The Nation Newspaper

Tag: pension

  • Pension fees cap could add £1b to savers’ pots

    A cap on excessive pension charges could boost savers’ retirement funds by £1 billion, five times more than previously estimated, one of Britain’s largest insurers has indicated.

    Pension fees will be capped at 0.75pc a year next April under a Government initiative to tackle “rip-off” levies that deplete customers’ savings.

    Ministers initially said this new ceiling would transfer £200 million from insurance company profits “into the pockets of savers.”

    But Royal London, which has 11 million customers calculated that the sum passed to savers by the industry would be monumentally higher.

    Phil Loney, chief executive of Royal London, said: “We estimate the total reduction in long-term insurer income may well reach £1 billion.”

    The cap on charges will apply to workplace pensions linked to the stock market.

    Pension companies such as Royal London take annual fees for managing money saved into company schemes. The charges can range from below 0.5pc a year to more than 2pc. Reducing the higher charges to 0.75pc will allow savers’ funds to grow more quickly to the detriment of pension providers. Royal London profits fell by 49pc the first half of this year as the firm acknowledged it will take less from savers each year.

    David Norman, a campaigner on charges and founder of asset manager TCF Investment, said: “The ordinary saver is entirely justified in thinking – hurrah, this serves the pensions industry right.

    “If on average consumers lose less from their pots in charges, we will all be richer. After all, pensions were not designed to make profit for insurance companies but for savers in old age – at least, that’s how it should be.”

    Justin Modray, founder of Candid Financial Advice, said some of the charges on older pensions were little short of criminal and were only there to pay excessive sales commissions.

    He said things have gradually improved over the years but there is no doubt some pensions remain too expensive. “Insurers are paying the price for treating customers poorly over several decades.”

    However, some commentators warned that reducing charges so quickly could have unintended consequences.

    Loney said the charges cap could do more harm than good, indicating that Royal London and similar providers might hit employers with supplementary fees. These would fall outside the 0.75pc government cap, which relates specifically to the management charges paid by staff.

    Tom McPhail, head of pensions at financial services firm Hargreaves Lansdown, said extra fees outside the cap would be passed on to customers and shareholders.

    “There could be a sort ‘money-go-round’ where insurers put extra charges on employers, who pass these on to staff in the form of lower pay rises and to shareholders in the form of smaller dividends.

    “If that happens there will be little overall benefit to the people the Government is trying to help.”

    Culled from The Telegraph

  • Pension assets hit N4.41tr

    Pension assets hit N4.41tr

    The pension fund assets under the management of the National Pension Commission (PenCom) hit N4.41 trillion as at last June.

    The figure was obtained by The Nation from the National Pension Commission (PenCom).

    In a report titled, ‘Summary of Pension Fund Assets as at June 31, 2014,’ PenCom stated that there  was a 2.04 per cent increase from the N4.32 trillion total assets recorded in May, this year.

    Of the amount, Pension Fund Administrators (PFAs) have invested N2.63 trillion in Federal Government Securities, accounting for 59.53 per cent of the total assets.

    A break down showed that N2.04 trillion was invested in FGN Bonds and N587.66 billion was committed to Treasury Bills.

    In the period under review, the PFAs, however, traded a volume of Domestic Ordinary Shares of N637.84 billion and Foreign Ordinary Shares of N55.86 billion.

    They bought State Government Securities of N187.55 billion and Corporate Debt Securities of N82.92 billion.

    They also invested N1.24 billion in Supra National Bonds, N527.42 in Local Money Market and N496, 000 in Foreign Money Market.

    Similarly, a total of N228.71 billion was invested in the Real Estate Properties accounting for 5.18 per cent of the total pension assets.

    They had a total of N46 billion in cash and other assets during the period under review.

    Meanwhile, the PFAs investment in May showed that total trade on FGN Securities was N2.59 trillion out of which N1.98 trillion was invested in FGN Bonds and N609.38 billion in Treasury Bills.

    Also in May, they invested N615.31 billion in Domestic Ordinary Shares, N54.82 billion in Foreign Ordinary Shares, N190.85 billion in State Government Securities, N78 billion in Corpoprate Debt Securities, N1.23 billion in Supra National Bonds, N496.25 billion Local Money Market and N813, 000 in Foreign Money Market Securities.

    The PFAs invested N228.33 billion in the real estate and N7.5 billion in Private Equities, with cash and other assets put at N42.99 billion.

