The Nation Newspaper

Tag: pension fund

  • World’s Biggest Pension Fund Finds New Best Friend in Trump

    One of the world’s most conservative investors has found an unlikely new ally in one of its most flamboyant politicians: Donald Trump.

    The unconventional president-elect’s victory is helping Japan’s giant pension fund in two important ways.

    First, it’s sending stock markets surging, both at home and overseas, which is good news for the largely passive equity investor. Second, it’s spurred a tumble in the yen, which increases the value of the Japanese manager’s overseas investments. After the $1.2 trillion Government Pension Investment Fund reported its first gain in four quarters, analysts are betting the Trump factor means there’s more good news to come.

    “The Trump market will be a tailwind for Abenomics in the near term,” said Kazuhiko Ogata, the Tokyo-based chief Japan economist at Credit Agricole SA. “GPIF will be the biggest beneficiary among Japanese investors.”

    While most analysts were concerned a Trump victory would hurt equities and strengthen the yen, the opposite has been the case. Japan’s benchmark Topix index cruised into a bull market last week and is on course for its 12th day of gains. The 4.6 percent slump on Nov. 9 now seems a distant memory. The yen, meanwhile, is heading for its biggest monthly drop against the dollar since 2009.

  • Over N3tr pension fund untapped, says PenCom

    Over N3tr pension fund untapped, says PenCom

    Over N3 trillion investible pension fund with the potential to unlock the nation’s economy has remained untapped, the Director-General, National Pension Commission (PenCom), Mrs Chinelo Anohu-Amazu, has said.

    Mrs. Anohu-Amazu, who spoke at the 17th annual lecture of the Catholic Brothers United (CBU) in Lagos, in  a presentation titled: Pension Fund as a Catalyst for Economic Development,  regreted that despite the availability of about  N861 billion (15 per cent) of the total N5.74 trillion total pension fund assets for infrastructure bonds, the fund has remained untapped due to the non-availability of investible instruments in the market.

    She said there was only 0.03 per cent investment in infrastructure funds leaving a huge untapped financing prospect, adding that like other emerging economies, Nigeria has invested over 69 per cent of the pension fund in government securities.

    She said investment in equities and money market securities were moderate at 11.54 per cent and 8.66 per cent respectively as at the second quarter of this year, she added.

    Stressing the need for urgent diversification of the economy away from oil in view of current volatility in the global energy market, the PenCom chief lamented that non utilisation of the fund places the country at a competitive disadvantage internationally, particularly with paucity of long term financing, which is a critical factor.

    She posited that in order to support economic development, it is fundamental that the pension fund is diversified to include investment in identifiable infrastructure, real estate and other key aspects of the real economy.  The PenCom chief urged both the corporate and pension industry strategies to design  initiatives and activities that would increase investment in infrastructure and other alternative assets from the four per cent in 2014 to 40 per cent by the end of 2019.

    She said: “Similarly, with the recent clamour for private sector participation in infrastructural development to inspire the real sector, it is clear that private finance is essentially needed to supplement government’s finite financial resources.

    “In line with global best practices, pension funds are a veritable source of private financing for infrastructure development. The Commission had over the years, through its regulation on pension investment, developed a portfolio mix that will catalyse funds from other asset classes to corporate debt securities, private equity and infrastructure bonds and funds to stimulate investments in infrastructure, agriculture, transportation, housing, power and sanitation, and real sector development.

    “The Commission is currently finalising a review of the Investment Regulation so as to ensure a sustainable deployment of pension funds for infrastructure developments. “The untapped potential for pension fund investments that will unlock the diversification of the Nigeria economy is over N3 trillion.

    “The untapped opportunities and the creative efforts of the pension industry has formed a niche for engaging the relevant stakeholders both from the public and private sectors, particularly the Ministry of Works, Power and Housing to build a synergy towards developing the Nigerian infrastructure as a veritable step towards economic diversification.”

    On the pension industry outlook, she said the Commission, in collaboration with its industry stakeholders has sought to further advance its notable achievements and drive the deployment of the pension assets for economic development.

