The Nation Newspaper

Tag: pension

  • 10 years after, retired policemen yet to get pension

    10 years after, retired policemen yet to get pension

    Some policemen who retired about 10 years ago are yet to be paid their pension. They are worried that their years of service to The Nation may go down unrewarded with their pension yet unpaid, reports Omobola Tolu-Kusimo.

    When the Chairman of the House Committee on Public Accounts, Hon. Solomon Adeola Olamilekan recently raised the issue of the N24 billion Police Pension Fund alleged to be missing two years ago, the Coordinating Minister for the Economy and Minister of Finance, Dr. Mrs. NgoziOkonjo-Iweala was quick to refute the claim, saying the money was intact.

    But facts are beginning to emerge that something has gone wrong with the pensioners’ money, as some pensioners have not been paid their pension benefits, or gratuities 10 years after retirement. Frustrated, some of the affected retired policemen have begun to cry out over the non-payment of their pensions and gratuities since their retirement 10 years ago.

    The pensioners who do not belong to any association as they are not allowed to do so while in service, said they were told recently by some senior police officers in the pension department that their pension money has been stolen.

    The police officers are in a dilemma as some have been allegedly duped by fellow officers at the police pension office who promised to facilitate the release of their benefits. Some of the affected pensioners, who spoke to The Nation, said the situation is sad, considering the fact that they have duly served their fatherland and protected the citizenry throughout their active years.

    They said the service of a police officer in the society cannot be overemphasised. They have helped in maintaining public order, preventing and detecting crimes in the state. They have protected life  and property of the people notwithstanding the growing rate of crime coupled with increase in the complexity of civilisation, they added.

    They said: “Without the police, there would have been chaos in the society and the people would live in Hobbesian state of nature in which life would be solitary, poor, nasty, brutish and short.

    “Thus, the police provide the necessary checks against the ambivalence of the human nature, play an important role in the administration of justice and enforcement of law. They are the saviour of our modern civil society.

    “Based on this, the welfare of a police officer should be uppermost in the mind of every responsible government.

    “It is therefore, appalling to find that many retired policemen under the old pension scheme, the Defined Benefits Scheme are still owed pensions and gratuities eight years after retirement.’’

    In this case, the police pensioners majorly affected, are soldiers from the Nigerian Army who got seconded into the Nigeria Police Force. Some of them have died, while some others are sick.

    Sixty-year-old Inspector, Abu Ekundayo, said he has not been paid his retirement benefits eight years after serving the Nigeria Army and Police Force for 27 years.

    He served last with the Lagos State Command, Ikeja, before his retirement on July 1, 2006.

    A letter written on behalf of Ekundayo by the Lagos State Commissioner of Police and signed by Deputy Commissioner of Police, Augustine Obaedo to the Director, Nigeria Police Pension Office on April 7, 2007 stated: “This is to introduce police officer, Inspector Abu Ekundayo who served last with Lagos State Police Command, Ikeja, before retirement on July 1, 2006.

    “Kindly render every assistance at your disposal to enable him collect his retirement benefits.”

    Ekundayo said that despite this letter and his several visits to the Lagos Pension Office before it was moved to the Police Headquarters in Abuja, his case has not been treated.

    Recounting his ordeal to The Nation, he said: “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.

    “Sometimes ago, when I visited the pension office, which was in Lagos as at the time, with some other retirees who have the same case, a fellow police officer who works in the pension office, said he could help us facilitate the release of our benefits if we give him some money. He collected N50, 000 from me and N25, 000 from another retiree. While we were waiting for him to help us, we didn’t know when he left the pension office and his phone number never went through afterwards and we could not trace him again.

    “In 2011, when a friend and retiree who has the same issue with me went to the Police Pension Office in Abuja, he said they (pension office) confirmed to me that they saw my name in the list of pending pensioners. Usually what happens is for Lagos Command to compile our files and send them to the Pension Office for payment. Under normal procedure, it should not take more than a year for them to pay. Some people who are well connected have received their own pension,” he added.

    Richard Ogundare and Assistant Superintendent of Police (ASP), retired 10 years ago and has not been paid his retirement after serving the Nigeria Army and Police Force for 35 years.

