The Nation Newspaper

Tag: pension

  • Pension funds safe, says PenCom chief

    Pension funds safe, says PenCom chief

    There has been no record of pension fraud or embezzlement under the new pension scheme, the Contributory Pension Scheme (CPS), the Director-General, National Pension Commission (PeCom), Chinelo Anohu-Amazu has said.

    Speaking to reporters in Abuja, he said the over N5trillion pension funds under the CPS arrangement is safe.

    According to her, the fact that there has been no record of fraud, stealing or unlawful diversion by both regulator and operators since the establishment of the CPS shows that the scheme is safe. She said unlike in the past where Nigeria operated the Defined Benefit Scheme (DBs), which left a total deficit of over N2trillion, the CPS has in 10 years accumulated over N5trillion.

    The PenCom chief debunked claims that N3.5 trillion of the pension assets had been drawn down by the previous administration to finance recurrent expenditure. She said this is not correct noting that the amount being referred to, is the current total value of pension fund investments in Federal Government of Nigeria bonds and treasury bills.

    She assured that the pension fund assets are intact, stating that treasury bills and government bonds are adjudged to be the safest instruments for pension fund investments.

    She explained that the administration and workings of the CPS makes it difficult for anyone to steal or divert the funds.

    She said: “The scheme requires pension funds to be privately managed by licensed Pension Fund Administrators (PFAs). They have been duly licensed to open Retirement Savings Accounts (RSAs)for employees, invest and manage the pension funds in a manner as the Commission may from time to time prescribe; maintain books of accounts on all transactions relating to the pension funds managed by it; provide regular information to the employees or beneficiaries and pay retirement benefits to employees in accordance with the provisions of the Pension Reform Act 2004.

    “Pension Fund Custodians (PFCs) will be responsible for the warehousing of the pension fund assets. The PFAs shall not be allowed to hold the pension funds’ assets. The employer sends the contributions directly to the custodian, who notifies the PFA of the receipt of the contribution and the PFA subsequently credits the retirement savings account of the employee.

    “The custodian will execute transactions and undertake activities relating to the administration of pension fund investments upon instructions by the PFA. The custodian shall hold pension fund assets on trust for its clients.”

    She further explained that the key objective of the pension reform is to introduce a pension system that is sustainable and has the capacity to achieve the ultimate goal of providing a stable, predictable and adequate source of retirement income for each worker in Nigeria.

    “The reform also seeks to establish a uniform set of rules and regulations for the administration and payment of retirement benefits in both the public and private sectors; stem the growth of outstanding pension liabilities; reduce fiscal cost of pension to government; stimulate domestic savings; and generate pool of long-term funds for financing developmental projects and increase private investments,” she said.

    She pointed out that the  CPS  has gradually  gained  public  confidence   and  acceptability   within the  short  period  of  its implementation, adding that the  private  sector,  which  hitherto was  apprehensive   of the CPS,  has come  to accept  it and  is implementing the reform.

  • Retired teachers bemoan pension arrears in Enugu

    Retired primary school teachers in Enugu State have complained  about being owed 27 months of pension.

    The senior citizens lamented that some of them were yet to receive their gratuity after retirement since 2002.

    The retired teachers from the three senatorial zones made known their woes when they paid a courtesy call on the Speaker of Enugu State House of Assembly, Rt. Hon. Edward Ubosi in his office.

    A delegation of the retired teachers led by their chairman, Chief Matthias Onovo and the secretary, Chief Ben Nwachi disclosed that they had written relevant authorities in the past without any positive result saying that as a result of the lack of payment of their pension and other entitlements, some of their colleagues have died while many are bed-ridden for lack of fund for medical care.

    Having exhausted every avenue possible to see that the past administration paid them their due, the retired teachers resorted to calling on the Speaker to bail them out.

    They listed other grievances to include harmonisation arrears, 6, 15, and 33 percent pension increases; irregularities in payment of monthly pensions, and non implementation of promotion re-computer i.e promotion received after retirement among others.

    Ubosi assured the retired teachers that something would be done to alleviate their plight saying that, “your labours will never go in vain. You have laboured and you deserve to be paid. “

    The speaker said that they came at the right time when the government has set up an audit committee of the local governments of which he is the chairman, pointing out that the issue of teachers as well as their pensioners was part of the terms of reference given by the governor.

