The Nation Newspaper

Tag: pension

  • ‘Non-implementation of Pension Act, threat to workers’ future’

    The Amalgamated Union of Public Corporations, Civil Service Technical and Recreational Services Employees (AUPCTRE) has decried the failure of the Federal Government, states and local governments to implement the New Pension Act 2014 for workers. The union is urging all tiers of government to comply with the provisions of the act so that workers could have something to fall back on after retirement.

    Its General Secretary, Comrade Yusuf Lekke Zambuk, reiterated the union’s position at the 20th Plenary Session of the National Governing Council/AUPCTRE Week in Abuja.

    He regretted that the non-implementation of the New Pension Act 2014 has been posing a serious challenge to an average worker.

    Zambuk said the New Pension Act 2014, Part 11, Section 5, provided for a group Life Insurance Policy for each employee for a minimum of three times the total annual emolument of the employee. The premium is expected to be paid not later than the date of commencement of the cover.

    He, however, said as at date, neither the Federal Government, states nor local government has implemented this policy in favour of employees.

    He said: “It is surprising, however, that political office holders enjoy retirement benefits inclusive of medical, car, furniture among others, after serving their four-year tenure, but nothing is being said about serving public officials by the Federal Government, states and local governments.”

    However, the NGC-in-session has called onorganised labour, which is a Pan Nigerian Organisation and a defender of democratic values, to unite and rise up to effectively engage the political class to ensure that the dividends of democracy are not lost,” he said.

    In a related event, the Minister of Labour and Employment, Dr. Chris Ngige,  has said  the Federal Government will comply fully with section 173 (3) of the Constitution  that makes review of pension compulsory every five years or at any increment of salaries.

    Ngige gave this assurance when the leaders of the Association of Contributory Pensioners of Nigeria (ACPN) visited him in Abuja on Monday.

    He said: “The constitution is clear in section 173(3) on how pension should be administered. It is to be reviewed every five years or upon an increment in salary.

    A review was done in 2011 on minimum wage, and once the minimum wage is touched, it should automatically affect the pension”Serving the nation, nobody should discriminate against you. I don’t understand why in the same country some pensioners are receiving full benefits while others are not.

    This is unconstitutional.”The minister regretted the ordeal of the contributory pensioners and promised to urgently institute an appropriate liaison with Pension Commission (PENCOM) to rectify observed operational anomalies relating to the group so as to ensure that their benefits were fully paid.

    He added that pension matters by the International Labour Organisation (ILO) Convention 102 should be under the Ministry of Labour and Employment, assuring that the pensioners would not be abandoned by the federal government.

    He further said the existing Pension Act made it difficult to register two separate unions under pension as requested by the contributory pensioners.

    Earlier in his address, the Chairman of the association, Mr. Uche Ekpo, lamented the non-representation of the Contributory Pensioners by an organised union, insisting that what the Trade Union Registrar cited as reason for denying it registration covered only the non-contributory pensioners. He, therefore, sought the assistance of the minister for the registration of the body as a trade union so as to better articulate and push the interests of the members of the union.

  • Idle pension funds

    •Government should find ways to tap into the money without jeopardising the goal

    The pension funds story somewhat reminds of the allegory of the dweller on the banks of the River Niger that would rather wash with spittle: A Federal Government on the brink of fiscal insolvency looking in all directions for funds to finance critical infrastructure; a pension system nearly bursting its seams with a huge potentially investible funds standing at an impressive N5.46tn by March ending. Then, a paltry spend of N1.3 billion representing some 0.01 percent out of the whopping N1.16 trillion allowable under the scheme for investment in infrastructure bonds and funds by December 2015. What emerges is a nation with abundant pool of investible funds at its backyard and yet locked in endless quest for offshore funds.

    With shrinking petrodollars and yawning infrastructure gap, it is understandable that the nation’s focus would shift to the pension funds as an alternative source of revenue to finance infrastructure. Indeed, we recall that the Minister of Power, Works and Housing, Babatunde Fashola, at the Nigerian Pension Industry Strategy Implementation Road Map Retreat in January stridently made the case for channelling the nation’s pension funds towards building of roads, hospitals, educational facilities, railways, inland water ways to generate employment, create wealth and improve the standard of living of the citizens.