    Ogundare, who served within 1969 and 1979 in the Nigerian Army before he got seconded to the Nigeria Policein 1979, is also aggrieved that the Police Service Commission refused to merge his years of service years in the army with those in the police.

    He petitioned the Chairman, Police Service Commission (PSC), MikeOkiro and copied the Inspector-General of Police, Mohammed Abubakar in the petition written and signed byhis lawyer, Kehinde Hassan Bamibola& Co.

    According to the petition, Ogundare has not received his retirement benefits since he retired in 2004.

    It stated: “We have the authority, instruction and consent of our client to call your attention to inhuman treatment he has been receiving from your Commission after he has duly served his fatherland, Nigeria, meritoriously, formerly as a military personnel from 1969 before he got seconded/enlisted to the Nigeria Police Force in 1979.

    “Our client informed us with documentary evidences that he applied to merge his service years sometimes in 2002 and that the application was not recommended. He would have served for 35 as at December 1, 2004, if the merging application had been granted.

    “However, he served the Nigeria Police meritoriously till April, 2007 before he was retired from the service. It is so painful and we consider it an act unleashing unmerited hardship on our client, that ever since his retirement, he has not received his retirement benefits. He has been suffering and languishing in abject poverty as a result of non-payment of his retirement benefits.”

    The petition further noted that a letter from PSC dated July, 2006, put Ogundare’s retirement date at April 24, 2004, while another letter dated May 3, 2007 with the heading “Retirement Benefits” put the effective date of his retirement at April 24, 2006 with factual affirmation that he was not indebted to the Federal Government.

    “Going by the letter from PSC, he actually applied for merging of his service years comprising the service years with the Nigerian Army from 1969 to the period he joined the Nigeria Police in 1979, but the application was turned down. He was made to serve beyond December 2004 till April 2007. Assuming the merging application was granted, he would have clocked 35 years at the service by December, 2004.

    “He actually served the Nigerian Police Force for 28 years from 1979 to 2007. That, the period between December 2004 and April 2007 should be reasonably computed into his service years for the treatment, calculation and payment of his retirement benefits.

    “We hereby appeal to your good office to pay our client all his retirement benefits as he is in great need of finances for his health and other necessities. The ‘dead does not spend money’ and so he should enjoy what he has laboured for while he is still on earth now. We are looking forward to hearing from you that his retirement benefits have been paid fully,” the petition read.

    Also recounting his ordeal, Ogundare said: “We are demobilized soldiers who fought war between 1967 and 1970 before we were asked to join the Nigeria Police Force.

    “The president at the time was OlusegunObasanjo. He asked us to join the police because it had few officers. Later in 2004, former Inspector General of Police, Sunday Ehindero, asked us to go on voluntary retirement. We obeyed him because we are loyal. But some people did not obey that instruction and worked up to 40 years before retiring. The most painful thing for me is that this group of policemen havebeen paid their pension with some of them receiving eight million naira.

    Ogundare also told The Nation that one of his colleagues also has the same case as his and his name is Paul Odunwa, an ASP who retired in December 12, 2005 after serving for 35 years.He has also not received his pension 10 years after retirement and he is seriously sick, Ogundare added.

    Another pensioner, he said, is AfolabiKosolu, who according to him has lost his sight and can no longer move around to demand for his pension.

    Ogundare appealed to relevant authorities to come to their aid.He also called on the National Assembly to look into their matter.

    Public Relations Officer, Police Service Commission (PSC), Ferdinand Ekpe in his reaction exonerated the commission.He said the PSC does not have anything to do with the pensioners.He said: “PSC does not handle police salaries or pension. Our mandate is to appoint, promote and discipline erring police officers. Any other thing that has to do with police welfare is not part of our business.

    “The pensioners will need to direct their complaints to the Police Pension Office.”

    Efforts to speak with the Managing Director, Pension Transitional Arrangement Department (PTAD), Ms Nellie Meshack and Force Police Public Relations Officer, Frank Mbah, proved abortive as at press time.