    She said corporate and industry strategies were developed to refocus the industry towards achieving this noble objective. Both strategies are focused on delivering safer and broader investment portfolio, positive real returns and visible impact on the economy, while consistently achieving excellence in service delivery, she added.

  • Poland to revamp $35b pension fund

    Poland to revamp $35b pension fund

    Poland’s equity market is back under scrutiny as the country’s new leaders set their eyes on overhauling an industry that controls one-fifth of local stocks traded in Warsaw.

    The country’s pension fund industry, which manages $35 billion in assets, will be reviewed in the second half of the year as the government seeks to “improve the efficiency of their investments,” Deputy Labor Minister Marcin Zieleniecki said an interview yesterday. The nation’s 12 privately-managed funds, which have been active since 1999, were stripped of 51 per cent of their holdings in bonds in 2014, when a previous administration sought to reduce the country’s debt burden.

    Polish stocks have lagged behind peers in emerging markets as the government elected in October levied the highest taxes on bank assets in the European Union (EU) to fulfill campaign pledges to boost social spending.

    The latest planned overhaul puts at risk directives for pension funds, which were set up to provide a source of local, long-term financing for the nation’s growing companies as well as capital to businesses abroad in eastern Europe, including companies from cash-strapped Ukraine.

    “Uncertainty about the future of pension funds holds foreign investors, including us, from investing in Polish stocks, even if country’s macro story is attractive,” said Andras Szalkai, who helps oversee about $2 billion in emerging European assets as a fund manager at Raiffeisen Kapitalanlage GmbH in Vienna. “Until the final outcome of pension review is known, it’s difficult to weigh risk,” Szalkai added.

    Poland may consider merging all of the funds into one entity, which would be managed by state-controlled insurer PZU SA or lender Bank Gospodarstwa Krajowego, newspaper Rzeczpospolita reported on May 27, citing government sources it did not name.

    It’s too early to comment on any merger of pension funds, said Zieleniecki.

    “The government is aware that the wellbeing of the Warsaw Stock Exchange depends on pension funds. “But in this shape, the funds aren’t safeguarding future pensioners or investing efficiently,” Zieleniecki said by phone from Warsaw.

    Warsaw’s WIG20 index has dropped 11 per cent since October, compared with a 4.4 per cent slide in the MSCI Emerging Markets Index. Equities haven’t been the only loser, with the zloty weakening 3.2 percent against the euro this quarter, the fourth-biggest decline among 24 emerging markets. Polish government bonds have dropped, sending the 10-year yield up 28 basis points to 3.12 per cent.

    The cabinet may consider broadening investment options for the funds as their present stock-focused portfolios aren’t “efficient,” Zieleniecki said. The previous government took over the funds government bond holdings, canceled the debt and banned the institutional investors from purchasing such securities. Meanwhile, Warsaw’s WIG20 index has showed negative returns for three years running.

    The Chief Economist at ING Bank Slaski SA in Warsaw, Rafal Benecki said: “Investors have been shedding Polish stocks for a while, seeing risk of a massive sell-off of shares held by pension funds after a possible takeover of their assets by the state.

    “Such proposals, if communicated wrongly, may hit the zloty and other Polish assets.”

  • Defined Benefits: PTAD reiterates safety of pension fund

    The Pension Transitional Arrangement Directorate (PTAD) has reiterated the safety of pension fund to retirees of the Defined Benefits Scheme.

    PTAD Head of Communications, Theodora Amaechi, made this known in an interview with The Nation in Abuja. She stated that the recent issue of alleged fraud by its former Director-General, Ms Nellie Mayshack, has nothing to do with pension fund of retirees, noting that the issue surrounding her suspension had to do with operational fund of the directorate.

    She further noted that the country has a lot of pension problem and challenges inherited from the old pension system, adding that the directorate is, however, solving the problems on a daily basis despite numerous challenges encountered.

    She said: “In those days, there were aggrieved pensioners all over the country claiming that the government was not paying them their pensions and the world thought the country has failed in this regard. But in the real sense, they were fake pensioners. We have money to pay verified and genuine pensioners and we are paying them.

