the collaboration between the NGX and National Pension Commission (PenCom) underlined shared commitment to create values for investors.

    According to him, the NGX Pension Broad Index is poised to play a pivotal role in guiding investment decisions and enhancing the overall stability of Nigeria’s pension industry.

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    “The collaboration between NGX and PenCom underscores a shared commitment to fostering transparency, compliance, and growth within the Nigerian capital market. I am pleased with the approval granted by the National Pension Commission for the NGX Pension Broad Index to serve as the benchmark index for Nigeria’s Pension industry equity investment portfolios. This further solidifies the credibility of the index as a reliable yardstick for evaluating the equity performance of pension industry investments,” Chiemeka said.

    The NGX Pension Broad Index is designed to track the performance of equity securities that adhere strictly to the profitability and dividend payment criteria, along with other parameters specifically tailored to the pension industry.

    With an all-encompassing approach, the index imposes no limits or caps on the number of stocks it can include as constituents. Currently featuring 84 equities, the NGX Pension Broad Index aligns with the provisions of the Pension Reform Act of 2014 and the Amended Regulation on the Investment of Pension Fund Assets proposed by PenCom.

    Chiemeka noted that the NGX Pension Broad Index has exhibited robust performance since its launch last year as the index stands out for its well-diversified composition, encompassing high-quality stocks across key sectors, including banking, insurance, oil and gas, consumer goods and industrial goods.

  • Pension fund equals 7.4% of GDP at N8.63tr

    Pension fund assets have grown to N8.63 trillion – as at end of December, last year. It grew  with an average monthly contribution of N29.15 billion, according to the Acting Director-General, National Pension Commission (PenCOM), Mrs Aisha Dahir-Umar.

    Speaking while receiving a Memorandum from the House of Representatives Ad-Hoc Committee on PenCom in Abuja at the weekend, she said total pension assets are equivalent to 7.40 per cent of the Rebased Gross Domestic Product (GDP).

    She said the number of registered contributors also grew to 8.41 million as at December last year, representing about 12.09 per cent of the country’s working population and 4.29 per cent of total population.

    Mrs Dahir-Umar said the pool of pension funds generated by the Contributory Pension Scheme (CPS) has helped in deepening the financial sector and providing a platform for attaining strategic programmes of government in infrastructure, housing and the development of the real sector of the economy.

    She further said the CPS has simplified the process of payment of retirement benefits through the issuance of effective regulations and guidelines for accessing such benefits.

    She said: “Over 260,808 persons had retired under the Scheme as at December, 2018 and are currently receiving pensions as and when due with an average monthly pension payment of N10.18 billion as at the same period.

    “The pension reform has gained public confidence and acceptability within the short period of its implementation. The private sector, which hitherto was apprehensive of the CPS as a ploy by the public sector to raise funds to address its huge pension liabilities, has come to accept and is religiously implementing the reform. To date, about 200,000 private sector employers of labour are implementing the CPS and have contributed about 60 per cent of the total pension fund assets. The CPS has also introduced transparency and integrity in the pension administration system in Nigeria. From inception of the reform to date, there had not been a single incidence of fraud or mismanagement of the pension funds and assets under the scheme.

    “Attracted by the enormous benefits of the Scheme, 24 states of the federation and the FCT had enacted the laws on the CPS and are at different stages of implementation; six states were at the bill stage on the CPS, three states have adopted the Contributory Defined Benefit Scheme (CDBS), two states are drafting bills to introduce CDBS, while one state has continued with the Defined Scheme as at December 2018.’’

  • Pension fund reaches N8.34tr

    • PFAs invest 70% in Fed Govt securities

    Pension fund assets have risen to N8.34 trillion as at September 30, 2018, a report by the National Pension Commission (PenCom) has shown.

    The report titled: Pension Fund Summary September 2018, stated that the Federal Government has however continued to take advantage of the fund as Pension Fund Administrators (PFAs) invested N5.9 trillion in Federal Government securities, representing 70.7 per cent of the total fund.

    However, PFAs invested the remaining 29.3 per cent of the total fund in asset classes such as Domestic Ordinary Shares, Foreign Ordinary Shares, State Government Securities, Corporate Bonds, Supra-National Bonds, Local Money Market, Foreign Money Market, Mutual Funds, Real Estate, Private Equities, Infrastructure Fund, and Cash and other Assets.