    In a statement in March, this year, the minister’s Special Adviser (Media), Paul Nwabuikwu, said: “As we explained in a recent communication, the Coordinating Minister for the Economy and Minister of Finance, Dr. NgoziOkonjo-Iweala, has maintained her stance that N24 billion is not missing from the police pension account contrary to allegations.

    “Therefore, allegations by the Chairman of the House Committee on Public Accounts, Hon. Solomon AdeolaOlamilekan over a so-called missing N24 billion from the police pension account, are ridiculous and false. It is unfortunate that the chairman has persisted in using his privileged platform to disseminate such distortions even though the minister has repeatedly explained to the committee that the money was an overpayment based on the demands of those trying to steal from pension funds, which were successfully blocked and the money returned to the treasury by the minister.

  • Pension: Lagos is most compliant state

    Pension: Lagos is most compliant state

    • Contribution hits N51.6b

    With a contribution of N51.6 billion to the nation’s N4.3 trillion pension fund assets,  and its consistency in the payment of pension benefits to retirees, the Federal Government has declared Lagos State as the best out of the 36 states in the country.

    It also praised the state for adopting and implementing the Contributory Pension Scheme (CPS) in compliance with the provisions of the Pension Reform Act, 2004.

    In recognition of this feat and to further encourage the state, President Goodluck Jonathan awarded Lagos a gold trophy in Abuja, during a dinner organised to commemorate the 10th year anniversary of the CPS in Nigeria.

    The award was received by Governor Babatunde Raji Fashola (SAN). The dinner was also organised as part of the activities for the just concluded World Pension Summit ‘Africa Special’ in Abuja.

    The Director-General, Lagos State Pension Commission, Rotimi Hussain, told reporters that the state has from inception of the scheme in 2007 contributed N51.6 billion, being the monthly deduction of 7.5 per cent from the salary of an employee and the counterpart 7.5 per cent contribution by the state government into the Retirement Savings Account (RSA) of every employee with the Pension Fund Administrators (PFAs).

    He said the state has also paid N26.2 billion as benefits to 4,990 retirees prior to the commencement of the scheme, adding that amendments to the new Pension Reform Act, 2014, will improve pensioners’ benefits in particular, and the scheme in general.

    According to him, the repealed Pension Reform Act, 2004, which has run for 10 years, has been tested by stakeholders in the pension industry, noting that there are  areas in the new law that will be of great interest to the contributors.

    He said: “We have run the Scheme for 10 years and I think it is enough time for us to have learnt from our experiences. Having been tested, we have found the key areas where we needed to fine-tune, change and amend.

    “Drawing from the experience we have gathered, the amendments to the law are meant to improve the system. They are a few key areas that would interest the contributors more. For instance, the increased counterpart contribution from the employer, makes it to have a larger contribution than the worker. Beyond that, there are a lot of other technical areas that are being addressed in a way that there is more transparency. The regulator has also ensured that they can enforce compliance more than it had been able to do.

    “The important thing to know going forward, is that the element is to be able to ensure that we try as much as possible to bring a lot more workers into the net of the CPS, so that we can expand the scheme as well. As it is, the coverage is still relatively low.”

    Hussain,said there is still the need for pension operators to ensure that compliance is enforced, noting that the investment climate has to improve in order to have a veritable avenue for the huge funds.

    Former President Olusegun Obasanjo also received an award for establishing the CPS in 2004. He expressed hope that by 2024 when the scheme would be 20 years, the number of workers in both public and private sectors under the scheme would have quadrupled. He also expressed joy that since inception, the scheme has not been associated with fraud.

    Other states that received awards  were Niger and Delta. Former Minister of the Federal Capital Territory, Mallam Nasir el-Rufai and the pioneer Chairman of the National Pension Commission, Mr. Fola Adeola, were among individuals who received awards for playing big roles in the establishment and implementation of the scheme.

  • ‘Why new pension scheme won’t fail’

    ‘Why new pension scheme won’t fail’

    Mr. Bayo Yusuf is Managing Director/Chief Executive Officer, UBA Pension Custodians. In this interview with Assistant Editor, Nduka Chiejina, he speaks on the prospects, challenges of the revamped pension scheme and what it bodes for the economy. Excerpts: 

    How will describe the Nigerian pension industry as currently constituted?