  • Canada pension assets jump 20%

    The country’s largest pension plan is scouring the world for “diamonds in the rough” as high valuations make acquisitions difficult, Canada Pension Plan Investment Board Chief Executive Officer Mark Wiseman has said.

    According to Bloomberg, assets at the pension fund, which manages retirement money for 18 million Canadians, surged 20 percent to a record C$226.8 billion ($208 billion) in three months ended June 30, Canada Pension said in statement today.

    The report stated that Wiseman said access to cheap credit has created a situation where there is a lot of capital and liquidity in the market and that’s making it a “very difficult” time for a long-term investor like Canada Pension to find value.

    “What we’re doing is being very patient,” he said in an interview. “We’re looking for those diamonds in the rough, and tactically divesting certain non-core assets and that’s the right thing to do in a time like this.”

    Canada Pension’s announcement today had allocated an additional $500 million to its North American joint venture with Sydney-based Goodman Group (GMG) to acquire a portfolio of warehouse and logistics facilities in the U.S. fit that strategy, Wiseman said.

    “The diamonds in the rough for us tend to be those types of assets where it is a very large transaction, where there’s less competition, when there’s a degree of complexity associated with it,” he said.

     

    Remain Difficult

     

    Global mergers and acquisitions have accelerated in the first part of the year with almost $1.9 trillion worth of deals announced year to date, up 66 percent from a year ago, according to data compiled by Bloomberg. That level of activity has created a challenge for value investors like Canada Pension, Wiseman said.

    Finding acquisitions is expected to remain difficult until there is a shift in the monetary policies of central banks, he said.

    Canada Pension had yet to make a decision on whether it would sell its holdings in the expected initial public offerings later this year of Alibaba Group Holding Ltd. (BABA) or Calgary-based Seven Generations Energy Ltd.

    “We are always evaluating all of our assets at any time,” he said. “There is a price at which we are sellers, there’s a price at which we are a buyer.”

    Canada Pension reported gross investment return of 1.6 per cent for the three months ended June 30, according to the statement. That trails the three per cent median return in the comparable period of the C$520 billion universe of Canadian pension funds tracked by RBC Investor and Treasury Services, which reported its survey results.

  • Pension Act denies federal staff of gratuity, EX-TUC boss alleges

    THE implementation of the 2004 Pension Act is denying federal civil servants their gratuities, a former Trade Union Congress (TUC) President, Comrade Peace Obiajulu, has alleged.

    She spoke with reporters yesterday at the fitness training exercise of the Trustfund Pension Plc at Abuja.

    The implementation of the Act, she stated, is at variance with the provision.

    She recalled that upon the enactment of the new Pension Act, former President Olusegun Obasanjo insisted that workers should still earn gratuity alongside their pension entitlement.

    Obiajulu, who compared the old with the new pension schemes, said: “In comparison, it is better but there is room for improvement.

    “Some organisations, especially Federal Government now use it to steal the workers’ gratuity because workers are no more being paid gratuity in Federal Ministries.”

    Calling for improvement in the implementation of the new scheme, the ex- TUC boss said although the Pension Act makes provisions for payment of pension, the Pension Fund custodians now prefer paying 25% and spreading the balance for life.

    She lamented that those who knew her as an advocate of the new Pension law complain the implementation is different from what they battled for.

    Obiajulu, however, said nobody has complained about the operation of the Trustfund Pension Plc to her.

    Former Permanent Secretary, Ministry of Labour and Productivity, Dr. Timiebi Koripamo-Agari, noted that the Act has improved on the payment of pension.

    She admitted that although there are few challenges in the implementation, the Pension Scheme is better than it was.

    “Whether the amount is enough is a different matter but in terms of payment, the pensioners now receive their payment,”  Koripamo-Agari stressed.

    The Managing Director, Trustfund Pension Administration, Mrs. Helen Dasouza, revealed that the firm is about boosting of about 600,000 customers nationwide.

    Announcing the organisation’s target for 2014, she said: “We said that by the end of the year we should be 650,000 registrations.”

    She said that the Trust fund mobile solution vehicle has been of tremendous progress in terms of registration of new customers.

  • Pension contributions’ review reasonable, says Suleiman

    The upward review in the rate of pension contribution from 7.5 per cent to 8 per cent for employees and 7.5 per cent to 10 per cent for employers as amended in the Pension Reform Act 2014 is a slight increase that may not arouse any reaction from employers, Managing Director, FUG Pensions, Usman Suleiman has said.