    He thanked them for making the submission that would serve as a guide to the audit committee set up by Gov. Ifeanyi Ugwuanyi led administration to look into the rot in the councils with a view to making them viable.

     

  • ‘Why service delivery in pension plan is crucial in Africa’

    Service delivery in pension plan will drive growth in the African pension industry, strategy development and implementation expert, Muibat Ijaiya has said.

    Ijaiya who is a partner with Strategy Management Partners, spoke on service delivery in pension plans at a pension forum in Abuja.

    She said customer experience has  direct impact on growth, noting that in a connected digital world, it pays to get the customer experience right.

    According to her, there is need to design a service delivery model and in doing this, it is essential to consider a desired customer experience for  pension participants at each point of interaction.

    She stressed that this include a true combination of a blue-print and best practice, where the administrative and operational essentials linked to the needs of the participants is showcased.

    She said: “Ideas on communications tools and concepts, can be adopted to realise the participants’ best understanding of pensions and control of their financial wellbeing. This would be key components, essential information blocks and new ways of participant’s involvement.

    “On service delivery, a set of integrated activities, processes, procedure, teams and systems among others should be combined to provide services to customers. It is much broader than customer service; which is a component of it. It is also not a one-size fit all.”

    She noted that in designing a service delivery model with customer experience at its heart, the experience must reflect the brand promise consistently.

    “We must develop strong understanding of the different segments of current and potential participants; their needs, limitations, challenges and desired outcomes. Define a service delivery model and structure the interactions. Be clear about the customer experience to be delivered at each stage of pathway, how and by whom.

    “Delivery location should be defined by participants’ needs and not that of the provider. Their role should not be passive. Use appropriate tools & forums to continuously engage, gather feedback and co-create experience solutions that delight.

    “Identify and address the root causes of problems that have high potential to undermine customer experience. Service boundaries will evolve. Periodically review and align the structure, operations, systems, teams and processes that are critical for delivering on the customer experience,” she added.

  • Akwa Ibom govt ready to invest in pension equities

    The Akwa Ibom State government says it is ready to invest in the pension industry to generate income for the state.

    Governor Udom Emmanuel  spoke in an interview with the News Agency of Nigeria (NAN) on the sideline of the on-going World Pension Summit in Abuja.

    He said the N5 trillion pension fund could create a lot of investment opportunities for interested investors.

    “The main reason for this is with over N5 trillion, which is over $25 billion, we have a whole lot of investment opportunities where we are doubly sure the pension fund can actually be invested and they can also realise the money because that is the essence of investment.

    “You don’t invest to lose your capital; you invest to actually get adequate return on your investment. Even in terms of road infrastructure, the economic viability of the roads in the Southsouth (zone) is being linked up by Akwa-Ibom.

    “So, we can actually earmark some of these for the investors to come under the PPP (public private partnership) model. We as a state government will also be interested in taking up some equity.“

    The governor said pensioners in the state were receiving their monthly pension on a regularly.

    According to him, the state government has been concentrating on the development of infrastructure in the past few months.

    “We have concentrated on some of this infrastructures, especially in terms of the human capital development,“ he said.

    Emmanuel told NAN that the state had the natural resources and the creativity to drive development in all sectors of the economy.

    He, however, said adequate funding was required to develop the infrastructure needed to drive the development process.

    “You could actually hear when I talked about the three Cs – cash, commodity and creativity. In this case we are creative in ideas, policies and in our approach on programmers that we invent.

    “In terms of commodity, we all know how wealthy we are in terms of the abundant natural resources. Cash could be a problem, but who owns the cash? It is either the capital market or the pension fund,“ he said.

    Emmanuel advocated the setting up of an institution that would ensure proper and accurate remittance of pension contributions.

    “Once you set up strong institutions, those things are mere administrative. We are after building those strong institutions so that processes and procedures can actually run normally.

    “So, set up strong institutions and things will happen – policies, procedures and processes will actually run,’’ he said.

     

     

  • PenCom probes 15,000 employers for failing to remit pension

    OF the 200,000 employers under the Contributory Pension Scheme (CPS), 15, 000 are being investigated for failing to remit pensions deducted from their employees’ monthly emoluments, Director-General, National Pension Commission (PenCom), Mrs Chinelo Anohu-Amazu has said.