    “We don’t have any problem with funding. The suspension of the former DG by the Minister of Finance has no connection with pension funds but with operational funds. It has nothing to do with pensioners.”

  • TUC kicks against deployment of N5.3tr pension fund to infratsructure

    TUC kicks against deployment of N5.3tr pension fund to infratsructure

    The Trade Union Congress of Nigeria (TUC) has kicked against calls by some National Assembly members to spend part of the N5.3 trillion pension funds on infrastructure.

    A statement by its President, Comrade Bobboi Kaigama, explained that the Congress has made its position on the vexed issue very clear, adding that the pension scheme was informed by the need to tackle poverty and difficulties faced by retirees, and not to raise money for the provision of infrastructure or investment at the instance of the rich.

    “We also use this opportunity to reiterate that the 25 per cent of total contribution paid at first instance to workers on retirement is too small. Anything less than 50 per cent defeats the purpose of the scheme. As it stands today, many states claim inability to pay the national minimum wage of N18, 000, a sum that is itself barely enough to take the workers home talk less of paying the bills for his family’s shelter, upkeep and development,” Kaigama said.

    He argued that infrastructural development remained the duty of the government, adding that it is a key driver and a critical enabler of sustainable growth all over the world. According to him, infrastructure provides a unique avenue for the public and private sectors of the economy to thrive. It is also critical in attracting foreign investors.

    Kaigama said rather than appropriating the monies saved from workers’ contributions to perform the government’s responsibility of fixing roads, providing electricity and other social infrastructure, the funds should be utilised for projects that are of direct benefit to the retirees and other workers, such as fixing housing deficit. He said this must be done with rules for proper accountability in place.

    PenCom Director-General Mrs. Chinelo Anohu-Amazu has said the fund is consistently invested by Pension Fund Administrators (PFAs) strictly as prescribed by the law. She said the money was also not domiciled at the National Pension Commission (PenComs) account but at Pension Fund Custodians (PFCs) as approved by the Pensions Act.

    These clarifications were made in Lagos during an interactive session with reporters. She regretted the misleading information by some persons on the status of the fund, saying that PFAs had played by the rule, and that no fraud with respect to management of the fund has been recorded.

    She added that the fund is protected arguing that there is no way it could be mismanaged or misappropriated under any guise. “We play by the rule and any PFA that invests outside the guideline will lose its operating license,” she said. She added that effort is being made to bring more Nigerians into the scheme through the Micro Pension Scheme now in the offing.

    According to Anohu-Amazu, the regulator has established a special function unit to drive the micro pension plan, which targets the low income earners as well as individuals. She said the commission has begun the sensitisation of service providers as well as the targeted workers in the informal sector with a view to creating the enabling environment to bring more people into the scheme.

    Anohu-Amazu noted that it would ensure that robust technological platform is put in place to drive the initiative, adding that special mobile phone applications that had been successfully implemented in some jurisdictions for financial transactions including provision of pension services to the self-employed and informal sector workers could be adopted to prop the plan.

    “It is evident that a robust technological platform that would support the provision of customer services is necessary to effectively and efficiently register, collect contributions, provide Retirement Savings Account support, pay benefits and provide financial advisory services to this class of workers.

    “Coincidently, special mobile phone applications had been successfully implemented in some jurisdictions for financial transactions including provision of pension services to the self-employed and informal sector workers. The success stories of these applications drive the confidence that similar platform can be designed and implemented in Nigeria,” she said.

    The PenCom chief attributed the growth in the funds to the security fence built to protect it from being diverted into personal use by managers of the funds.

    She said the commission had not and would not prevent the investing of pension assets in infrastructural development and other sectors, but that such investments must abide by the guidelines in the Pension Reform Act 2014.

  • Lagos, Delta, Osun, Niger get N160bn from pension fund for infrastructure

    A total of N160 billion out of the N5.1 trillion pension fund has been invested in four States Bonds towards infrastructure development as at September 2015.

    The States include Lagos, Delta, Osun and Niger State.

    This was made known in a report made available to The Nation by the National Pension Commission (PenCom).

