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Tag: pension

  • Allure of non-interest fund for pension contributors

    Allure of non-interest fund for pension contributors

    It’s been three years since the National Pension Commission (PenCom) introduced the Non-Interest Fund as part of the investment portfolio options available to pension contributors and retirees. In this report, AbdulKareem Olawale examines the progress of the Non-Interest Fund and other initiatives under the Mrs Aisha Dahir-Umar-led management team.

    Cultural and religious diversity is increasingly becoming a core driver of financial products, with Shariah-compliant investments featuring prominently in global markets. Shariah-compliant funds have become more popular in recent times. In general terms, Non-Interest Funds are financial securities and specialist investment funds that comply with the provisions of Islamic commercial jurisprudence and any other established non-interest principles. In Nigeria, these are approved by the Financial Regulation Advisory Council of Experts (FRACE) or any other body constituted by the Central Bank of Nigeria (CBN) and/or Securities and Exchange Commission (SEC).The Non-Interest Fund was introduced by the National Pension Commission (PenCom) in September 2021.

    As of August 2023, the Active Non-Interest Fund had a value of N42.43 billion while the Retiree Non-Interest Fund stood at N5.24 billion.

    Moving from zero to nearly N50 billion within three years is an indication of how well it is gaining traction with the pension contributors.

    The Non-Interest Fund, also known as Fund VI, is part of the Multi-Fund Structure designed to empower pension contributors and retirees to get optimum returns by aligning their pension savings with their individual risk/return objectives.

    Other options under the Multi-Fund Structure are Funds I, II, III, IV and V. Fund I is for contributors who are 49 years and below. They have a right to choose whether or their savings should be invested under this portfolio or under Fund II, which is the default fund for all active contributors 49 years and below. Fund III is for active contributors who are 50 years and above. Fund IV is for retirees, while Fund V is for those on the Micro Pension Plan, which is restricted to the Informal Sector. RSA holders cannot transfer to Fund V, neither can those on Fund V transfer to any other Fund because the Fund is for Micro Pension Plan only. To give teeth to the provisions in the Pension Reform Act, the Commission introduced Fund VI in September 2020 as the non-interest portfolio for pension participants who have a disinclination towards interest banking.

    The Non-Interest Fund’s operational framework expands coverage of the Contributory Pension Scheme (CPS) by attracting employees with reservations about investments in non-Shari’ah compliant instruments and promotes financial inclusion within the Nigerian Financial System.

    Mrs Aisha Dahir-Umar, who assumed office as the substantive the director general of PenCom three years ago, told the media in a recent interview that the Non-Interest Fund is doing well.

    “The Multi-Fund Investment Structure is meant to provide investment portfolio choices to contributors. The Non-Interest Fund is a fund that complies with Sharia principles. It has provided an inclusive option for contributors to save for their retirement while respecting their ethical preferences. The reception for the Non-Interest Fund has been positive and PenCom is continually working to expand awareness and access to this option,” she said.

    It is built on principles that uphold a positive ethical message derived from the Qur’an and the Sunnah, moral considerations, as well as fair and just trading practices which include the avoidance of ribah (interest), contractual and legal uncertainty and leniency to debtors where the borrower can prove mitigating circumstances. Investments in forbidden commodities like alcohol, tobacco and companies whose debt exceeds one-third of its assets are also prohibited.

    Essentially, wealth must be generated from legitimate trade and asset-based investment while risk should be shared between the capital provider and the expertise.

    Capital and labour are also conceived as a single factor of production, just as investment should have a social and an ethical benefit to the wider society beyond what is commonly referred to as returns.

    Although only the Shari’ah Advisory Council (SAC) of the CBN is authorised to examine the validity of application and screening of Islamic financial products, the bodies will still not approve any instruments and activities that are contrary to Shari’ah principles.Islamic banking dates back to more than thousand years when financial instruments like mudarabah were utilised in the 7th Century.

    But in the past decade, Islamic finance has emerged as an effective tool for financing development worldwide, including in non-Muslim countries where major financial markets are discovering solid evidence that Islamic finance has already been mainstreamed within the global financial system with the potential to help address the challenges of ending extreme poverty and boosting shared prosperity.

    Nuruddeen Sani Gwarzo, Executive Director, South, Access Pensions, said in a recent interview: “The appeal of ethical and socially responsible investment of savings is something that generates universal appeal, and we have several instances of non-Muslims who subscribe to Fund VI.”

    Dave Uduanu, Managing Director and Chief Executive Officer, Sigma Pensions, also said: “Given Nigeria’s large Muslim population, the Non-Interest Fund of the Contributory Pension Scheme will help deepen financial inclusion in the country.”

    Meanwhile, Lamido Yuguda, Director-Generator, Securities and Exchange Commission, also urged stakeholders in pension fund management to embrace Non-Interest Fund products, even as he highlighted its potential for the economy.

    He said: “It is encouraging that the National Pension Commission has taken concrete steps to improve the regulatory framework for the investment of pension funds in the non-interest capital market by the introduction of an operational framework for the Non-Interest Fund. This will no doubt provide an additional opportunity for retirement savings account holders and retirees to invest their savings in financial instruments that are aligned with their life goals and objectives.”

    On the third anniversary of her appointment, Mrs Dahir-Umar listed other milestones attained by the Commission in its supervisory and policy-making roles.

    Reflecting on this period, she said: “I can describe the journey as a blend of achievements and challenges. On the positive side, we have made remarkable strides in enhancing the efficiency and transparency of the Contributory Pension Scheme (CPS). Our efforts include the implementation of crucial reforms aimed at optimising procedures and fostering compliance among pension contributors and employers. The outcomes are impressive: pension assets have surged by N5.94 trillion over the last three years, growing from N11.35 trillion in August 2020 to N17.29 trillion in August 2023. Furthermore, over 1 million new contributors have keyed into the CPS within this timeframe.”

    Dahir-Umar also spoke on the recapitalisation of the shareholders’ fund of Pension Fund Administrators (PFAs) from N1 billion to N5 billion.

    “The significant increase in the number of registered contributors and pension assets under the management of PFAs had necessitated increased capital injection, in order to meet minimum service standards and address various operational needs in the pension industry. Following the successful conclusion of the recapitalisation exercise, PFAs have become financially stronger and better equipped to offer quality service to Retirement Savings Account (RSA) holders,” she explained.