    With the the largest chunk of the fund invested in FGN Securities, the PFAs invested N845 billion in Local Money Market representing 10.17 per cent; N602 billion in Domestic Ordinary Shares, representing 7.21 per cent; N427,7 billion in Corporate Debt Securities, representing 5.13 per cent; and N225 billion in Real Estate Properties, representing 2.7 per cent.

    Meanwhile, the PFAs’ investment in State Government Securities stood at N152 billion, representing 1.83 per cent; Foreign Ordinary Shares N64 billion, representing 0.77 per cent; cash and Other Assets N43 billion representing, 0.52 per cent; Private Equites Fund N40 billion representing 0.48 per cent; Mutual Funds N17.8 billion and Infrastructure Fund N17 billion, both representing 0.21 per cent; while Supra National Bonds got the least of N6 billion representing 0.07 per cent.

     

     

     

     

     

     

     

     

     

     

     

  • Pension fund growth declines by 2.06% in Q2

    Nigeria’s pension fund assets growth has declined by 2.06 per cent in the second quarter (Q2) of this year.

    According to a new report compiled by the National Pension Commission (PenCom), it  declined from 5.70 per cent  recorded in Q1.

    The report, which was obtained at the weekend in Lagos, showed that the total value of pension fund assets based on unaudited valuation reports grew from  N7.94 trillion as at March 31 to N8.23 trillion as at June 30, representing a growth of 3.64 per cent.

    This indicated a decreased growth rate compared to the 5.70 per cent for the previous quarter.

    The breakdown of the pension assets investments by scheme type showed that as at Q2, the Retirement Savings Account (RSA) active fund had the largest portfolio of N5.57 trillion.

    This represents 67.69 per cent of the total assets under management.

    However, Closed Pension Fund Administrators (CPFAs) and Approved Existing Scheme (AESs) assets stood at N1.09 trillion and N947.92 billion, representing 13.20 per cent and 11.51 per cent of the total assets under management respectively.

    The RSA Retiree Fund stood at N625.27 billion representing 7.60 per cent of the total assets.

    A further breakdown of the pension industry portfolio indicated that the pension fund assets were mainly invested in Federal Government Securities, with allocation of 70.75 per cent of total pension assets under management.

    While 49.08 per cent of the total fund was invested in FGN Bonds, 20.76 per cent was invested in Treasury Bills, 0.10 per cent in Agency Bonds, 0.71 per cent in Sukuk Bonds and 0.09 per cent in Green Bonds.

    This was slightly higher than the 70.39 per cent recorded in Q2. The increase in the value of Bonds was partly due to new investments and accrued coupons.

    The reports also showed that the comparative pension industry portfolio for the period ended June 30 and March 31 this year as well as the variance between both periods.

  • ‘Pension fund reduces old age poverty’

    Mrs. Aisha Dahir-Umar, the Acting Director-General, National Pension Commission, in this In this interview with Moses Emorinken , she speaks on the contributory pension scheme and other related issues. Excerpts:

    As at the end of May 2018, PenCom’s total pension fund assets in the country was over N8trillion. What is the implication of this for the pensions industry and the economy at large?

    It is worthy to note that the N8.14 trillion pension fund assets are being managed by the Pension Fund Administrators (PFAs) and kept in safe custody by the Pension Fund Custodians (PFCs). However, all investments are conducted based on the Investment Regulations issued by PenCom, which generally regulates and supervises to ensure safety and fair returns. As rightly noted, there are significant implications of these pension fund assets for the stakeholders in the pension industry and the Nigerian economy. Some of the key implications are as follows:

    The N8.14 trillion pension assets as at the end of May, 2018 are available to fund retirees pension obligations as and when due. This implies that the Contributory Pension Scheme (CPS) is fully funded unlike the old Defined Benefits Scheme, which was dependent on budgetary allocations for payment of pensions. Consequently, it contributes to the fulfillment of the first Sustainable Development Goal by reducing old age poverty in Nigeria.

    It also represents an unprecedented accumulation of huge investible funds available for economic development of the nation. However, for reasons of safety, these investments are allowed in structured outlets such as quoted equities, bonds, money market instruments, infrastructure funds, private equity, etc. While the non-availability of these products has limited pension funds participation, there are some recent positive developments. Pension funds invested over N50 billion in the 1st FGN N100 billion Sukuk issued in September, 2017. The proceeds of the Sukuk are being deployed to the construction and rehabilitation of some major roads in the country. Furthermore, pension funds invested about N7 billion in the 1stN10.69Billion 5-Year Sovereign Green Bond in December 2017, to fund some environmentally compliant renewable energy projects. There are also other impact investments in infrastructure and private equity, amongst others.