    According to the report, these four States are able to benefit from the pension fund because they have implemented the Contributory Pension Scheme (CPS).

    The report stated that pension assets totaling N160 billion was invested in State Bonds towards infrastructure development.

    It however showed that not all States have adopted the CPS.

    It read: “11 States and the FCT have commenced implementation while 11 States have enacted pension laws on CPS but are yet to commence implementation in the period under review.

    “Three States have enacted Laws, which need to be reviewed as they vary substantially from the provisions of the pension Reform Act (PRA) 2014 while 12 States are at the bill stage.

    “Aside from the four states that benefitted from the fund in the period under review, other States that have implemented the CPS are Ogun, Jigawa, Zamfara, Rivers, Kaduna, Anambra, Enugu and FCT.

    “States that have enacted pension laws but are yet to commence implementation are Ekiti, Edo, Gombe, Ondo, Nassarawa, Kebbi, Kogi, Sokoto, Oyo, and Taraba while those who have enacted laws but need to be reviewed are Adamawa, Bayelsa and Kano”, the report stated.

    Meanwhile, Chairman of Premium Pension Limited, Aliyu Dikko adviced State Governors to comply with the CPS in other to access it for infrastructure.

    He noted that it is in their own interest to comply because once they comply, a lot of opportunities are opened to them.

  • Group wants Buhari to prosecute pension thieves  

    Group wants Buhari to prosecute pension thieves  

    Nigeria Union of Pensioners (NUP) South-South zone has called on President Muhammadu Buhari to commence investigation on how pension fund were diverted during the last administration.

    The group who endorsed the Federal government’s anti-corruption crusade said President Buhari who is also a pensioner should ensure that those who mismanaged pension fund were brought to book and the fund recovered.

    They made this call Friday in a communiqué which was signed by all the NUP’s state chairmen from the South –South zone during a meeting of the organization held at NULGE Consulate, Port Harcourt, Rivers State capital.

    Addressing other chairmen at the meeting, the host chairman, Comrade Edward Festus-Abibo, the State chairman of NUP, Rivers State, said the meeting is significant because it’s provided the avenue to re-strategize, formulate and plan for next year.

    Comrade Edward said NUP wants to actualize the issue on payment of harmonization, short payments, omission from pay roll, non- pay roll and arrears of various types of pension increases.

    While applauding Governor Ezenwo Nyesom Wike  for clearing six month  outstanding owed the state pensioners, Comrade Edward  calls on the various state governments in the zone to pay without further delay, all entitlements owed pensioners in their zones, which include the 6% increase (2003), the 15% increase (2007) and the 33% monetization increase (2010).

    Also speaking, the chairman of NUP, Cross River State chapter, Comrade Benjamin Etta, who doubled as the South-South Zonal chairman of NUP, said committee has been set-up by the body to know the disappointment and frustration of pensioners in the zone.

    He worried on the inability of Pension Transitional Administration Directorate (PTAD) to commence the Biometric verification exercise nation-wide. He appealed to the directorate to ensure that the exercise get to its logical conclusion.

    “One of the reasons of the meeting is to declare our support on the federal government’s anti-corruption crusade. We want President Muhammadu Buhari to ensure that pension funds mismanaged during the last administration are recovered and the perpetrators brought to book.

    “The union urges PTAD to ensure that the pensioners and the next-of-kin of deceased pensioners are paid their entitlements without delay immediately after the exercise. We noted the frequency calls from Abuja, demanding for money from pensioners before their papers are processed is another worrisome issue that requires thoroughly investigates.”

  • 96,002 RSA holders claim N20.7b from pension fund

    A total of 96,002 RSA holders who retired before the age of 50 and had stayed for at least four months after retirement without securing employment sought for 25 per cent of their RSA balances from their various Pension Fund Administrators (PFAs) in the third quarter of last year.

    The Nation learnt that the RSA holders, who are contributors under the Contributory Pension Scheme (CPS), have duly been paid N20.72 billion.

    This was contained in a report obtained by The Nation from the National Pension Commission (PenCom).