    Read Also: We grew assets by 17%, contributors by 5% in 2022 – Norrenberger Pensions

    Going further, Dahir-Umar said: “PenCom had, as part of efforts to clean the database of contributors under the CPS and pave way for RSA holders to initiate transfers from one PFA to another, deployed the Enhanced Contributor Registration System (ECRS) in June 2019. The ECRS replaced the Contributor Registration System (CRS) which had become obsolete. Accordingly, PenCom directed all PFAs to commence the Data Recapture of RSA holders registered on the legacy CRS. The exercise, which involves the recapturing of contributors’ biodata and biometrics, applies to all RSA holders who registered with PFAs before 1 July 2019. Over 1,103,237 RSA holders have, from the inception of the exercise in August 2019 to 31 September 2023, been recaptured on the ECRS. It is noteworthy that the deployment of the ECRS has greatly improved the integrity of contributors’ data and led to the automation of the process of generation of Employer Codes for employers in Nigeria.“

    The deployment of the ECRS has also enabled the Commission to launch the Retirement Savings Account (RSA) Transfer Window on 16 November 2020. The RSA Transfer Window provides the platform for RSA holders to seamlessly transfer their RSAs, with the associated balances, from one PFA to another once every year. This development has engendered competition among PFAs, thus promoting quality service delivery and competitive investment returns. 222,141 RSAs have, from the inception of the RSA Transfer Window to 31 August 2023, been transferred to new PFAs alongside associated pension assets.”

    She said the emergence of the COVID-19 pandemic in early 2020 had prevented PenCom from conducting the hitherto annual physical enrolment exercise, which provides necessary data to determine the Accrued Pension Rights of FGN employees who were in service before the commencement of the CPS in June 2004.

    PenCom decided to launch the Online Enrolment Application, which was designed and developed in-house, and subsequently commenced the maiden online Enrolment and Verification Exercise for retirees and prospective retirees of Treasury-funded Ministries, Departments and Agencies (MDAs) on 1 September 2021.

    The Online Enrolment Application can be accessed through the Commission’s website.In 2022, PenCom issued the Guidelines on Accessing Retirement Savings Account (RSA) Balance towards Payment of Equity Contribution for Residential Mortgage by RSA Holders.

    The guidelines gave effect to the provisions of Section 89 (2) of the Pension Reform Act (PRA) 2014, which provides that “a Pension Fund Administrator may, subject to guidelines issued by PenCom, apply a percentage of the pension assets in the Retirement Savings Account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account.”

    “This landmark achievement by PenCom seeks to ensure that employees become homeowners while still in service. PenCom has, from the commencement of the implementation of the Guidelines to 31 August 2023, approved 339 applications for payment of residential mortgage equity contributions amounting to over N4 billion,” she said.

    The Non-Interest Fund and other success stories notwithstanding, there are obviously still many challenges the Pension Industry has to overcome. PenCom would want the Federal Government to renew its commitment to the pension reform.

    “President Tinubu’s commitment to economic reforms is commendable. Regarding the pension industry, the Commission would welcome the Federal Government’s continued support and collaboration, in order to address the challenges of funding accrued pension rights, pension increases and other outstanding pension obligations.

  • Pension complaints and solutions

    Pension complaints and solutions

    YAJI:  Good day, my name is Yaji. My complaint is about the delay of my late father’s benefits, Inspector Yaji. His PFA is Leadway Pensure Nigerian Ltd. He died on July 16, 2013. We are yet to be paid his death benefits.     

    PENCOM:  Dear Sir, the request was returned to the Pension Fund Administrator because there was no death certificate attached, which is one of the requirements for processing death benefits. Kindly provide the death certificate to the PFA for resubmission of the request.

    PRECIOUS: My name is Precious Schutmann Nig. Ltd. My complaint is on that we applied for application for Certificate of Compliance For 2019 to 2022. Our Employer Code is PR0000153777. Sir, I submitted an application since August 4, 2023 and since then I have not heard anything from PENCOM. I need your assistance for speedy process. Thank you.      

    PENCOM:  Dear Sir, the documentation to process the certificate was incomplete. Kindly visit www.pencom.gov.ng to see the required documentation for processing of Pension Clearance Certificate.

    OBADARE: My name is Obadare. I am a retiree from Radio Nigeria. I did my PenCom verification in September 2022 but I am yet to be paid my pension. Kindly look into my case, thank you.

    PENCOM: Dear Obadare, kindly provide the name of your Pension Fund Administrator to enable the Commission process the complaint.

    SALIU: My name is Saliu, I understand it takes five working days for approval to come from you when a PFA forwards application. I want to find out why it’s not so with my application. This is two weeks now according to Leadway Pension that my application has been sent to you. What is holding my application?

    PENCOM: Dear Mr. Saliu, kindly provide the name of your Pension Fund Administrator to enable the Commission process the complaint.

    ANONYMOUS: Good day, my complaint has been made by one of my pension account officers on my behalf but I am yet to get update and it has been over three months now. How long does it take for merging?

    PENCOM: Dear Sir, kindly provide the details of the two Retirement Savings Accounts you are trying to merge to enable the Commission process the complaint.

    ANONYMOUS: Ma, I strongly need your help. We are leaving the country today and we need money for upkeep as we go. We are banking on my 25 per cent pension savings. PenCom is yet to approve. Kindly help us.

    PENCOM: Kindly provide the details of your Retirement Savings Account, the PIN and the PFA to enable the commission process the complaint.

    MOHAMMED: Dear sir, we are the administrator of our late father Mohammed. He worked with immigration service from 1987 and was down sized during the presidential task force in 2006. Since then, we have not collected Kobo from National Pension Commission or Nigeria Immigration Service. We don’t know where to go or what to do sir. Help us out. Yours faithfully. Bawa

    PENCOM: Please provide the PFA and PIN number to enable the commission investigate your complaint.

    Read Also: Pension funds gain N588b to hit N17.35tr in Q3

    ANONYMOUS: I am Oforlea, I retired on September 14, 2022. My date of birth is November 23, 1964 but it was wrongly captured in my NIN as November 23, 1965 which has been corrected. I later went for recapturing at Premium Pension but the staff of the company refused to attend to me. He said my date of birth is different from the date of birth in PENCOM record. Meanwhile, I have November 23, 1964 in all my records. What should I do?