    The pension fund assets are contributing about seven percent to the Nigerian Gross Domestic Product (GDP). This implies that about 7 percent of the Nigerian economic growth is driven by the pension fund asset.

    How does the newly revised fee structure for the pension industry increase the effectiveness and productivity of the industry?

    The revised fees structure was introduced to align with the newly established Multi-Fund Structure for RSA Funds as well as promote a low fees regime for the pension industry. This is in line with one of the pension industry’s goals of providing a least cost structure for pension assets.

    With regards to PenCom’s initiative to develop a workable guideline to allow Retirement Savings Account (RSA) holders to access part of their pension contribution for mortgage financing. How far has your Commission gone in this regard?

    The Commission, in drafting the Pension Reform Act (PRA) 2014, introduced a new section 89(2) with the aim of enabling contributors own homes through mortgages. Section 89(2) of the PRA 2014, states that “Notwithstanding the provision of sub-section (1)(c) of this section, a Pension Fund Administrator may, subject to guidelines issued by the Commission, apply a percentage in the retirement savings account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account.

    Consequently, draft Guidelines were developed and exposed to stakeholders in 2015 based on a model that allows contributors to use a portion of their RSA balance as equity contribution for a mortgage loan given by a Primary Mortgage Institution (PMI). On exposing the draft Guidelines to relevant stakeholders for their comments, most of them expressed concerns about the huge possibility of misapplication / diversion of these funds, other than for the purpose of obtaining a mortgage to buy their homes.

    Accordingly, the initial draft guidelines were stepped down and new guidelines are being developed to align with on-going plans by the Central bank of Nigeria (CBN) to establish a Mortgage Guarantee Company. The new guidelines are being finalised and will be disclosed shortly for comments by stakeholders prior to final approvals and implementation.

    What are the strategies and plans that the Commission is putting in place to make pension administration transparent and seamless bearing in mind some complaints about mismanagement and errors by some Pension Fund Administrators (PFA) and Pension Fund Custodians (PFCs)?

    The need for improved service delivery by PFAs is of paramount importance to the Commission. This is because the overall success of the Pension Reform Act (PRA) 2014 is largely dependent on effective and efficient customer service delivery by the PFAs. The Commission has recognised the need for a holistic approach to make pension administration transparent and seamless which include:

    Why do retirees have to sometimes wait as long as two years before getting their gratuity? Some retirees had died before their gratuities were paid because they lacked necessary funds to meet their daily obligations, including medical expenses?

    We wish to explain that payment of pension benefit under the Contributory Pension Scheme is based on the balance on the retirees’ Retirement Savings Account (RSA) upon retirement. The components of the RSA/Retirement Benefit include Accrued Right, Monthly Contributions and Accrued Investment Income. All these have to be consolidated prior to payment of the benefits.

    It should be noted that in the case of the Treasury Funded MDA’s retirees, the accrued rights represent benefits relating to their past service up to June 25, 2004 which has to be redeemed and paid into their RSA in line with Section 15 1(a) of PRA 2014. Consequently, the Commission each year conducts Verification and Enrolment Exercise to obtain data and determine the accrued rights of FGN employees of the Treasury Funded MDA’s who would retire the following year. The amount of accrued rights determined is submitted for budgetary preparation and appropriation. This arrangement provided for seamless payment of accrued rights as amounts due to retirees for each month were released by the Federal Government. However, in the last two years, budgetary funding/releases had not been regular and adequate for the payment of the Accrued Rights falling due in the year due to decline in government revenue. As a result, there had been delays in the payment of pension benefits to FGN retirees.

    The Commission had developed guidelines for the payment of benefits of Professors and Political Appointees (Permanent Secretaries and Head of Service) who retire with full benefits in line with provisions of Sections 6(2) and 7(1) (D), (E) of the Pension Reform Act (PRA) 2014. The guidelines had been exposed to stakeholder and approved by Management.

    Following from the above, the Commission entered into an arrangement with PTAD in accordance with the approval of the Head of Civil Service of the Federation and the Honourable Minister of Finance to commence the payment of the shortfall in the retirement benefits of Political Appointees in 2016 (including arrears). This MoU expired in December 2017.

    Another MoU was signed by the Commission with PTAD to continue the payment of the shortfall in retirement benefits of Heads of Service and Permanent Secretaries from January 2018 until the passing and implementation of the 2018 budget when the Commission will be in a position to take over the payment.