    He spoke withn reporters in Lagos. He said the increase would provide additional benefits to workers’ Retirement Savings Accounts, thereby enhancing their monthly pension benefits at retirement.

    He said employers who have been contributing without being prompted or coerced will find it easy to adjust to the new rate adding that there are employers who were contributing 20 per cent when the minimum contribution was 15 per cent.

    He said: “All those who are in compliance at present, one will expect them to continue to be in compliance in spite of the increase which is minimal. Those who are not in compliance apparently are not complying because of the differences in the percentage but for other reasons.

    “These types of employers are those who do not usually obey the laws. They are the ones that fail to remit PAYE, the taxes deducted from their employees. They fail to remit company tax that they deduct from their suppliers and contractors.

    “It will, therefore, not be surprising if they also fail to remit pension. Such employers will have this increase as an excuse but it really should not be an excuse,” he said.

  • ‘We pay N3b monthly pensions to pension departments’

    The Pension Transitional Arrangement Directorate (PTAD) has been paying about N3 billion as monthly pension to each segment of pensioners under the old pension scheme of Pay As You Earn (PAYE), the Director-General of the Directorate, Ms Nelie Meshack, has said.

    Speaking in Abuja on the total amount paid by PTAD since its inception in August last year, she said the directorate has been diligent in the discharge of its duties.

    The segments to be managed by the Directorate are the Police Pension Department; the Customs, Immigration and Prisons Pension Department; the Civil Service Pension Department; and the Treasury Funded Parastatals Pension Department.

    PTAD is already managing and paying monthly pensions of the Nigeria Police Force, Customs and Immigration and Prisons and recently adopted the Power Holding Company of Nigeria (PHCN) pensioners categorised under the Civil Service Pension Department.

    Meshack however said the Directorate cannot ascertain the total liabilities of pensioners under the old scheme as a result of lack of database for the pensioners in the country.

    She said not all the pensioners have been consolidated under PTAD, noting that this is why the directorate is embarking on a nationwide verification exercise soon.

    This, she said, will enable the directorate to know the total number of genuine pensioners and sieve out ghost pensioners under the system.

    She further said the pensioners are presently scattered across the country and it is part of its mandate to put them under a strong database.

    She said: “We cannot fully ascertain the total liabilities of pensioners under the old scheme and that is why we will soon embark on a nationwide verification exercise to verify genuine and fake pensioners.

    “We have not done the total of the few ones that we have on our list now but on a monthly basis depending on a certain segment of pensioners, we pay about N3 billion monthly.”

    Speaking on the Directorate’s mandate, she said: “Our mandate is to make budgetary estimates for existing pensioners and officers exempted from this scheme under Section 5 (1)(b) of this Act, prepare and submit the monthly payroll of pensioners to the office of the Office of the Accountant-General of the Federation for direct payment from the budgetary allocation maintained with the CBN’s bank accounts; issue payment instructions to the Office of the Accountant-General of the Federation; maintain a comprehensive database of pensioners under their respective jurisdiction.

    “Others include ascertaining deficits in pension payments if any to existing pensioners or the categories of officers exempted under section 5 (1)(b) of this Act, and carry out such other functions aimed at ensuring the welfare of pensioners and render monthly returns on pensioners, deceased pensioners, details of NOK of deceased pensioners and on any other issue as may be required from time to time.”

  • Ondo appoints Adediji to establish pension commission

    Following the enactment of the contributory pension law by the Ondo State Government, it has appointed the Group Managing Director, Pensionscope Group/Chief Executive Officer Interterms Pension Consultancy, Tai Adediji, a consultant to establish the state pension commission.

    The commission is expected to  coordinate and manage workers’ pension affairs in the state.

    With the appointment, Adediji is expected to bring to bear his experience on pension management, in drawing the template for the commission, draw the criteria for the appointment of the Director-General and relevant officers.

    He will also be responsible for the appointment of Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs).

    Adediji, who was the pioneer Managing Director/Chief Executive Officer of the CRIB Pension Fund Administrator, has contributed to pension industry’s development through article publications, paper presentations at high profiled fora, production of pensionscope radio as well as pensionscope magazine, a monthly professional publication for both pension and insurance industries.