    PENCOM: Please send the complaint to info@pencom.gov.ng

    ANONYMOUS: I have a problem with my pension. I am a police officer.  My pension has not been paid into my pension account since 2017. I have been on this for the past three years now by moving from one office to another but all my effort proved abortive. Kindly help me.

    PENCOM: Kindly provide your name and PIN.

    OHAEKELEM: Good morning Madam, I have applied for my late husband’s death benefit since August 2021 through NPF PENSIONS. I have been informed that my file is awaiting the DG’s approval. Please may I know the position now and where my file is? My late husband’s name is SP. NNAMDI OHAEKELEM

    PENCOM: Dear Madam, kindly provide the Retirement Savings Account PIN to enable the commission process the complaint.

    EMMANUEL: Good morning, My name is Emmanuel. I will like to know if it is possible for me to get upfront payment of my pension to enable me pay for my son’s school fee and exams up to N100,000? My official line with the commission is 08056573289. Thank you.

    PENCOM: Kindly note you cannot access your pension contributions until you attain the age of 50 years. However, you can access 25 percent of your total contributions, if you have been out of a job for more than four months.

  • Pensioners applaud govt for prompt payment of pension

    Pensioners applaud govt for prompt payment of pension

    • Appeals for payment of arrears

    The Chairman, Nigerian Union of Pensioners, Federal Civil Service Pensioners branch, Abuja, Comrade Sunday Omezi has called on the Federal Government to pay Pensioners the arrears owed, while he hails the government for not owing pensioners their monthly payment.

    Omezi made this call during a news conference in Abuja, expressing gratitude for the reappointment of  Mrs Chioma Ejikeme as the Executive Secretary of the Pension Transition Arrangement Directorate PTAD for a second term in office.

    He said: “There has been a lot of improvement in the welfare of Pensioners. Before now we go to queue for verification, since PTAD took over we no longer queue. Our pension is now paid as at when due.

    ” Our major challenge now is with the arrears, from what we got arrears depends on the availability of funds this is according to PTAD. We are appealing to the government to increase PTAD allocation so there will be prompt payment of arrears just like our pension.

    Read Also: Ex-governors in Senate shouldn’t collect pensions, says Falana

    “Again we want to use this opportunity to appeal for review of pension payment, there are people who still collect ten thousand naira in this present time.

    What can N10,000 buy for a whole family, pls the government should look into our plight and review the Pension salary payment. We want this review made constitutional”.

    The Chairman and his team said the reappointment of the ES is well deserve in view of her track record in the administration of pension and with the prompt payment of monthly pensions and landmark innovation that has eased the process of pension management including the overall welfare of Pensioners.

  • Pension reform: View from the outside

    Pension reform: View from the outside

    • By Grace A. Abayomi

    In October 2020, former President Muhammadu Buhari appointed Mrs Aisha Dahir-Umar as the Director General (DG) of the National Pension Commission (PenCom) after a lot of uncertainty on the status of the leadership of the commission. Dahir-Umar and the Executive Management Team have now been in the saddle for three years and I think it is important to ask this question: How much ground have they covered in discharging their responsibilities to the pension industry?

    As it is well known about Nigeria, we are never short of reform policies. Since 1999, we have embarked on ground breaking reforms in various aspects of the economy. The big issue all the time is how well these reforms are impacting the sectors. There is this dim view that reforms do not always succeed in Nigeria. Some reforms are launched with fanfare and expectations but before the music dies down, they are gone with the wind for reasons that have to do with lack of continuity, dynamism and commitment. The pension reform has, however, bucked the trend.

    I must necessarily start by admitting that PenCom is a government agency that has gone through leadership changes over the decades and still remains strong in performing its regulatory and policy-making duties. Kudos must go to those who laid the foundation of the commission, and we have to mention former President Olusegun Obasanjo when we discuss the success of Nigeria’s pension reform. The commission started off on a good footing in 2004. Interestingly, Mrs Dahir-Umar served as a member of the Fola Adeola Committee that recommended the establishment of PenCom. She was the committee secretary. When she was appointed as DG by Buhari, I expected her to maintain and improve upon the standards. Anything less and the pension reform would unravel.

    The hard facts in the last three years have been very encouraging despite the mountains of challenges that still need to be climbed. One of the most newsworthy developments is the fact that pension assets have grown by N5.94 trillion between then and now, moving from N11.35 trillion to N17.29 trillion. Given the turbulence the economy has passed through, including the effects of the COVID-19 pandemic, the pension industry has every reason to appreciate its steady growth. A major impact of this growth is felt in the financial sector. The growing pool of funds has not only helped with savings mobilisation, but it has also expanded the capital market and provided consequential benefits to the economy. Pension funds contribute significantly to infrastructural finance in the country, especially in waste management, independent power generation and road construction (through Sukuk bonds). Thanks to the growing pension assets, the real sector of the Nigerian economy is receiving more long-term funds for investment.

    Furthermore, between 2020 and 2023, there has been an increase in the number of contributors enrolled on the Contributory Pension Scheme (CPS), which is core to the pension reform. Over the period, CPS has recorded over one million new contributors, according to official statistics. This is remarkable within the context of other developments, such as the exit of certain contributors based on legislative and administrative approvals, and the economic recession induced by COVID-19. Hitting the 10-million mark in the number of registered contributors is good for the headlines but, more importantly, it is worth noting that enrolment has not tanked. With what the economy has gone through in the last three years, the natural expectation would be for enrolment to drop. That it has kept growing speaks volumes of the resilience of the management of the reform.

    Read Also: Pension complaints and solutions

    Another area of interest is the recapitalisation of the Pension Fund Administrators (PFAs). When PenCom issued a directive in April 2021 asking PFAs to recapitalise, it was received with mixed feelings. Their shareholders’ funds were mandated to be increased from N1 billion to N5 billion, with the deadline set for April 2022. On the one hand, I believed it was necessary to strengthen the PFAs because they were carrying more responsibilities by the day. The number of registered contributors and value of pension assets needed to be managed in a way that the PFAs would have to improve service standards, in addition to meeting the operational needs in the industry. On the other hand, I was wondering if the capital review would not lead to the deregistration of some PFAs that might not be able to meet the requirement. It could shake confidence in the industry if it ever came to that. The good news is that the capital review turned out well. No company went under. Indeed, they all came out stronger, with some receiving foreign investments. What looked like a delicate policy initiative by PenCom ultimately delivered a good outcome.