    Nigeria’s pension industry is positively growing, in the sense that this is the first time we are having a well structured, well regulated formal pension industry in the last decade. Before the 2004 Pension Act, the only seeming regulator we had was the Joint Tax Board (JTB), the private sectors have one scheme or the other and they go into it because of the tax benefits they get. Everybody tried to meet up with the requirements of the Joint Tax Board because of the tax benefit when they are rendering their account at the end of the year. For the public sector, it has always been Pay-As-You-Go, so the Head of Service was in charge of regulation there. So there was no formal structure or regulation, so to say, prior to 2004 we had a seemingly well regulated pension industry and clearly defined operators and those who they are managing the scheme for.

    Unlike where we had the public sector taken care of by the government, private sector left in the hands of the employers and the only thing the government did at the time was to say ok if there is no formal scheme for the private sector then the NSITF which used to be NPF that was the only saving grace for the private sector. But since the 2004 pension reform, we have a formal, well-regulated, structured pension industry and we can all see the benefit today with N4.21 trillion in accretion of capital to be used for the economy.

    What is your take on the newly amended Pension Reform Act (2014)?

    It’s a welcome development in the sense that it addresses many issues from the employee, the employer and the government. The complaint from the employees has been that what they get is not commensurate and how do we increase this amount? That has been addressed by increasing what the employer puts into the account of the employee from 7.5 per cent to 10 per cent. And also on the employee side their own contribution has to go up to from 7.5 per cent to 8 per cent. This, for me, is a welcome development because you are running a scheme based on what you are able to accumulate over time and what returns on investment. So, this, for me, is going to improve what will be in the purse of the employee at retirement.

    ICT in pension administration was a topical issue at the World Pension Summit, how do you hope to integrate ICT with pension administration?

    The success of this industry is hinged on ICT because it’s a retail market and in the retail market a lot of data passes from the employee to the employer and to the operators and also the regulator. So, if there is no good, robust ICT, then there will be a major challenge we all know the era we are in now, the swoosh media, information goes left and right. At the beginning of 2004 pension system, the level of information technology was inadequate. The law says we should collect on behalf of the PFAs with no restriction, yes the requirement to be a custodian is that you must be a subsidiary of a bank with a very large branch network, UBA, for example, has over 700 branches; that does not mean we have to now select that as an employer you must go to X branch, no you can go to any branch of UBA and make your payment, you can go to any branch of UBA to make your lodgements. At the beginning, electronic payment was not popular, so employers to the branches submit cheques, in some cases accompanying schedules are not included so there were a whole lot issues at the beginning. We also had money deposited which employer we did not know. For example, you send an employee to make lodgements, this employee puts his name as the depositor and when the teller captures it he captures the personal name; it becomes an issue to identify who made the lodgements and when you identify who made the lodgements finding the schedule becomes an issue again.

    So, you need technology in collection. At the initial stage, we had a whole lot of money taking us time to track down but what we have done over time now is that in the last two to three years with the advent of electronic banking and the support of the CBN, with a directive that all public sector organisations must make their payments electronically. This put an end to cheque writing and this was another challenge as money was trooping in in large volumes and there was no industry standard to say when you are paying electronically.

    These are the basic information that must accompany the payment from the receiving bank to the sending bank so we see a lot of money coming in via different channels without proper narration and identification. So, the question of how to address this came since this the era of electronic banking, things have to change we now had to come up with a system that will capture this fully, as technology is improving, we need to also use technology to drive the collection which is the number one assignment of the custodian.

    So, we came up with a platform which is being driven by holistic needs by using the platform called Electronics Pension Collection System. With this system, an employer, after running a payroll for the month, all he needs to do is to log on to the platform, upload the schedule, irrespective of the employers, employees and the PFAs, the pension generated from your payroll application and you upload it on this system, this system will break it down to respective PFAs and respective custodians. Immediately you finish that, there is an automatic payment system; if you have an internet banking, from there on, you will just transfer the money.