    Meanwhile, the Commission had made provision for the payment of Political Appointees in the 2018 budget which had been approved. Implementation will commence as soon as funding of the shortfall of the benefits of the Political Appointees is received.

    Also, Budget Office of the Federation had been requested to create a separate expenditure sub-head for the payment and open a dedicated account with the Central Bank of Nigeria (CBN) into which the releases of the appropriated funds will be remitted.

    Subsequently, on monthly basis, funds released into the dedicated account with the CBN will be transferred to the PFAs to enable the PFAs pay to bank accounts of the political appointees.

    Can you tell us about the proposed Micro Pension Plan for those in the informal sector, and also how you intend to regulate the process to ensure that stakeholders in the sector get maximum utility by embracing the plan?

    The Pension Reform Act under Section 2(3) provides that employees of organizations with less than three employees as well as self-employed persons shall be entitled to participate in the Contributory Pension Scheme in accordance with Guidelines issued by the Commission. The category of employees referred to under Section 2(3) of Pension Reform Act 2014 are not covered by any pension scheme due to the nature of their employment, therefore, the Commission considered it necessary to develop the Micro Pension Plan to cover this category of employees.

    The Micro Pension Plan is an arrangement for the provision of pension to the self-employed and persons operating in the informal sector through the Contributory Pension Scheme.  This means that traders, stylists, farmers as well as self-employed professionals operating on their own such as accountants, architects, lawyers, artisans and others can contribute towards having pension after retirement.

    The Commission is yet to roll out the Micro Pension plan because it wants to ensure that it provides a policy that would ensure that the needed flexibility in the system is put in place for these categories of persons; contributors get optimal return on investment; and the protection of the rights of contributors.

    The Commission has released the draft guidelines and framework on the Micro Pension Plan to the Licensed Pension Operators and the various stakeholders.

    Feedback from the stakeholders and operators have been received, considered and incorporated. The final guidelines for the Micro Pension Plan (MPP) will be released as soon as they are approved.

    Meanwhile, the Commission is developing the required ICT infrastructure to drive the process and this is critical to the success of implementing the Micro Pension Plan. It is envisaged that before the year ends, the plan will commence.

    Data plays a significant role not only for the nation, but in enabling your Commission make critical decisions for the overall benefit of stakeholders in your industry and the country. How is your Commission partnering with data collection agencies like the National Identity Management Commission (NIMC)?

    The Commission has been collaborating with the National Identity Management Commission (NIMC) towards the implementation of the Presidential directive of 17 December 2013, to all biometric data collecting Ministries, Department and Agencies (MDAs) to harmonise and integrate their databases with that of the National Identity Database (NID), maintained by NIMC.

    However, to harmonise our database with that of NIMC, as required by the NIMC Act, the Commission is required to migrate its legacy data of all registered contributors in its database to NIMC’s NID. To facilitate this process, the Commission has commenced the process of upgrading and cleaning up its legacy data to incorporate NIMC’s ecosystem minimum bio-data and biometric requirements for the registration of an individual.

    Similarly, the Commission has also reviewed its registration process and incorporated in its Retirement Savings Account (RSA) registration form, the specified identity ecosystem bio-data and biometric requirements, for new RSA registrations under the CPS. Henceforth, RSA registration process by an individual will not be complete until the Commission successfully authenticates the contributor using the National Identification Number (NIN), on the NID.

    For seamless verification of the NIN on the NID, the Commission is collaborating with NIMC for the deployment of “National Identification Number (NIN) Verification Interface’ between the Commission and NIMC.

    We know that your Commission has reduced the 50% lump sum payable to retirees as gratuity on retirement from their Retirement Savings Account (RSA) to enable retirees earn at least 50% of their last monthly salary as pension. Why the change in payment template?

    As you may be aware the Commission introduced a new template for programmed withdrawal, which took effect from 15th May, 2018.  There has however being concerns expressed by some stakeholders. The Commission in its usual responsive and consultative manner has decided to review the template. Consequently, the Commission has directed that Pension Fund Administrators (PFAs) revert to the old template till further notice.

     

  • Pension fund assets hit N8.14tr, says PenCom

    The total pension fund assets stood at N8.14 trillion as at the end of May, the National Pension Commission (PenCom) said yesterday.

    PenCom spokesman Peter Aghahowa added that the assets rose from N7.52 trillion in December 2017.

    The commission said: ”The pension assets as at December 2017 stood at N7.52tr, it moved up to N7.8 trillion as at February and soared to N7.94 trillion in March, then to N8.14 trillion in May.”