    PenCom has also succeeded in its efforts at digitalising the industry. It has revved up the deployment of technology in recent years, and this has seen to the clean-up of the database of contributors in a country where pensioners used to suffer over “missing files”. In 2019, PenCom had deployed the Enhanced Contributor Registration System (ECRS) to replace the outdated Contributor Registration System (CRS). PenCom then asked all PFAs to do a data recapture of Retirement Savings Account (RSA) holders who had been registered on the old system. Contributors’ biodata and biometrics were recaptured under ECRS. This did not just improve the integrity of contributors’ data, but it also made it easy for the automation of the process of generating employer codes for employers. A direct benefit of this is that since PenCom launched the “Transfer Window” in November 2020 — by which contributors can change PFAs once a year if they are not satisfied with the service of their current PFAs — the ECRS makes the process smoother for RSA holders. Data recently released by PenCom shows that nearly a quarter of a million RSA holders have changed PFAs. The stark reality that account holders can move elsewhere has created competition among PFAs. This can only promote quality service delivery and competitive investment returns.

    I must not fail to mention that in 2022, when PenCom issued guidelines for the Residential Mortgage, I saw another dimension to the pension reform. My focus all along had been the payment of retirement benefits. Mortgage never featured in my imagination. Section 89 (2) of the Pension Reform Act (PRA) 2014 provides that “a Pension Fund Administrator may, subject to guidelines issued by PenCom, apply a percentage of the pension assets in the Retirement Savings Account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account”. Realising the policy guidelines to implement this section opened up yet another outlet for the impact of pension reform on the individual’s life. Employees can now become homeowners while still in active service by accessing a percentage of their RSA accounts towards mortgage. According to PenCom, over 300 applications have been approved since the initiative took effect in August and contributors have accessed over N4bn for this purpose. This is massive.

    This is not an invitation for PenCom management to rest on their oars. As I noted already, there are still challenges to be overcome. PenCom must lead the conversation on how to address the issue of low pensions. I recently read an interview granted by Mrs Dahir-Umar in which she said employers and employees need to engage more on these issues. As the regulator, PenCom is limited in what it can do, but it should continue to moderate the discussion so that the enthusiasm will spread. PenCom should also step up its advocacy on the need to stop attempts by many government bodies and officials to exit the CPS. These are real dangers to the reform.

    • Mrs Abayomi, an economist, lives in Akure, Ondo State
  • ‘How Tinubu can help grow pension industry’

    ‘How Tinubu can help grow pension industry’

    Mrs. Aisha Dahir-Umar, Director General of the National Pension Commission (PenCom), speaks on the challenges of regulating the multi-trillion naira pension industry, as well as what President Bola Tinubu should do to further growth, in this interview with journalists.

    It has been three years since the PenCom management team was inaugurated. How would you describe your experience – the highs and the lows?

    Reflecting on this period, I can describe the journey as a blend of achievements and challenges. On the positive side, we have made remarkable strides in enhancing the efficiency and transparency of the Contributory Pension Scheme (CPS). Our efforts include the implementation of crucial reforms aimed at optimising procedures and fostering compliance among pension contributors and employers.

    The outcomes are impressive: pension assets have surged by N5.94 trillion over the last three years, growing from N11.35 trillion in August 2020 to N17.29 trillion in August 2023. Furthermore, over 1 million new contributors have keyed into the CPS within this timeframe.

    One of our outstanding achievements is the recapitalisation of the shareholders’ fund of Pension Fund Administrators (PFAs) from N1 billion to N5 billion. The significant increase in the number of registered contributors and pension assets under the management of PFAs had necessitated increased capital injection, in order to meet minimum service standards and address various operational needs in the pension industry. Following the successful conclusion of the recapitalisation exercise, PFAs have become financially stronger and better equipped to offer quality service to Retirement Savings Account (RSA) holders.

    PenCom had, as part of efforts to clean the database of contributors under the CPS and pave way for RSA holders to initiate transfers from one PFA to another, deployed the Enhanced Contributor Registration System (ECRS) in June 2019. The ECRS replaced the Contributor Registration System (CRS) which had become obsolete. Accordingly, PenCom directed all PFAs to commence the Data Recapture of RSA holders registered on the legacy CRS. The exercise, which involves the recapturing of contributors’ biodata and biometrics, applies to all RSA holders who registered with PFAs before 1 July 2019. Over 1,103,237 RSA holders have, from the inception of the exercise in August 2019 to 31 September 2023, been recaptured on the ECRS. It is noteworthy that the deployment of the ECRS has greatly improved the integrity of contributors’ data and led to the automation of the process of generation of Employer Codes for employers in Nigeria.

    The deployment of the ECRS has also enabled the Commission to launch the Retirement Savings Account (RSA) Transfer Window on 16 November 2020. The RSA Transfer Window provides the platform for RSA holders to seamlessly transfer their RSAs, with the associated balances, from one PFA to another once every year. This development has engendered competition among PFAs, thus promoting quality service delivery and competitive investment returns. 222,141 RSAs have, from the inception of the RSA Transfer Window to 31 August 2023, been transferred to new PFAs alongside associated pension assets.

    The emergence of the COVID-19 pandemic in early 2020 had prevented PenCom from conducting the hitherto annual physical enrolment exercise, which provides necessary data to determine the Accrued Pension Rights of FGN employees who were in service before the commencement of the CPS in June 2004. Accordingly, PenCom launched the Online Enrolment Application, which was designed and developed in-house, and subsequently commenced the maiden online Enrolment and Verification Exercise for retirees and prospective retirees of Treasury-funded Ministries, Departments and Agencies (MDAs) on 1 September 2021. The Online Enrolment Application can be accessed through the Commission’s website.

    In 2022, PenCom issued the Guidelines on Accessing Retirement Savings Account (RSA) Balance towards Payment of Equity Contribution for Residential Mortgage by RSA Holders. The Guidelines gave effect to the provisions of Section 89 (2) of the Pension Reform Act (PRA) 2014, which provides that “a Pension Fund Administrator may, subject to guidelines issued by PenCom, apply a percentage of the pension assets in the Retirement Savings Account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account”. This landmark achievement by PenCom seeks to ensure that employees become homeowners while still in service. PenCom has, from the commencement of the implementation of the Guidelines to 31 August 2023, approved 339 applications for payment of residential mortgage equity contributions amounting to over N4 billion.