    As you upload the system, the schedule of pension into that platform, turns into the respective PFAs, so the PFA gets an alert that XYZ employer has uploaded and awaiting payment and immediately the employer makes payment, alert is sent that payment has been made, so that enables us to have what we call security processing of collection. This is a system that we are testing now which we believe as an industry is going to go a long way to reduce the number one challenge of the industry today as a custodian. Collection is our number one challenge.

    We are doing the testing of the application now, it is an industry initiative which the custodian is playing a major role in driving and ensuring that it comes to light and as soon as this is done, it takes off the collection challenge that the industry is facing. So, when employers deduct your money that 24 hours specified in the Act will now be seen because as we speak, it is very difficult to achieve in that 24 hours. We cannot have a smooth pension system without ICT but the number is growing. Right now, we are just six million and we are talking of bringing in the informal sector into it. The informal sector is another area entirely in the sense that they are not all experienced individual and we know that so we are working with the banks, specifically UBA, to come up with a product that will enable the informal sector use their phone to remit their pension contribution, they don’t need to go to the bank. So, technology is a major game changer and also it is going to be a differentiating factor in few years to come. So, we cannot do without the ICT in pension landscape, especially administration.

    The President and Minister of Finance hinted that they were targeting a $100billion pension asset in 20 years, do you see this as being feasible in the next 20 years or do you see it coming a lot earlier?

    I see it coming a lot earlier. I was sharing statistics with you before and I said, there are 17.6million employers in the informal sector and these employers have employed 43million as of march 2014. Total Retirement Savings Account opened is just 6.2million, so, you can see the gap. Now, the new Act makes provision for a minimum of three and above and when you look at the figures of 16.7 million and 43million, you can see that there is minimum employment figure by the SME. So, it is just for the operator to hit the market. I can assure you, in a couple of years, twenty years is very far. With the rate of growth that we have been having at 30 percent annual growth contribution, I can assure you, in the next two years, the rate of growth will be more than this even with the fact that we have a new set of people. The main challenge for us is to have the mechanism, the framework. We know that in whatever we do, we need to domesticate it.

    We know the average informal sector employer, the financial education is very limited. They believe in what they can get back in the immediate and pension is a long term thing and when you look at the demography of the majority of the people in the informal sector; secondary school leavers, ONDs, these are people in their twenties. So, in coming up with a framework for the informal sector, there is need for us to have a portion of their accumulation that they can have access to at any point in time.

    What I mean is 100 per cent of your contribution will not be locked down till retirement. A provision says 20 per cent of your contribution, you can have access to it at anytime. That is you are domesticating it. A fashion designer, for example, if you run into problem or see a new machine to buy, you cannot tell her that she cannot access the money, that it is tied down until retirement age, even a professional can have access to 20 per cent of his or her money. So, it is not until you get to retirement before you begin to see the benefit of my contribution, I should be able to benefit from it while I am working, not when I retire. The panel was discussing that the people should see the direct impact of their contribution.

    We have a situation where government changes every four years. What if government changes and the new one says this road should no longer be tolled and the proceeds of pension would already have been used to finance the project and then they did not recoup either the principal or the profit, how do you strike a balance between these two?

    Government will not just come and say, stop collecting toll from this land. If government says that, then it is saying, yes, I will pay because that project, the hundred percent fund was not provided by the government. The people that put their money must be paid before it can say, no, we are not going to toll this road again. So, there is going to be a strategy for the people that put their money in this project. I did not fund this project hundred percent, I funded 40 per cent and a counterpart funded the remaining 60 per cent and I am saying as government, because I have a responsibility to the people, I’m saying, I am going to fund this project hundred percent, so, what is the cost of the balancing in financing this project? It will be difficult for government to say, no, the project I did not finance hundred percent, I am stopping it and the counterpart that participated in the financing of the project, I am not going to pay them their money. So it is not every project that is bankable and it is not every project that you should throw your money at. You should look at the project, if it is bankable, people will bring finance. So, pension fund will not say because they have money, they should throw it into any project, no. No pension fund will do that.

    How much has been paid out to retirees so far?