    Commenting on the appointment, Adediji pledged to do his best in ensuring that the state has one of the best pension commissions that can guarantee improved wellbeing for contributors, retirees and other stakeholders.

    He said the enactment of the state’s pension law, especially now that a new pension law has been signed by the Federal Government, will help enhance the moral of the workers.

    He lauded the efforts of the state government in joining other progressive states in laying a secured and prosperous future for its workers and called on workers in the state to reciprocate the gesture of the government by redoubling their contributions to the state’s development.

    He said: “When the Governor Olusegun Mimiko decided to bring in the change by the introduction of the contributory pension scheme in replacement of the Defined Benefit Scheme (DBS), it appears the governor was fully expecting reactions and in some cases rejections to the new scheme simply because a change was about to come.

    “This led to the application of democratic principle by opening up the window to dialogue with virtually all the interest groups. This has worked and averted what would have led to serious crisis in the state.”

  • PTAD vows to resist interference in old pension administration

    PTAD vows to resist interference in old pension administration

    The Pension Transitional Arrangement Directorate (PTAD) has vowed to resist interference from the individuals and organisations with opposed to change or that have vested interests.

    Speaking at a sensitisation workshop for Treasury Funded Parastatals and their Pension Boards of Trustees in Abuja yesterday, its Director-General, Mrs Nellie Mayshak said the Directorate has come to recognise that some people would be opposed to change and also have entrenched interests; these people, she said, were welcome to hold their views as long as they don’t interfere with PTAD.

    Specifically, she identified one of the challenges facing the directorate as “resistance to change/entrenched interes.”. Another challenge, according to Mrs Mayshak, is the absence of credible database on the parastatal pensions.

    She said she did not inherit any pensioners data when she assumed duties last year and as a result, the directorate would embark on a pensioners verification and biometric data gathering across the country before the end of the year.

    The Directorate, she said, would meet labour unions and others to work out  modalities for the exercise.

    The result of the Verification and Biometric Data Capture Exercise, Mrs Mayshak said, would include the establishment of a comprehensive, authentic and credible database of pensioners under the DBS, which would ensure effective planning and management of pensions; elimination of ghost pensioners; elimination of duplication of payments; correction and eradication of anomalies such as over payments and short payments; Pay pensions, gratuities, death benefits and other pensioner entitlements; Update records of next of kins; and Enrollment of new pensioners.

    Other challenges include lack of adequate awareness by some concerned stakeholders, e.g. Pension Board of Trustees (PBOTS), Pensioners and other critical stakeholders, Wrong impression/misperception of PTAD by some PBOTs Pensioners; huge pension liabilities; and mismanagement of pension funds by defunct PBOTs.

    The PTAD boss also admitted that the directorate was facing challenges with complaints from pensioners on the performance of Board of Trustees (BOTs) as well as trapped funds with underwriters

    Under her watch, Mrs Mayshak said “there has not been a single incident of misappropriation of pension funds since PTAD and there will never be” because the Directorate has Zero tolerance for corruption.

    In the last one year, PTAD has established a robust complaints resolution mechanism; improved services for Pensioners; improved understanding and collaboration with unions and partners; and creation of a befitting office space and home for pensioners.

  • What you need to know about Pension Reform Act 2014

    On July 1, this year, President Goodluck Jonathan signed into law the new Pension Reform Act 2014, which repealed the Pension Reform Act.

    The key objectives of the reform are to ensure contributors receive their benefits as and when due and to assist improvident individuals to save in order to cater for their livelihood during old age.

    As an employee or an employer, there are implications of this change in law that you need to know;

    Access to benefits in event of loss of job

    The Pension Reform Act 2014 has reduced the waiting period for accessing benefits in the event of loss of job by employees from six months to four months. This is done in order to identify with the yearning of contributors and labour.

    Opening of temporary RSA for employees that failed to do so

    The Pension Reform Act 2014 makes provision that would compel an employer to open a Temporary Retirement Savings Account (TRSA) on behalf of an employee that failed to open an RSA within three months of assumption of duty. This was not required under 2004 Act.

    Enhanced Coverage of the CPS and informal sector participation

    The Act expanded the coverage of the Contributory Pension Scheme (CPS) in the private sector organisations with three employees and above, in line with the drive towards informal sector participation.