    Much as such calls are hard to fault at this time, a number of factors are hard to gloss over.

    The first is that pension funds are by nature highly regulated, hence the use of the funds for investments is somewhat restricted. Indeed, under the current National Pension Commission’s (PenCom) guidelines, only a maximum of 20 percent of the total value of pension fund assets could be invested in infrastructure – 15 percent through infrastructure bonds, and another five per cent through infrastructure funds – all of which have stringent conditions attached.

    Second, given the terrible mess made of the old pension scheme, PenCom has understandably been rather careful in erecting necessary safeguards, hence the preponderance of the entire assets – some N3.68tn or 67.47 per cent –in the relatively safe Federal Government’s securities. Indeed, one hallmark of the new pension scheme is the guarantee of security of the funds, the reason it has earned its place as a success story.

    Third is the challenge of finding investible vehicles with low risk profiles and with sufficient comfort to the fund custodians. The simple truth is that a good number of the projects on which the funds are being sought are either poorly conceived or not entirely bankable. That would no doubt explain the rather poor state of utilisation of the infrastructure portfolio recorded last December. To compound the problem is the legal system that has proven time and again as an investors’ nightmare, particularly in an environment where something as ordinary as contracts are not only difficult to enforce, but can drag on interminably to the point of frustrating the would-be investors.

    Be that as it may, we are still of the view that current exigencies call for new thinking on the use of the funds. Indeed, as experience of the South African Public Investment Corporation (PIC) with its highly diversified portfolio worth $150 billion has shown, the funds have the potential to provide a big catalyst to the domestic economy, as well as being a ready vehicle for trans-border investments.

    In the circumstance, the least we expect of the Federal Government at this time is to work with the relevant stakeholders to address these and many of such thorny issues, and by so doing evolve an agreeable framework to ensure utilisation of the portion of the funds earmarked for infrastructure.

  • Lagos pays N64b pension

    The Lagos State Government has remitted N64 billion as Contributory Pension Scheme (CPS) into workers retirement savings account since the inception of the scheme.

    Commissioner for Establishments Training and Pensions Akintola Oke said “as at March, the deductions have cumulatively risen to N64 billion approximately since the inception of the scheme in 2007.

    “Also, since the beginning of the Retirement Benefit Bond Certificate Presentation in 2010 to over 10,000 retirees/ deceased/withdrawn staff, the government has paid accrued pension rights of about N48.08 billion.”

    Oke added that the government had reduced the backlog of terminal entitlements of retirees, saying that between last August and April, the government, through the State Pension Commission (LASPEC) paid N13.701 billion into the Retirement Savings Account (RSA) of 3,069 retirees.

    He said 1,294 of the retirees were from the Local Government and while the State Universal Basic Education Board (SUBEB) had745; Teachers Establishment Pension Office (TEPO) 731 while the mainstream service had 299 retirees.

  • Why N1.059tr pension fund remains idle, by PenCom

    Why N1.059tr pension fund remains idle, by PenCom

    The National Pension Commission (PenCom) has explained why about N1.059 trillion available for infrastructure financing as at last December, cannot be deployed. There are no investment instruments, Director-General Mrs. Chinelo Anohu-Amazu has said.

    She spoke during the Public Hearing of the Joint House Committees on Pensions, Finance, Capital Market and Institutions on “The Need to Invest Pension Funds to Meet Nigeria’s Infrastructural Challenges and Threat to Continuation of the Contributory Pension Scheme by Non-Remittance of Contributions.”

    The infrastructure deficit currently stands at about N23 trillion.

    She said there is an urgent need to refocus the discussion to a call for development of bankable and eligible infrastructure financing structure in Nigeria that can attract pension fund and other institutional investments.

    The Forum was organised by the Joint House Committees at the National Assembly Complex in Abuja.

    As a way forward, she said the commission has recommended steps which relevant Federal Government agencies should immediately embark upon.