    We are pension fund custodians and we have specific rules entrenched in the Act. Number one is collection on behalf of PFAs that sign us up. We are custodians to 10 of the 27 PFAs; we have 27 PFAs and of these 10 are our clients. On a monthly basis, we collect between N17billion and N18billion in terms of collections spread across the federation. Two, settlement of transactions on behalf of PFA, the administrative part of investment is being handled by the custodian.

    So, we settle transaction on behalf of our PFAs and when we settle, we collect instrument representing investment. Also, income collection, the income accrued in all of these investments like the dividends on equity, interest on placement. Also, the payment of benefit to retirees, every month, for those that are on programme withdrawals, we make payment on behalf of our PFAs. We have 25,000 retirees that we pay on a monthly basis and we pay in the excess of N3.5 billion. These are some of the things we do aside other value added services. We are basically servicing the PFAs; we don’t have a direct relationship with the employees. We were appointed by the PFAs and that is why you cannot see us in the newspapers everyday because the people we are servicing are just 27.

  • New pension act to boost capital market,say experts

    The new Pension Act, which was recently signed into law by President Goodluck Jonathan, could lead to further inflow of funds and help to deepen the liquidity of the Nigerian capital market.

    Investment experts told The Nation that although the new Pension Act does not include any direct provisions that may have immediate impact on the capital market, many changes in the Act would indirectly impact the market.

    Head, Research and Intelligence, BGL Group, Mr, Femi Ademola, said the changes in regulatory powers of National Pension Commission (Pencom) and enforcements would quicken the pension pool.

    According to him, the new pension act contains changes to regulatory powers of the Pencom especially in terms of compliance to the mandatory retirement savings while it also seeks to increase pension contribution by expanding covered persons, especially to the informal sector. All these developments will definitely help to grow pension assets in the coming years.

    He noted that while investment allocations by the pension fund administrators (PFAs) would still be governed by the periodic regulatory guidelines from pencom, which restrict investments in equities, the increase in pension assets would lead to larger investments in the capital market.

    “As the pension assets increases, the amount of assets to invest in equities, corporates and other non-sovereign securities could increase. The increase in pension assets may also result in the altering of permissible investments by the regulator which may eventually favour the capital market,” Ademola said.

    Group head, research, Lead Capital Plc, Mr. Sadiq Waziri, pointed out that the increase of total contribution from 15 per cent to 18 per cent would accelerate pension assets that can be created by PFAs noting that pension assets, which currently stands at more than N4 trillion, could have a 20 per cent boost in it growth.

    “Since PFAs can invest in equities, it would simply mean more funds will be available to them to invest in various asset class including equities. It would add more liquidity to the market,” Waziri said.

    Meanwhile, many capital market operators had called for more flexible investment guidelines that would allow PFAs to aggressively grow their funds and finance creative financial solutions without necessarily undermining their assets.

    Group deputy managing director, BGL Plc, Mr. Chibundu Edozie, noted that capital market operators and investment managers would like to see a pension sector that is creative and more amenable to more exotic assets to meet the market’s needs.

    According to him, while the guarded approach by Pencom saved the industry from the market meltdown of 2008-2010, the industry is ripe now to start allowing more innovation and skilful management expertise from the fund managers.

    “We may start this by allowing investment according to the demography of beneficiaries where funds with more young contributors are allowed more investment in equities than funds with older contributors. We may also allow fund managers to invest in some private products such as infrastructure funds and other development-focused products and funds which may not fulfill all the current investment guidelines by the Pencom as long as the fund manager is convinced that it is a beneficial investment to the fund contributors,” Edozie said.

    Managing director, Capital Assets Limited, Mr. Ariyo Olushekun, also noted that there should be flexible in pension fund investment and management in line with the structures and classes of the contributors.

    According to him, increased pool of capital and flexible investment rules should allow aggressive fund managers to play in the equities market without violating any rule.

    He noted that pension funds as collective assets of the Nigerian people should be used as catalyst for the Nigerian capital market, which would in turn impact on the nation’s economic development.