    Upward review of the penalties and sanctions

    The sanctions provided under the Pension Reform Act 2004 were no longer sufficient deterrents against infractions of the law. Furthermore, there are currently more sophisticated mode of diversion of pension assets, such as diversion and/or non-disclosure of interests and commissions accruable to pension fund assets, which were not addressed by the PRA 2004. Consequently, the Pension Reform Act 2014 has created new offences and provided stiffer penalties that will serve as deterrence against mismanagement or diversion of pension funds assets under any guise. Thus, operators who mismanage pension fund will be liable on conviction to not less than 10 years imprisonment or fine of an amount equal to three-times the amount so misappropriated or diverted or both imprisonment and fine.

    Power to institute criminal proceedings against employers for persistent refusal to remit pension contributions

    The 2014 Act also empowers PenCom, subject to the fiat of the Attorney General of the Federation, to institute criminal proceedings against employers who persistently fail to deduct and/or remit pension contributions of their employees within the stipulated time. This was not provided for by the 2004 Act.

     Upward review of rate of pension contribution

    The Pension Reform Act 2014 reviewed upwards, the minimum rate of pension contribution from 15 per cent to 18 per cent of monthly emolument, where eight per cent will be contributed by employee and 10 per cent by the employer. This will provide additional benefits to workers’ Retirement Savings Accounts and thereby enhance their monthly pension benefits at retirement.

    Corrective actions on failing licensed operators

    The Pension Reform Act 2004 only allowed PenCom to revoke the licences of erring pension operators but does not provide for other interim remedial measures that may be taken by PenCom to resolve identified challenges in licensed operators. Accordingly, the Pension Reform Act 2014 now empowers PenCom to take proactive corrective measures on licensed operators whose situations, actions or inactions jeopardise the safety of pension assets. This provision further fortifies the pension assets against mismanagement and/or systemic risks.

    Restructuring the system of administration of pensions under the Pension Transition Arrangement Directorate

    The Pension Reform Act 2014 makes provisions for the repositioning of the Pension Transition Arrangement Directorate (PTAD) to ensure greater efficiency and accountability in the administration of the Defined Benefits Scheme in the federal public service such that payment of pensions would be made directly into pensioners’ bank accounts in line with the current policy of the Federal Government.

     

     

  • FUG Pension capital base hits N1.5b

    Future Unity Glanvills Pensions Limited (FUG), a pension fund administrator’s paid up capital  stands at N1.5 billion, a leap above the statutorily minimum requirement of N1 billion, its Managing Director, Usman Suleiman has said.

    Giving an update on the activities of the company since 2007 at a press briefing in Lagos he said the firm will take advantage of the Pension Reform Act (PRA) 2014,  especially in the areas of transfer window, when it is opened, and the integration of the informal sector into the Contributory Pension Scheme (CPS) to deepen penetration and grow its market share.

    He said the firm also plans to leverage on the law  to produce competitive investment returns and better service for customers which include employees, retirees and other stakeholders.

    He said the pension industry has moved from a huge and unsustainable liability at inception in 2004 to accumulate asset of over N4 trillion within a short span of ten years. According to him,  in spite of the challenging business terrain occasioned by persistent noncompliance by the states, the private sector and the general economic disincentives and lack of enabling environment, the board and management are not deterred.

    He promised to leave no stone unturned in the bid to guarantee a brighter future for all stake holders.  Besides he said  management has put in place appropriate strategic plans aimed at continuously growing the company.

    He said: “As the industry moves to the next phase following the repeal of the PRA 2004 and enactment of PRA 2014, we assure all our stakeholders and indeed all Nigerian employees and retirees that we are poised to move into that phase in a strong and well-focused manner.

    “Our vision which forms the foundation of the promise and commitment we have made of a brighter future to all our stakeholders is to produce competitive investment returns for our clients, by employing world class management expertise and deploying cutting edge technology to the benefit of all stakeholders.

    “This and it not only put us in a good standing to compete and provide best of service but also give our clients the comfort of knowing that they have their RSA and other funds in a solid institution.”

    Suleiman said management  has positioned the company to contribute significantly to the overall industry achievement adding that it has over the last seven years been providing excellent and constantly improving service to our numerous customers across the country.

    He said the company was able to achieve growth despite being among the last set of PFAs to be licensed by the National Pension Commission (PenCom) to carry out the business of Pension Fund Administration (PFA). According to him, the firm commenced full operational and investment activities by September of same year and have since then grown to be one of the leading PFAs in the country.