    According to her, the steps to take include: “Determination of key infrastructure segments to focus on –roads, rails, power and ports. The need to identify potential projects and create PPP vehicles for these projects, put  in  place  appropriate  government  guarantees  that  will  improve  ratings of infrastructure projects and thereby increase their attractiveness to institutional  investors and provide other Government support, such as long-term policy planning and tax incentives to encourage investors invest in less liquid, long term infrastructure investments.

    “They should create a public/private intermediary that provides instruments, such as takeout financing, co-financing in the form of long-term or subordinated debt, and a variety of guarantees, the intermediary would need to have a credible governance and management structure in place that provides oversight as well as checks and balances to maximally insulate its operations and decision-making from political influence, the intermediary should provide the credit assessment and arranger functions and there must be improved coordination between key stakeholders such as the Central Bank of Nigeria, the Ministry of Finance, the Infrastructure Concession Regulatory Commission, Securities and Exchange Commission, and various line Ministries, Departments and Agencies to ensure that the right projects are initiated, financed and successfully completed.”

    She urged her audience to note that one of the achievements of the 2004 pension reform and the implementation of the Pension Reform Act in the past 11 years is the pool of long-term pension fund assets, which has grown to over N5.30 trillion as at 31 December last year.

  • Operators blame idle pension cash on past govts

    Operators blame idle pension cash on past govts

    PENSION Fund Operators Association of Nigeria (PenOp) has blamed the failure to invest money borrowed from pension funds on past governments.
    The group said the funds stand at over N5.3 trillion.
    Its Chairman, Longe Eguarekhide, who spoke at the PenOp2016 Media Retreat for Pension correspondents, in Lagos, said said instead of channelling these borrowings into infrastructure, it had been using it to fund its recurrent expenditure.
    PenOp is the umbrella body of Pension Funds Administrators (PFAs) and Pension Fund Custodians (PFCs).
    Eguarekhide, who is also the Managing Director, AIICO Pension, said people who say pension fund does not have any impact on the economy are wrong, adding that the government has been borrowing about 70 per cent of the funds as allowed by the Pension Reform Act (PRA) 2004 as repealed by the PRA 2014
    He said: “It is a mistake for people to say they don’t see investment that are made from pension fund impacting on the economy. This cannot be blamed on the pension industry but on government. If you look back at how the pension money has been invested, you will find out that over 70 per cent of the money are in government bonds. In other countries, some government invested the money in infrastructure to impact on their local economy. Lagos State is a good case in point.
    “As pension managers, we are not responsible for what government does with money that it borrows. Ideally, monies borrowed for reasonably long term should be used for long term assets and not used to fund recurrent expenditure. It ought to have been used to develop infrastructure because that would have had significant impact on the economy.”
    Eguarekhide said the critical question that Nigerians needed to ask is: What has the government done with all the money it has made from all the borrowings from institutional investors?
    “For instance, if they borrow $2 billion and they take it and utilise it as bail out money, how do you think the creditors will feel? All these questions are very important for people to ask and not look at pension managers as not wanting the fund to be used to impact the economy,” he added.

  • Pension aberration

    SIR: Over the years, I can’t stop imagining why Nigerian politicians earn pension without contributing to such pension. In the civil service, a civil servant is expected to serve for 35 years. During this period, he is expected to contribute certain percentage of his money as pension under the contributory pension scheme. If such civil servant retires, what he gets as pension on monthly basis is less than two-third of his monthly salary while in active service.

    In the case of Nigerian politicians, after serving for just eight years as governor for instance without contributing a dime as pension in the contributory pension scheme, the politician will be placed on a mouth-watering amount which is more than what a civil servant gets in a year as salary.

    This fraudulent pension system where an active politician is placed on pension is draining our economy and should be stopped to save the future of this country. Let us put a stop to this impunity.

     

    • Adewumi ‘Tope Humble

    Omuo-oke Ekiti, Ekiti State.

  • Corruption war: Woman donates pension to Buhari

    A pensioner, Mrs. Rose Arabameh Julius, has donated her monthly pension of Ten thousand naira (N10,000) to support the Buhari administration’s war against corruption.