    Out of this number, 91,355 representing 95.16 per cent were from the private sector and 4,647 representing 4.84 per cent from the public sector.

    Meanwhile, the total number of retirees under the Scheme and on Programmed Withdrawal (PW) has increased by 3,340 from 103,081 as at the end of the fourth quarter of 2014 to close at 106,421 as at the end of the first quarter of the year. This represents an increase of 3.24 per cent.

    A sectoral breakdown of the total number of retirees shows that while the public sector accounted for 1,322 retirees representing 38.43 percent, the private sector accounted for 2,118 retirees representing 61.57 percent in the first quarter of 2015.

    The report notes that the public sector refers to both Federal and state governments.

    It also showed that the monthly lump-sum withdrawals on Programmed Withdrawal in the first quarter of 2015 was N2.55 billion, which cumulatively amounted to N257.43 billion from inception to the end of the period under review.

    The report further showed that retirement by Life Annuity (LA) also increased.

    It said the Commission received a total of 1,914 applications for retirement under the LA Plan in the quarter.

    It said: “All the requests were approved, which brought the total number of retirees on LA to 15,976.

    “In addition, a total premium of N79.18 billion was approved for payment to insurance companies on behalf of the 15,976 retirees in return for monthly payments amounting to N790.10 million.

    “A comparative analysis of retirees on LA and PW shows that while 13.05 per cent of the retirees were under annuity, 86.95 per cent were under PW.  Thus, while retirees under the LA, accounted for 9.20 per cent of cumulative lump sum withdrawal, those of PW accounted for the remaining balance of 91.80 per cent.”

    During the quarter under review, approvals were given for the payment of N4.44 billion as death benefits to the Next of Kins (NoKs) of 1,450 deceased employees.

    The report showed that N77.18 billion had been paid to the NoKs of 27,321 deceased employees from inception to the end of the first quarter of the year.

  • PenOp seeks investment channel for $25b pension fund

    A safe and workable system must be designed to channel the $25 billion pension funds, (approximately N4.925 trillion) accumulated by the pension industry for real economic development, Chairman, Pension Fund Operators Association of Nigeria (PenOp) Misbahu Yola has said.

    He made this known at the 2nd forum of PenOp, organised in Nigeria by Africonomie for African Pensions.

    Aside from investment of the pension funds, Yola highlighted regulation, enlightenment of the general public and collaboration of major stakeholders as key areas that need to be worked on to facilitate and build a strong and sustainable pension system that works for the Nigerian environment.

    He disclosed that as at May 31, 2015, Nigeria’s Contributory Pension Scheme (CPS) had approximately 6.6 million contributors and assets in excess of USD25 billion.

    He said that as impressive as this may sound, they have only just started.

    According to him, much more remains to be done as they have covered less than one tenth of the working population.

    He added that the assets are less than five per cent of the nation’s GDP and the effect on economic development is still at embryonic stage.

    He said: “To effect significant changes, it is imperative that the regulator, pension operators and other key stakeholders work together to build a strong and sustainable pension system that works for our environment.

    “Nigeria has drawn a lot of international attention in recent years due to the success of its CPS. The scheme has been in existence for only 10 years and is therefore relatively young when compared to some of its counterparts in Africa.

    “The common vision shared by all the players in the Nigerian Pensions industry is to see this contributory pension system grow to its full potential. This is by no means an easy task especially when we consider the size of our economy, our population and a lack of proper understanding and often mistrust at all things pensions. Nevertheless, a lot has been done since then by the National Pension Commission (PenCom) and pension operators to develop and improve the new pensions system.”

    Speaking on regulation, Yola said  the secret behind any solid structure is its foundation.

    “For the pension system in Nigeria, the foundation is the law and by extension the Regulator that is custodian of this law, PenCom. In order for the system to succeed and be sustainable, the regulator must remain focused and continue to be innovative in its guidelines, regulations, codes and various other rules of operations.

    “While being consultative, it must continue to be firm in monitoring and supervising the management and administration of the funds. It must also enforce compliance by employers in accordance with the law and sanction those who contravene any section of the Act. Fortunately the PRA 2014 has conferred more powers on PenCom in this regard. In addition, PenCom must continue to engage regulators in other industries that have a bearing on pension funds management.