    One persistent issue is the complaint of low pensions by some of those enrolled under the CPS. You have often suggested ways of supplementing the benefits. Why are we finding it hard to address this issue once and for all?

    The challenge of insufficient pension benefits is a multifaceted problem that extends beyond the purview of PenCom. It is imperative to note that several factors are responsible for insufficient pension benefits, but the main one is the issue of low salaries, especially in the public sector.

    It is worthy of note that the PRA 2014 has sufficient provisions to address the issue of low benefits. For instance, Section 4(4)(a) of the Act provides that an employer may, notwithstanding the pension contributions made by the employer and employee into the employee’s RSA, agree on the payment of additional benefits to the employee upon retirement. Employers, especially those in the public sector, can take advantage of this provision to enhance their employees’ retirement benefits.

    Furthermore, employers can consider an upward review of the rate of pension contributions in respect of their employees. Section 4(1) of the PRA 2014 stipulates a minimum pension contribution of 10% by the employer and 8% by the employee. However, the pension contribution rate can be enhanced through a collective agreement between the employer and the employee as provided under Section 4(2) of the PRA 2014. An employer may also elect to bear the full responsibility for the pension contribution of his employees.

    Achieving a comprehensive solution to the challenge of low pensions requires collaboration between employers and employees. PenCom, however, remains resolute in finding a lasting resolution to the challenge.

    PenCom introduced the Non-Interest Fund to cater for the choices of contributors. How well has it been received?

    The Non-Interest Fund (Fund VI) is one of the fund types under the Multi-Fund Investment Structure introduced by PenCom. The key objective of the Multi Fund Structure is to empower pension contributors and retirees to achieve optimum returns by aligning their pension savings with their individual risk/returns objectives. In addition, the structure is meant to provide investment portfolio choices to contributors.

    The Non-Interest Fund is a fund that complies with Sharia principles. It has provided an inclusive option for contributors to save for their retirement while respecting their ethical preferences. The reception for the Non-Interest Fund has been positive and PenCom is continually working to expand awareness and access to this option. As at 31 August 2023, the value of the Active Non-Interest Fund and Retiree Non-Interest Fund stood at N42.43 billion and N5.24 billion respectively.

    Nigeria’s pension assets are now over N17 trillion. What does this mean in a layperson’s language?

    The Nigerian Pension Industry has witnessed significant growth in assets under management which, as at 31 August 2023, stands at N17.29 trillion. This pool of funds has significantly enhanced savings mobilisation, capital market development and economic growth. Specifically, Pension Funds have been deployed for investment in infrastructure targeted at financing waste management, independent electricity generation and road construction (Sukuk). Furthermore, Pension funds have increased the availability of long-term funds for investment in the real sector of the Nigerian economy.

    Some examples of infrastructure projects financed with pension funds include roads built across the six geopolitical zones under the Sukuk program, Akute power plant, Island power plant, Pipp Genco, Gasco Marine limited and the Construction of 1200 hostel rooms at the University of Calabar, Cross Rivers State.

    In the final analysis, an improved economy and financial system directly benefit individual pension contributors through improved returns on pension savings and enhanced payouts at retirement.

    The impression outside is that PenCom is awash with money like NNPC, FIRS and similar institutions. How much of the pension assets are with PenCom?

    The roles and responsibilities of all players in the pension industry are well defined by the PRA 2014. PenCom was established by law to regulate, supervise and ensure the effective administration of pension matters in Nigeria. Accordingly, the functions of PenCom include the regulation and supervision of the CPS; issuance of guidelines for the investment of pension funds; and approving, licensing, regulating and supervising Pension Fund Administrators, Custodians and other institutions relating to pension matters as the Commission may from time to time determine.  

    Read Also: PTAD: Resolving pensioners’ issues

    On the other hand, Pension Fund Administrators are companies licensed by PenCom to manage and invest the pension funds in the employee’s RSA, while Pension Fund Custodians (PFCs) are responsible for holding pension assets in safe custody on trust for pension contributors. PFCs receive pension contributions and settle transactions relating to the administration of pension fund investments on behalf of PFAs.

    Based on this explanation, I believe it is clear that PenCom does not have custody of pension assets, neither can it access the funds which are held in custody by PFCs.

    You introduced the Micro Pension Plan for individuals and small businesses. It would appear that adoption has been very low. Why is this so?

    The Micro Pension Plan (MPP) was introduced to broaden pension coverage, particularly for individuals and small businesses in the informal sector. From its inception to September 2023, about 105,455 contributors have been enrolled in the MPP. However, registration numbers have fallen short of initial projections due to several factors.

    Firstly, there are notable challenges within the informal sector which are related to accessing financial services, building trust and understanding the pension system. Secondly, the current unavailability of appealing incentives associated with the product has made it less attractive to our target clientele. PenCom is actively exploring the introduction of incentives, such as health insurance coverage for MPP participants, in order to address this challenge.

    Finally, the economic situation in the country, characterised by high unemployment, inflation and rising poverty levels, has slowed down the uptake of the MPP. The MPP remains a vital initiative and PenCom is committed to making it more accessible and appealing to a broader spectrum of individuals and small businesses in the informal sector.

    The introduction of the RSA Transfer System is one of the major highlights of your tenure so far. What changes has the industry witnessed as a result?

    The RSA Transfer System (RTS), which enables RSA holders to seamlessly transfer their RSAs from one PFA to another, was introduced in November 2020. The RTS has been a significant milestone in the Nigerian pension industry and has facilitated the transfer of RSAs without losing pension benefits. It is noteworthy that the RTS has improved competition among PFAs, driving them to offer better services and competitive investment returns. The ultimate beneficiaries are RSA holders because the RTS has enhanced the pension industry’s overall efficiency and competitiveness.

    Many government agencies and senior officials are still trying to exit the CPS. How much danger does this pose to the Pension Industry as a whole?

    The CPS was meticulously designed to ensure the sustainability of pension benefits for all participants. You may wish to note that the reasons that informed the decision of the Federal Government and that of the 6th and 8th National Assembly to decline the request to exempt some personnel from the application of the CPS are still valid. Indeed, the arguments against the exemption of these personnel are compelling and reinforced by economic, fiscal, social and public policy reasons.