    Mrs. Julius,  who retired as a cleaner from the Lagos University Teaching Hospital, also promised to contribute N1,000 every month out of her pension towards the rehabilitation of Internally Displaced Persons.

    She said that she was making the donation because she was convinced that President Muhammadu Buhari is a tested man of integrity who can  be trusted to restore the lost glory of Nigeria and drastically curb corruption in the country.

    According to a statement signed by Abiodun Oladunjoye on behalf of the Special Adviser to the President Media & Publicity, Femi Adesina, the pensioner also commended the President’s efforts to end the Boko Haram insurgency and rehabilitate internally displaced persons.

    Receiving the donation on behalf of President Buhari, the Special Adviser to the President (Media & Publicity), Mr. Femi Adesina thanked Mrs.  Julius for her faith in the Buhari administration.

    “We have a pact with Nigerians to change things for the better and we are on the right track. President Buhari and his team are working tirelessly to  revamp the economy, combat terrorism and curb corruption,” Adesina said.

  • Nigeria’s suffocating pension scheme

    The government appears audacious in its quest to bring about ‘change’ but it should be careful for the ‘real change’ would remain scarce if life after service is spent in agony, and retirement a misery.

    The pension scheme in the country is a no-no, to say the least. The system, itself, is self-destructive and the mismanagement of billions of retirement funds only spell a deeper shade of trouble for the nation’s pension system. And despite the resulting decline in government revenue in the face of a troubled economy, government must pay pensioners.

    While it is logical that government will not pay salaries forever, the pension system must be made to work and even sustainable enough to cater for the beneficiaries for a lifetime.

    Here is a reality check. The average retirement age in Nigeria is 65, considered a positive as only 3.1 per cent of the population are 65 and above, but it is disturbing that 34.4 per cent (around 60.6 million) of the population are in the working distribution and more than four per cent of them (6.8 million) will retire before 2025 in an unpredictable mono-economy.

    Despite fluctuations in government revenue, these figures will be state responsibilities, and with the current state-regulated system, it would be only a matter of time before the vagaries of welfare statism crash the economy. Greece is still fresh in history books for those who care to know.

    When current workers provide pension funds for the retired generation predominantly through tax remittances, and the next generation of workers subsequently provides pensions for the current working class, it becomes a dangerous cycle; one that would be unravelled by the slightest drops in government revenue.

    In a desperate measure to pay pensions when revenue drops, governments usually increase the retirement age and make more borrowings as it has done in recent past, while in some cases it prints more notes and effectively ignite future economic hardships it has not been there to steer since leadership is not permanent.

    On the contrary, Nigerians should be free to decide how to invest in retirement from the onset and not cajoled into some untenable welfare scheming, and having vigorously served for 65 years, excuses of misappropriations of promised jumbo-pays cannot be enough. The present administration should make positive choices to end the sorry narrative as the 2014 Pension Reforms still promotes government dominance.

    Government is already overwhelmed with major problems as annihilation of insurgency and a deplorable healthcare system; it should urgently privatise the pensions completely. Another body should entirely be in charge of pensions just like in advanced economies, and the only body in the modern market that can effectively give an investment driven system that will not only improve pension services but also expand government tax base is the private enterprise.

    If privatisation is adopted, three initial positives will materialise: the private enterprise invested pension funds will create jobs which will increase tax base, while generated income are reinvested to spark increase in both individual pension benefits and investor’s profits, nullifying the hectic pay-as-you-go order.

    Liberal economists predicted the advent of pension funds to be a key determinant of capital in the modern economy, for it would hold greats stocks in the investment market, a prophecy exhibiting before us as we can only deprive the economy’s potentials to expand. Liberals do not only believe that a complete privatisation of the pension system will bring about healthy market competition that will promote service quality, but also foresee perpetual improvements in retirement benefits as it is in most developed countries.