    It explained that N5.2 trillion had been invested in Federal Government Securities by the Pension Fund Administrators (PFAs)

    It said the investment represented 70.08 per cent of the N8.14 trillion pension assets.

    “A breakdown of the investment is FGN bonds got N3.96 trillion; treasury bills, N1.68 trillion, agency bond like the Nigeria Mortgage Refinancing Company (NMRC) and the Federal Mortgage Bank of Nigeria (FMBN) got N6.54 billion, Sukuk bonds got N51.98 billion and green bond got N8.26 billion.

    “The state government securities gulped N154.02 billion; corporate bonds, N393.27 billion; corporate infrastructure bonds, N8.36 billion; banks, N662.80 billion; commercial papers, N71.75 billion and estate properties, N228.86 billion.

    a“Other classes of assets include, supra-national bonds, N8.21 billion; open/close end funds, N10.16 billion; mutual funds, N1987 billion; private equity fund N3727 billion; infrastructure fund, N8.95 billion and cash & other assets N96.13 billion,” the commission said.

  • Whose pension fund is it?

    •A new payment template introduced by PenCom makes retirees wonder who owns the money?

    In spite of the noble efforts made by modern man to manage life after a long life of work, retirement has remained a weary path full of hurdles and uncertainties for retirees. Hardly anything turns out as planned and as the years roll by, the man/woman in the middle of it all – the retiree – gets more enfeebled as he increasingly loses control of life.

    This scenario captures the life of the retired and elderly as he trudges through the rest of life. But nothing confounds and befuddles him more than the dis-alignment of his well-laid out retirement plans and financial structure. This is what may be playing out in the new payment template released to Pension Fund Administrators (PFAs) by the National Pension Commission (PenCom) for the calculation of retirement benefits of retires.

    PenCom is said to have set a new retirement benefit structure which pays 20 per cent lump sum of benefit to retirees in the Contributory Pension Scheme instead of the 25 per cent originally stipulated by law. While the initial Pension Reform Act (PRA) of 2004 had stated clearly that upon retirement or attaining the age of 50 (whichever comes later), a retiree would be entitled to at least 25% and a maximum of 50% lump sum in his retirement savings account, the revised PRA of 2014 is unspecific on the issue of lump sum. This has set retirees worried.

    The RSA 2014 only stated that upon retirement or attaining the age of 50, a retiree would utilise the amount in his or her Retirement Savings Account (RSA) for the following benefits: withdrawal of a lump sum from the total amount credited to his RSA provided that the amount left after the lump sum withdrawal or annuity for life is in accordance with extant guidelines issued by the commission from time to time.

    From the foregoing, we understand the need to review the laws and operational modalities of the scheme after about a decade of operation, but we also stand vehemently on the point that whatever change must be in the utmost interest of the retiree.

    We have strong reasons to believe that this has not been the case here. In the first place, it is apparent that the new template has been largely the handiwork of the regulators, PenCom and the administrators, PFAs. There is no evidence that the retirees have been properly briefed on the revised law and attendant new template. This explains why retirees expecting to receive 25% upon retirement are miffed to get something less. And this explains why they are currently kicking at the new template.

    Again, some of the response and explanations of the PFAs as to why a new template was necessary come across as cheeky, if not out-right derogatory to the retirees. According to report, administrators are said to have complained that many retirees go on a binge as soon as they were paid a lump sum of 25% only to return soon for more. This explains why they are reducing the lump sum payout and spreading the RSA over the monthly pay.

    But the retirees have also complained that the monthly pay is nothing to write home about. Some have complained that it is less than 20% of their last salaries.

    Our take on all this is simple: pension scheme is about retirees, for retirees and must be always in favour of retirees.

    Unfortunately, the history of pension scheme in Nigeria has been a sad and sordid one. Unfortunately, the story has not changed even till this moment despite supposed reforms. The most astounding fraudulent activities in recent history have happened in one pension scheme or the other. Managers and administrators of various pension schemes have found it easy to make away with large hauls of money. The police pension brouhaha is a case in point.

    A worker who worked and contributed for about 30 years deserves a decent lump sum upon retirement. It is nobody’s business what he does with it. It is expected that funds would have been invested over this period and tidy profits accumulated. How much of this do hapless retirees get?

    We see officials of both the regulators and administrators live in opulence. This, of course, is at the expense of vulnerable retirees. This is unacceptable. Government must take keener interest in the pension scheme to protect the interest of poor workers.