    “Similarly, there is a strong need to re-orientate the general public on the need for pensions and assure them of the effectiveness of the CPS. The states and local governments and indeed the informal sector should also be encouraged to join the scheme as required by law. The mistrust from the past experiences still lingers and this must be dealt with by assurances of the safety of the current CPS structure if we want to move forward in building a strong and sustainable pension system.”

    In the same vein, the PenOp chairman said collaboration of key stakeholders namely SEC, CBN, FIRS, FMDQ, NASD, Private Equity and Infrastructure Funds etc is extremely important in achieving sustainability.

    On investment of pension funds, he said that an enabling environment that facilitates the creation of quality investible products and alternative asset classes through which the pension assets can be invested safely but with relatively high returns for the contributors must be encouraged.

  • PenCom canvasses investment of Pension Fund within Africa

    PenCom canvasses investment of Pension Fund within Africa

    •To raise workers under CPS from 6.5m to 20m by 2019

    The National Pension Commission (PenCom) is committed to the vision and ideals of the AU Agenda 2063 to promote the investment of accumulated pension fund assets of over N4.7 trillion within the African continent, Director-General of the Commission, Mrs. Chinelo Anohu-Amazu, has said.

    She made this known while addressing participants during the 3rd International Conference on Financing for Development in Addis Ababa, Ethiopia with the theme: ”Leveraging Pension Funds for Financing Infrastructure Development in Africa”.

    She also said the Commission hopes to raise the number of workers covered under the Contributory Pension Scheme (CPS) from 6.5 million this year to 20 million by 2019, using the Micro-pension initiative.

    The Commission, according to her,  is committed to promoting sustainable pension fund investments in Africa and welcomes the AU Agenda 2063 as well as the Programme for Infrastructure Development (PIDA).

    She said it would project same through the annual World Pension Summit (WPS) ‘Africa Special’ in collaboration with the WPS Amsterdam.

    She said: “The AU Agenda 2063 is both a vision and action plan; a call for action to all segments of African society to work together to build a prosperous and united Africa based on shared values and a common destiny.”

    According to her, the Comission is expected to translate this vision and ideals into concrete objectives, milestones, goals, targets and actions/measures and it is supposed to enable Africa remain focused and committed to the ideals envisaged in the context of a rapidly changing world.

    In operational terms, the Agenda 2063 would be a rolling plan of 25 years, 10 years, five years and short term action.

    Heads of State and Government of the African Union (AU) in its 50th Anniversary Solemn Declaration, rededicated themselves to the continent’s accelerated development and technological progress and laid down the vision and eight ideals to serve as pillars for the continent in the foreseeable future.

    They mandated the Chairperson of the African Union Commission (AUC) to collaborate with the UN Economic Commission for Africa (UNECA), African Development Bank (AfDB) and New Partnership for African Development (NEPAD)  Agency to develop Agenda 2063 through a people-driven and extensive consultation process.

    Speaking on the Contributory Pension Scheme, the Director-General, who expressed dissatisfaction with the level of coverage of the scheme 11 years after it was established, said the Commission hopes to raise the coverage using, the Micro-pension initiative, which it planned to launch very soon.

    She stressed that the current position of 6.5 million contributors is low relative to estimated working population.

    “There is plan to expand it to at least 20 million by 2019 through Micro Pensions. This is pertinent also due to inadequate social safety nets. This is a Pan-African issue that should provoke ideas sharing,” Anohu-Amazu said.

    The Nigerian pension reform represents a major action in Domestic Revenue Mobilisation (DRM), an AU policy that stemmed from the realisation that Africa should take responsibility and indeed, possess the resources, if properly mobilised, for its own economic development.

    The reform is mobilising funds, which hitherto were untapped, Anohu-Amazu stressed.

    She said applying pension funds to economic development is being pursued through initiatives on infrastructure and real estate investments domestically. “There is also ample room in the near future for same to be extended to viable African investments,” she assured.