    In a report, she  said the defaulters have been assigned to Recovery Agents (RAs) to review their records and recover any outstanding pension contributions plus penalty

    According to her, in pursuance of the statutory responsibility of ensuring compliance with the provision of the PRA 2014, the Commission deployed an application called Risk Management Analysis system for monitoring remittance of monthly pension contributions by employers.

    She said: “Defaulting employers are subject to the regime of sanctions which includes among others a recovery process.

    “The framework for recovery of outstanding pension contributions with penalty from defaulting employers among others, provided for appointment of RAs.

    “Consequently, the Commission has identified and assigned over 15,000 employers to RAs to review their records and recover any outstanding pension contributions plus penalty. The Commission also follows up on complaints from workers against their employers for failure to remit pension contributions as and when due.”

    Mrs Anohu-Amazu noted that where the employer refuses to remit the outstanding pension contributions of its employee within the time  stipulated by the  Commission, appropriate actions, including instituting legal action are taken.

    She further said remittances by state governments have also been irregular.

    “Irregular remittance by some state governments contribute to the unfunded RSAs which is caused by the economic challenges faced within the country.

    “The private sector employers also view pension contributions as an additional cost of doing business which translates to non-funding of RSAs. In addition, refusal of employees to allow deduction of their own portion of the pension contributions from their salaries due to lack of awareness of the benefits of the CPS and measures put in place for the safety of the pension funds contribute to poor funding of RSAs.”

    She stressed that both PenCom and the Pension Fund Administrators (PFA) work towards ensuring employers continuously fund their employees RSAs.

     

  • How to invest pension funds

    What is a pension? Put simply, a pension is a vehicle to provide deferred compensation to employees and usually their partners in retirement. Properly managed, a pension must cover its liabilities as these become payable.

    Nevertheless, many pension plans today invest their assets independently of the promises or liabilities created. A recent study showed that US pensions still invest close to 60% of their assets in equities, almost 25% in bonds (down from prior periods), and the rest in cash/other. This can create an asset-liability mismatch, meaning that retiree benefits may not be payable if the stock market takes a tumble and stays down for years or during periods that liabilities/promises fall due.

    There may be lessons to be learned from endowments and sovereign wealth funds (SWFs). Most critically, the “better-managed” among these institutions tend to incorporate both a liability and a funding analysis in their investment program. That is, similar to pensions, endowment and SWF obligations can be outlined in terms of near, medium and long term funding needs: for instance, a sovereign or organization may save and invest for the population’s aging-related costs, such as medical or long term care, or to finance a new university library.

    Similarly, we can think about ourselves as needing to understand our future liabilities or needs, identifying both the “hard” and the “soft” liabilities. Hard liabilities could involve a mortgage or a child’s education costs, while soft liabilities may include travel or expensive hobbies, or uncertain health issues and broader family obligations, such as care for parents.

    To the extent that some of your retirement needs are longer term, this can allow you (and your pension fund) greater investment flexibility. For instance SWFs, endowments and life insurers often provide or “sell” liquidity via investment capital seeking a 4-6% illiquidity premium; this means they lock-up capital for longer periods, rather than having more immediate access.

    Yet regulators and policymakers largely focus on the asset side of institutional balance sheets, rather than liquidity, funding and liability structures. Indeed, this was a contributing factor to regulatory shortcomings before the financial crisis of 2008. Today, we seem to be doing the same again…for example, efforts to regulate non-banks – including pensions – the same as banks, leads to short-termism, and we are implementing non-risk based rules on banks (eg., leverage ratios), which lead banks to provide less market liquidity. Such regulatory policies influence market behavior, making it more difficult for retirement investors to exercise the flexibility inherent in their balance sheet structures. What we need is for the less-liquidity-constrained investors to provide longer-term capital, given their longer-term liabilities, and not encouraging pro-cyclical or short-term investment behavior.

    • Culled from Forbes
  • Non-remittance of pension: PenOp urges workers to report erring employers

    Non-remittance of pension: PenOp urges workers to report erring employers

    Workers have been urged to report employers who fail to remit their pension contributions.

    Chairman, Pension Fund Operators Association of Nigeria (PenOp), Misbau Yola, made the call during the PenOp/PenCom Consultative Forum in Abuja.