    Exemption of government agencies and personnel from the CPS would imply an additional financial burden on the Federal Government. It is trite that the Federal Government is already overburdened with the payment of pensions under the Defined Benefits Scheme, as illustrated by the 2023 Appropriation Act which made a provision under the Service Wide Vote for the sum of N854.8 billion as total allocation for Pension and Gratuities. This amount includes allocations to Military Pension (N244.6 billion), National Intelligence Agency (N10.4 billion) and the Department of State Security (N18.5 billion), representing 29%,1.2% and 2.2%, respectively.

    Another immediate negative impact of exemptions from the CPS is that it would unsettle the FGN’s fiscal policy and financial system stability. It is imperative to note that as at 31 August 2023, about 66.31% of the N17.2 trillion pension assets are invested in Federal Government securities. Exemptions from the CPS would lead to material divestment from FGN securities before maturity, which would have ripple adverse effects on government’s finances and the entire financial system.

    It is also important to note that the exemption of any agency from the CPS would erode the pool of long-term investible funds accumulated under the Scheme. This would undermine the process of funding the huge infrastructure gap in the country. Indeed, it is noteworthy that the pension industry has significantly contributed to the provision of finance for infrastructure development in Nigeria through investments in infrastructure bonds (including sukuk).

    In your book Fighting for the Future: Nigeria’s Pension Reform Journey, you spoke about an “industrial complex” built on blackmailing government officials. You narrated several occasions in which the media was used to intimidate you. Is there a solution to this?

    The issue of undue influence and intimidation by some media outlets, particularly online media establishments, is a challenge that needs to be addressed as part of a reform process. Transparency, accountability and a robust regulatory framework are vital to combating such practices. PenCom has made significant strides in improving transparency in the pension industry and strengthening regulatory oversight. The Commission is, in order to preserve Nigeria’s pension system, committed to upholding the highest ethical standards and working with relevant authorities to address any undue influence or intimidation attempts.

    President Bola Tinubu has promised economic reforms. Is there any reform the Pension Industry needs now that you would want him to address?

    President Tinubu’s commitment to economic reforms is commendable. Regarding the pension industry, the Commission would welcome the Federal Government’s continued support and collaboration, in order to address the challenges of funding accrued pension rights, pension increases and other outstanding pension obligations. There is also a need for a definitive policy pronouncement to stop further exit from the CPS.  

  • Pension complaints and solutions

    Pension complaints and solutions

    ANONYMOUS: l recently retired from one of the MDAs. What do I do to get my benefits?

    PENCOM: Please visit your PFA and ensure that you have the required documents, have undergone the enrolment and data recapture (if applicable).

    Your PFA will provide more information and guide you through the process.

    DAUDA: Good day, my name is Dauda. I applied for payment since last November 22.

    I have fulfilled the requirements at the Stanbic IBTC Pension office in Abuja, but up till now no information about it.

    I would like the commission to assist me. Thank you. 

    PENCOM: The RSA holder should please visit his PFA for an update as the application has not been submitted to the Commission.

    DOGARA: Good day, my name is Dogara. I salute PenCom for attending promptly to complaints from retirees. My problems are that my PFA invited me for recapture information on September 26, 2019. I went to their office and the recapture was successful.  But, my monthly pension has been stopped for about four years.

    Before the exercise, my PFA IEI Anchor Pensions gave me an Enhancement of Monthly Pension Consent Form to fill which l signed.

    Kindly help me. 

    PENCOM: Please send the complaint to info@pencom.gov.ng.

    SARAFA: Good day, my name is Sarafa. Can you explain Pension Enhancement?

    PENCOM: The Pension Enhancement is periodic boost for retirees on Programmed Withdrawal under Contribution Pension Scheme by using the surpluses generated from return on investments. Visit www.pencom.gov.ng for more information.

    POPOOLA: My name is Popoola. I retired from the Federal Ministry of Agriculture in 2016. I have not been paid the 2.5 per cent increase in pension approved by Mr President since 2021. My PFA is First Gurantee. Kindly investigate.

    PENCOM: Work in progress. Please exercise patience.

    MOHAMMED: Dear madam, my name is Bawa.

     We are the administrators of our  father, the late Mohammed. He worked with Nigeria Immigration Service (NIS) from 1987 and was sacked by the Presidential Task Force in 2006.

    Since then, we have not been paid by the National Pension Commission or the Nigeria Immigration Service. We don’t know where to go or what to do. Please help us.

    PENCOM: Please provide the PFA and PIN number to enable the Commission investigate your complaint.

    ANNONYMOUS: I am Oforlea. I retired on September 14, last year. My date of birth is November 23, 1964, but it was wrongly captured in my NIN as November 23, 1965, which has been corrected.

    Later I went for recapturing at Premium Pension but the staff member in charge  refused to attend to me. He said my date of birth was different from the one in PenCom record.

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    I have November 23, 1964 in my records. What should I do?

    PENCOM: Please send the complaint to info@pencom.gov.ng.

    ANNONYMOUS: I am a police officer.  My pension has not been paid into my account since 2017.  I have been on this for the past three years by moving from one office to another, but my efforts proved abortive. Kindly help me.

    PENCOM: Please provide your name and PIN.

    OLOWOYEYE: Good day, I wish to inform you that the Access PFA have responded to my calls. I am grateful for your kind intervention. Thanks a lot.

    THE NATION: The newspaper is excited that your complaint has been resolved.

    ANONYMOUS: Good day. I am Omobulejo. I retired from Vintage Press Limited in Lagos on August 15, 2020. I regularised my documents with my PFA, Stanbic IBTC, which confirmed it in November 2021 and they confirmed it as okay. Since then, they send me messages to be patient. For how long will I be patient?

    I an unemployed. Please help me. Thank you.

    PENCOM: Please visit your PFA to resubmit your application.

  • Suffering unlimited

    Suffering unlimited

    • Governments keep punishing pensioners ostensibly in a bid to weed out “ghosts”

    A very modern government comes up with measures to make life better for senior citizens. This is in appreciation of the fact that the youth of today, today’s leaders, are tomorrow’s senior citizens. Many have become frail and have very little resources to take care of their needs.

    Pensioners who worked in the public service for decades deserve better attention. They have been left behind in a series of wage reviews such that the paltry sum they are paid can hardly feed them in old age, let alone care for their medical needs, compounded by old age.