    On the contrary, successive administrations have questioned the capacity of the individual to resourcefully manage his retirement savings, since the consequences of waste boil down to the hills of the state as it would be compelled to provide welfare. However, our swiftly enterprising world consumes their paranoia. In fact, statistics have revealed that people are more likely to manage effectively their retirement benefits than their regular salaries.

    The continuous government domination of the pension system undermines self-determinism and disregards human dignity. Nigerians should be at will to choose from arrays of suitable retirement plans deemed beneficial. People that worked for money determine how best it is managed.

    Governments should discontinue being custodian of the pension system since it has no permanent administrative resident. Pension policies often change with administrations and long-term reforms might be hard to achieve as far as politicians prefers to adopt popularity plans i.e., increasing pension benefits to cajole electorates, instead of correct choices to avert future economic problems. Private enterprises on the contrary are in better position for long-term pension planning, for their pedigree and corporate survival are always at stake.

    Centralisation does not make the pension system cheaper or secure; it only neglects potentials for improvements. And the absence of competition minimises choice and levies questionable service quality from the state. Chile completely privatised its pension system in the 1980sand achieved high rates on individual pension accounts, which served as a template for other Latin American countries.

    This administration should know that contemporary governments do not over-occupy themselves with divisible responsibilities anymore, especially as it concerns retirements and investments, for statehood and welfarism could be very hard and often destructive to balance, and Nigeria must be aware.

     

  • N5tr pension funds: Reps, PenCom, PFAs to discuss infrastructure investment

    N5tr pension funds: Reps, PenCom, PFAs to discuss infrastructure investment

    The House of Representatives  has mandated its committees on Pensions, Finance and Capital Market institutions to interface with the Nigerian Pensions Commission (PenCom) and other stakeholders  on the viability of investing part of the N5trillion idle  pension funds in infrastructural facilities.

    The resolution of the House was an offshoot of a motion sponsored by a member, Yusuf Tajudeen, yesterday.

    The motion was passed with dissent from some members.

    While arguing the motion, Tajudeen said there is growing concern over infrastructural decay in all sectors of the country as a result of neglect, ineptitude and lack of planning by successive governments.

    He said the dearth of infrastructure is having far-reaching consequences on the economy of the country.

    He said: “In over one decade of the implementation of the Pension Reform Act, the National Pensions Commission has accumulated about N5 trillion which is mainly in the vaults of commercial banks as free funds characterised by low investment returns and sharp practices by various Pension Funds Administrators (PFAs).”

    According to him, in most countries in Europe, Asia and America, pensions funds are usually invested in the provision of infrastructure as a means to regenerate the funds, grow the economy, sustain meaningful development and met the needs of the citizenry.

    He expressed concern that the consequences of taking  offshore loans and facilities to address the infrastructure needs of Nigeria will, in the long run, bring colossal damage to the economy.

    “The huge infrastructural deficit in all sectors of Nigeria’s economy cannot be achieved through budgetary allocations alone, thus, if no concrete and pro-active investment strategies are put in place to comprehensively address these infrastructural challenges, the nation may be thrown into deeper economic crisis,” he said.

    However, Hon. Pally Iriase and Hon. Lawal (Yobe North/South) sounded a note of caution on the issue.

    Iriase said there is need to be careful so that wrong decisions that would be regretted in the future would not be made on the issue.

    Lawal said members should take cognisance of the fact that already, there is over N80 billion non-performing loans problem in the country and it would be sad if the pension fund becomes a part of that.

    According to him, there might be a scenario in which the retirement benefits of pensioners may not be paid as in the past because of bad investment decisions.

  • Pension contributors up 1.76 per cent

    Pension contributors up 1.76 per cent

    Contributors under the Contributory Pension Scheme (CPS) rose from 6,581,031 at the end of the first quarter of last year to 6,696,793 in the second quarter, indicating a 1.76 per cent growth in the pension scheme membership.

    In a report, the National Pension Commission (PenCom) said the expansion in the industry membership was driven by the Retirement Savings Account (RSA) Scheme.

    It said the membership of the Closed Pension Fund Administration Scheme (CPFA) experienced a negative growth while membership of the Approved Existing Scheme (AES) remained unchanged.