    He said it is the duty of employees to complain to their Pension Fund Administrator (PFA) and the National pension commission (PenCom).

    He advised employees not to be afraid, adding that they could report anonymously to avoid reprisal by their employers.

    He said: “If you find out your employer is deducting money from your salary for pension and not remitting same, it is your responsibility to complain to your PFA to see how they can recover the money or report to PenCom. There is a complain channel at PenCom.

    “Employees must rise up because the law backs them. They must find a means to get their employers remit their pensions. The employee must come together and put pressure on the employer to pay. When your self-help fails, then you can approach PenCom. PenCom has the power of prosecution. You don’t have to be afraid but if you are afraid, you can write anonymously to PenCom.’’

    He continued: “While the PFAs don’t have the powers to enforce complaints, PenCom has the powers of enforcement. They have an enforcement departments. In some instances, PenCom has engaged recovery agents to recover the pensions. Unlike FIRS that can seal premises, PenCom don’t have that power but they can prosecute. PenCom partners with federal parastatal such that now, if you want to do a job with them, you will show a certificate of compliance. Some major organisations like Mobil and Shell have also introduced similar conditions.”

    Yola, however, noted that the fact that PenCom cannot seal off premises of erring employers may also be slowing them in recovering unremitted pension deductions of employees.

    He pointed out that employees who complained were vague as they did not provide specific details.

    “We really need to speak up. If people are afraid of speaking up because they are afraid to get their rights, how would others get it for them?” he asked.

  • N3.25tr pension funds invested in govt securities, says PenOp

    N3.25tr pension funds invested in govt securities, says PenOp

    About N3.25 trillion out of the almost N5trillion of the Pension Funds so far collected have been invested in Federal Government securities, the managers of the fund, have said.

    The Chairman, Pension Fund Operators Association of Nigeria (PenOp), Alhaji Musbahu Yola, said this yesterday when he addressed journalists at the end of the consultative forum between the National Pension Commission (PenCom) and Pension Fund Administrators (PFAs) in Abuja.

    He said the invested amount is equivalent of 65 per cent of the almost N5 trillion pension assets currently warehoused by pension operators, adding that another 12 per cent has been invested in equities, while 15 per cent is invested in the money market.

    Yola maintained that not withstanding the recent removal of Nigeria from the JP Morgan Index, the country’s Pension Fund Operators will continue to invest in FGN Bonds and Treasury Bills, pointing out that FGN Bonds are not only profitable, they are safe to invest in.

    He aid the removal of Nigeria from JP Morgan Index  would favour PFAs because exiting foreign investors will have to sell their assets at lower prices and it doesn’t mean that the FGN Bonds have become junk.”

    He said PenOp members “will continue to invest in FGN Bonds and Treasury Bills,” wondering  where else would we put the money, Treasury Bills and Bonds are safer assets” he said.

    Yola also revealed that it has been agreed between the PenCom and PenOp members, that 20 million Nigerians will be captured into the pension net by 2024 from the current 6.6 million pension contributors, saying “this is the best we can do under the circumstances and it points to the fact that majority of Nigerians are employed outside the formal sector.

    “State governments have also not complied. The point really is that  most Nigerian businesses are informal or are SMEs that haven’t really kicked in for one reason or the other if our economy develops and becomes more Industrialised with more formal corporations, a lot of people will be captured in the pension net but many Nigerian just do small jobs that are not incorporated.

    You can’t get them in so easily, we know we have a lot more to do, but we shouldn’t be discouraged by the fact that it is 6.7 million out of 170 million. Our objective is to go 20 million by 2024, that is where the informal sectors being captured in the guidelines comes in” he said.

    Regarding unremitted employees’ pension after deductions have been made, members of PenOp urged employees to blow the whistle on the employers. They said “employees are responsible for their pension. If employers are not remitting, employees should go to their PFAs and report, you must be in charge of your pension. The PFAs do not have the power to enforce complaints. PENCom has the power of enforcement and they have engaged recovery agents employees must also rise up the law is backing them they have to find the means of making their employers make those remittances on their behalf either as a union, they must come together and pressurize their employers particularly where they have deducted from the salaries and have not remitted.”