    The worse experience is that the old men and women in most states are required to travel to the capital city to verify the authenticity of their documents. This is palpably insensitive and barbaric as the senior citizens are usually kept standing on verification queues.

    There are so many ways this could have been done better. First, if the biometrics have to be freshly captured so many times, couldn’t the exercise be decentralised to the various local government areas, or spread over days?

    Second, couldn’t more hands be engaged to cut down the hours it would take to ensure that they are attended to? Many are known not only to have collapsed owing to exhaustion, some actually died in the process. The younger workers now in charge could not even ensure that medical personnel are on hand to attend to those who may have medical conditions.

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    It is difficult to understand that in the 21st century Nigeria people have to congregate at a centre to capture their biometrics. These retirees are no longer paid by hand, but through their bank accounts. As such, their fingerprints and facial appearance could be verified through their bank verification numbers. It is thus sheer punishment to take them through such laborious process.

    More than a decade after the Pension Reform Act was enacted, very little has changed as most state governments and even sections of the private sector have been reluctant to embrace the contributory pension scheme. Where companies have enrolled their workers, they are not faithful in remitting the deductions.

    We call on the Federal Government to take the lead in boosting the welfare of the retired workers. The law should be fully applied against those who fail to ensure that remittance is made promptly and regularly.

    Last week Monday’s collapse of three retirees who had filed out to be captured by the consultant engaged by the Osun State government was one shameful episode too many.

     Unless dignifying measures are taken, even the palliative measures introduced to relieve the economic pains in the country could as well compound the difficulties being experienced by retirees as they would again be made to travel long distances and lined up to be counted before they can receive what is promised them.

    Trade unions have a duty to speak out for the old men and women whose voices have become muffled. Where employers of labour, especially governments continue to trample on old employees’ rights, the union leaders and activists should rise up nationwide to demand better life for them.

  • Pension complaints and solutions

    Pension complaints and solutions

    ANNONYMOUS: l recently retired from one of the MDAs. What do I do to get my benefits?

    PENCOM: Please visit your PFA and ensure that you have the required documents, have undergone the enrolment and data recapture (if applicable).

    Your PFA will provide more information and guide you through the process.

    DAUDA: Good day, my name is Dauda. I applied for payment since last  November 22.

    I have fulfilled the requirements at Stanbic IBTC Pension office in Abuja, but up till now no information about it.

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    I would like the commission to assist me to know the position. Thank you. 

    PENCOM: The RSA holder should please visit his PFA for an update as the application has not been submitted to the Commission.

    DOGARA: Good day, my name is Dogara. I salute PenCom for attending promptly to complaints from retirees. my problems are that my PFA invited me for recapture information on September 26, 2019. I went to their office and the recapture was successful.

    But, my monthly pension has been stopped for about four years.

    Before the exercise, my PFA IEI Anchor Pensions gave me an Enhancement of Monthly Pension Consent Form to fill which l declared and signed.

    Kindly help me. 

    PENCOM: Please send the complaint to info@pencom.gov.ng.

    SARAFA: Good day, my name is Sarafa. Can you explain Pension Enhancement?

    PENCOM: The Pension Enhancement is periodic boost for retirees on Programmed Withdrawal under Contribution Pension Scheme by using the surpluses generated from return on investments. Visit www.pencom.gov.ng for more information.

    POPOOLA: My name is Popoola. I retired from the Federal Ministry of Agriculture in 2016. I have not been paid the 2.5 per cent increase in pension approved by Mr President since 2021.

    My PFA is First Gurantee. Kindly investigate.

    PENCOM: Work in progress. Please exercise patience.

    MOHAMMED: Dear madam, my name is Bawa.

     We are the administrators of our  father, the late Mohammed. He worked with Nigeria Immigration Service (NIS) from 1987 and was sacked by the Presidential Task Force in 2006.

    Since then, we have not been paid by the National Pension Commission or the Nigeria Immigration Service. We don’t know where to go or what to do. Please help us.

    PENCOM: Please provide the PFA and PIN number to enable the Commission investigate your complaint.

    ANNONYMOUS: I am Oforlea. I retired on September 14, last year. My date of birth is November 23, 1964, but it was wrongly captured in my NIN as November 23, 1965, which has been corrected.

    Later I went for recapturing at Premium Pension but the staff member  refused to attend to me. He said my date of birth was different from the one in PenCom record.

    I have November 23, 1964 in my records. What should I do?

    PENCOM: Please send the complaint to info@pencom.gov.ng.

    ANNONYMOUS: I am a police officer.  My pension has not been paid into my account since 2017.

    I have been on this for the past three years by moving from one office to another, but my efforts proved abortive. Kindly help me.

    PENCOM: Please provide your name and PIN.

    OLOWOYEYE: Good day, I wish to inform you that the Access PFA have responded to my calls. I am grateful for your kind intervention. Thanks a lot.

    THE NATION: The newspaper is excited that your complaint has been resolved.

    ANNONYMOUS: Good day. I am Omobulejo. I retired from Vintage Press Limited in Lagos on August 15, 2020.

    I regularised my documents with my PFA, Stanbic IBTC, which confirmed it in November 2021 and they confirmed it as okay. Since then, they send me messages to be patient. For how long will I be patient? I an unemployed. Thank you.

    PENCOM: Please visit your PFA to resubmit your application.

  • 25 states, FCT enact Contributory Pension Scheme law

    25 states, FCT enact Contributory Pension Scheme law

    No fewer than 25 states and the Federal Capital Territory (FCT) have enacted laws on the implementation of the Contributory Pension Scheme (CPS) as at last month, the Director-General, National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar, has said.

    The DG, who made this known in a report obtained by The Nation, said the development further affirmed the progress made by the commission.

    She described the enacted laws, which are in  tandem with the provisions of the Pension Reform Act (PRA) 2014, as the first significant step towards the domestication of the CPS at the sub-national level.

    Specifically she said, Section 2(1) of the PRA 2014 provides that the CPS applies to any employment in the Public Service of the Federation, the FCT, states, and local governments, as well as the private sector.

    She maintained that by the provisions of the 1999 Constitution of the Federal Republic of Nigeria (as amended), state governments could legislate on pension matters; consequently, state governments have to domesticate the CPS within their various jurisdictions by enacting a state pension law.

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    She said while six states were at the bill stage, six already have laws on the Contributory Defined Benefits Scheme (CDBS).