    Yola and his team PenOp associates wondered that “if people are afraid of speaking up for their right who will do it for them? Now anybody who wants to do a job with the federal government must produce their certificate of compliance and some private organizations have included it in their manuals too so that they don’t go foul of the law especially those that provide them with contract staff. To prevent victimization PenCom has been mandated not to reveal the identity of whistle blowers.”

  • Police retirees appeal to PTAD over 11-year pension benefits

    Distressed police pensioners have appealed to the Director-General of the Pension Transitional Arrangement Directorate  (PTAD),  Nellie Mayshack to pay their over 10 years pension benefits.

    The pensioners, numbering over 5000, are majorly soldiers from the Nigerian Army, who got seconded into the Nigeria Police Force.

    Sixty-year-old Inspector, Abu Ekundayo, said he has not been paid his retirement benefits eight years after serving the Nigeria Army and the Police Force for 27 years. He served last with the Lagos State Command, Ikeja, before his retirement on July 1, 2006.

    Ekundayo, who spoke with The Nation on behalf of some of his colleagues, said he was planning to go to PTAD office in Abuja.

    He said he was receiving salary regularly until he retired in 2006, adding that he and his colleagues had high hope that they would be paid after PTAD’s verification exercise carried out on police pensioners nationwide early this year.

    He stressed that following the verification  exercise, PTAD gave them certificate of participation, which included their account number, pensioner verification number, phone number and states.

    Ogundare, who said many of them are seriously sick, homeless and hungry, wondered why they have not been paid till now.

    He appealed to the PTAD and other relevant authorities to come to their aid.

    “I was receiving salary regularly until I retired in 2006 but I have not received my pension since I retired. I have been suffering and partially blind with no money to eat or go to hospital. I have been living a miserable life.

    “We are demobilised soldiers, who fought war between 1967 and 1970 before we were asked to join the Nigeria Police Force. We do not deserve this kind of treatment from the country that we have served,” he said.

    When asked why and when the police retirees would be paid their pension, Mayshack  said the PTAD has just made some payment into the police pensioners’ account.

    She said: “This is good timing. We have just paid this long suffering group, but the Integrated Financial Management Information System (GIFMIS) payment system may take a day or so to deposit the payment into the bank account of the pensioners. But be rest assured that payment is on its way.

    “PTAD has worked extra hard to bring relief to this group of pensioners. We inherited them as a forgotten group, but we are glad that relief is finally here.”

    The Police Pension Department (PPD) was initially established by Decree 75 of 1993 as an Extra – Ministerial Department under the Ministry of Police Affairs. The  Department under PTAD now handles the payment of Gratuity and Pension of Police pensioners, who retired on or before 30th June, 2007, while the National Pension Commission (PENCOM) handles the payment of entitlements of Police personnel in the new contributory Pension Scheme through various Pension Fund Administrators.

    The administrative structure of the Police Pension Department is made up of both civilian and police personnel headed by a Commissioner of Police, who reports to the Director-General of PTAD.

  • AIICO Pension has full disaster recovery plan, says Longe

    AIICO Pension has full disaster recovery plan, says Longe

    AIICO Pensions Manager Ltd has disaster recovery plans as required by the regulatory body, the National Pension Commission (PenCom), itsManagingDirector, Eguarekhide Longe has said.

    Longe, who made this known in an interview with The Nation in Lagos, said PFAs are required to have a disaster recovery plan for them to withstand either major catastrophe or minor disruptions that can shut down businesses.

    According to him, the cost of getting a disaster recovery plan in place is more than 40 per cent, hence the non-compliance by some PFAs.

    He said the PFA is part of an insurance group, which has certification for business continuity. He noted that it is the first in the financial service sector.

    “For us at AIICO, we understand that business continuity is very critical. This is why we have very robust business continuity plans, which is disaster recovery.

    “Business continuity is broader than disaster recovery alone, but  some people don’t have disaster recovery facility.

    ”The regulatory authority takes this requirement very serious and has said any PFA that cannot establish a disaster recovery plan should not bother doing the pension business.

    “It costs money to install, more than 40 per cent of the cost of doing business is related to information technology. Some people may say it is difficult for them to afford it, but the regulatory authority has said you don’t have to do this business if you don’t have the resources to invest appropriately.

    “They are taking these things seriously and for us as a self-respecting PFA, we will do things that will keep us competitive,” he said.