    Commendably, she said, 16 states have established Pension Bureaux/Boards, and 11 are remitting employer and employee pension contributions in line with the CPS.

    She added that seven states have, however, started paying pensions to retirees under the CPS.

    She pointed out that PenCom, as the apex regulator of the pension industry in Nigeria, has, however, intensified the drive to implement the CPS by states and local governments. PenCom remains committed to the effective regulation and supervision of the pension industry.

    She said: “The transition from the Defined Benefits Scheme (DBS) to the CPS or even the CDBS at the state and local government levels is significant in several ways and inevitable eventually, even for the states yet to do away with the DBS. The CPS is structured to ensure that  retired employees receive their benefits as and when due. The benefits of the CPS are enormous. The CPS is the best solution for pension liabilities, which many states are grappling with.

    “States that fail to offset pension arrears are creating a financial burden on future generations as these pension benefits will continue to grow. States can avoid this trap by adopting the CPS. The CPS will stem further growth of pension liabilities and provide fiscal discipline in the budgetary process because pension obligations would be accurately determined and settled systematically. Importantly, assets are available at the exit of a retiree for payment of pension benefits promptly. Thus, no accumulation of pension arrears.

    “The CPS provides safeguards to enable states to combat corruption in the pension sector. The pension contributions are received and held by custodians in the name of the Retirement Savings Account (RSA) holder.

    “The RSA holder can only access the funds at retirement or under specific conditions. Licensed Pension Fund Administrators (PFAs) invest the funds to ensure safety and earn fair returns for the contributors. Pension assets cannot be used to meet the claims of creditors of pension operators. They cannot be seized or subject to execution of judgment debt or sold, granted as a loan or used as collateral.”

    Mrs. Aisha-Dahir said due to the contributory nature of the CPS, employers no longer needed to bear the burden of making provisions for retirement benefits for their employees.

    Unlike the DB scheme, she continued, employees under the CPS are also responsible for contributing towards their retirement benefits, thus reducing the financial burden on the employer.

    “In addition, the scheme has provisions for employers to pay monthly pension contributions. This provision alleviates the burden on employers to make bulk payments to settle pension liabilities. The CPS is a more efficient avenue for financing state governments’ long-term borrowing needs via investible instruments such as infrastructural bonds.

    “States that implement the CPS derive the benefits of generating long-term savings, which can promote the growth of their real sector as PFAs invest in bonds issued by such states. PFAs are not allowed to invest in the bonds of states yet to implement the CPS.

    “Meanwhile, PenCom’s regulatory oversight of states and local governments’ pension schemes is guided by the provisions of the enabling laws in the states. Section 23(i) of the PRA 2014 clearly emphasised that PenCom’s role regarding the CPS at the sub-national levels shall be to promote and offer technical assistance to states in line with the scheme’s objectives.  

    “Despite the enormous benefits of the CPS, it would be contrary to constitutional provisions for PenCom to enforce the requirements of the PRA 2014 on the states without recourse to state laws and prevailing economic limitations at every material point.

    “PenCom has continued to adopt the persuasive approach to drive full implementation of the CPS at the states and local governments.

    “A key objective of the Pension Reform Act (PRA) is to establish a uniform set of rules, regulations, and standards for administering and paying retirement benefits for the public and private sectors at the national and sub-national levels.

    “The National Council of State in its meeting of August 2006 adopted the CPS for states and local governments. Following the scheme’s adoption, a Model State Pension Law was developed for the state governments to adopt and modify based on their peculiarities.

    “The National Pension Commission (PenCom) reviews draft state Pension Laws and supports states in implementation,” she noted.

  • What you should know about Defined Benefits Scheme: Part 6

    What you should know about Defined Benefits Scheme: Part 6

    What are the cut-off dates for pure federal pensioners and state with Federal Share pensioners?

    The cut-off date for the pure federal pensioners under the Defined Benefit Scheme is June 30, 2007 while the cut-off date for the state pensioners with Federal Share is March 31, 2011.

    Also, the state pensioners with Federal Share must have started work on or before  March 31, 1976.

    How do I correct an error in my verification slip after I have been verified?

    Send a notification to PTAD attaching a photocopy of the verification print-out and the supporting document(s) for the change to be effected.

    Why are monthly pension sometimes delayed?

    A number of reasons may cause delays in receiving monthly pension, such as non–availability of funds; change in bank records or account numbering system; Failed payments due to technical glitches on the government’s e-payment platform; operational delays by banks (PTAD ensures follow up)

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    Is change of date of birth possible?

    Yes. Only the date of birth recorded at the time of entry into the service is acceptable for processing pension.There is no room for change of information on date of birth as such change does not translate to any possible pension benefit. Requests for change of name should be done in line with the answers under Question Number 47 below.

    What are the procedures for change of account or bank by a pensioner?

    The pensioner should forward an application letter addressed to the Executive Secretary explaining the reason for the change of account. He should attach statement of account of the old account; statement of account of the new account; BVN slip, and letter of non-indebtedness from the old bank.

    Thereafter, he will be required to complete a certificate of indemnity in a prescribed form to indemnify the Directorate from any form of liability that may arise from the change of Account or Bank.

    What are the procedures for change of name?

    The pensioner should forward a for an application letter to the Executive Secretary explaining the reason for the change of name. The application should be accompanied documents such as birth certificate or an affidavit of declaration of age; National Identity Card issued by National Identity Management Commission (NIMC); Identity card; newspaper publication; BVN slip; statement of account; marriage certificate for married women; certificate of indemnity in a prescribed form to indemnify the directorate from any liability arising from the change of name.

    What are the likely reasons for change of name by a pensioner?

    The main reasons why people change their name are reflecting change in-marital status such as marriage, divorce, etc; and change of family name.

    What are the features of a valid letter of administration?

    Letters of Administration are usually granted by a probate registry of a High Court to appoint appropriate person(s) or institution to administer the estate of a deceased person in line with applicable laws and regulation such as the Administration of Estate Laws, 2005.

    A valid Letters of Administration must contain name of the court (High Court); name of deceased; date granted; place of death; name and addresses of the beneficiaries; value of property; seal of the court; and registration number of the letters.

    Which of the courts are saddled with issuing Letters of Administration?

    The High Court of a state or FCT High Court. Letters of Administration purportedly issued by magistrates or customary courts are not admissible.