  • Africa set to utilise pension funds for growth

    Africa set to utilise pension funds for growth

    Pension professionals, stakeholders and regulators in Africa and from other parts of the world gathered last week in Nigeria for the World Pension Summit, ‘Africa Special,’ co-hosted by the National Pension Commission (PenCom). The agenda was to brainstorm on how best to harness the continent’s pension fund assets as catalysts for economic development and prosperity. OmobolaTolu-Kusimo, who was at the summit, reports.

    Within 10 years, the pension industry in Nigeria has experienced phenomenal growth from a deficit of N2 trillion in form of pension liabilities in 2004, to accumulation of pension fund assets worth N4.3 trillion by the end of last year.

    The achievement in the industry will further grow with the recent passage of the new Pension Reform Act, 2014 by President Goodluck Jonathan.

    These developments and more were showcased at the just concluded World Pension Summit ‘Africa Special,’ hosted by the National Pension Commission (PenCom) which held for the first time in Africa.

    Thoughts and experiences were shared among African countries in particular, and the world in general on how pension funds can evoke pragmatic, sustainable and most effective initiatives for pension fund governance and regulation in the continent.

    According to PenCom, the summit was also held in recognition of the increasing significance of pension funds in shaping Africa’s future.

    Speakers, panelists and other discussants dissected many of the issues and proffered solutions that will ensure that Africa remains at the cutting-edge in the conception  and implementation of sustainable pension policies.

    They also deliberated on strategies for developing an appropriate framework for leveraging pension funds across the continent to accelerate the implementation of critical high-impact infrastructure projects.

    Prior to pension reform and the establishment of PenCom in 2004, pension schemes in Nigeria had been bedeviled by many problems. The public service operated an unfunded Defined Benefits Scheme and the payment of retirement benefits was budgeted for annually.

    The annual budgetary allocation for pension was often one of the most vulnerable items in budget implementation in the light of resource constraints. In many cases, even where budgetary provisions were made, inadequate and untimely release of funds resulted in delays and accumulation of arrears of payment of pension rights. It was obvious therefore, that the Defined Benefits Scheme could not be sustained.

    In the private sector, many employees were not covered by the pension schemes put in place by their employers and many of these schemes were not funded.Besides, where the schemes were funded, the management of the pension funds was fraught with malpractices carried out by the fund managers and the trustees of the pension funds.

    This scenario necessitated a re-think of pension administration in Nigeria by the administration of President Olusegun Obasanjo. Accordingly, the administration initiated a pension reform in order to address and eliminate the problems associated with pension schemes in the country.

    The outcome of the reform was the enactment into law of the Pension Reform Act 2004 and the establishment of the National Pension Commission (PenCom) to regulate, supervise and ensure effective administration of pension matters in Nigeria.

    At present, there are 20 Pension Fund Administrators (PFAs) and four Pension Fund Custodians (PFCs) under PenCom.

    Since its establishment, PenCom has been able to implement the contributory pension system that has pension administration and custodianship intertwined; duly licensed Pension Fund Administrators (PFAs) open Retirement Savings Accounts for employees, invest and manage the pension funds in a manner that the Commission may from time to time prescribe, maintain books of accounts on all transactions relating to the pension funds managed by them, provide regular information to the employees or beneficiaries of the fund and pay retirement benefits to employees . The Pension Fund Custodians, on the other hand, are responsible for the warehousing of the pension fund assets. The employer sends the contributions directly to the PFC, who notifies the PFA of the receipt of the contribution and the PFA subsequently credits the retirement savings account of the employee.

    Meanwhile, the new Pension Reform Act 2014, which repeals the Pension Reform Act, No.2, 2004, is meant to further fortify the pension assets against mismanagement and systemic risks, govern and regulate the administration of the uniform pension scheme for both public and private sectors in Nigeria.

    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 or remit pension contributions of their employees within the stipulated time. This was not provided for by the 2004 Act.

    Similarly, the new law allows PenCom to revoke the license of erring pension operators.However, the huge pool of funds that the contributory pension scheme has put together has been identified by analysts and other stakeholders as a firm backing to the economy.

    The Acting Director-General, PenCom, Chinelo Anohu-Amozu, while speaking at the summit, said the outcome of the event has set modalities that can address the challenges of infrastructure gaps in Africa, which will indeed help in creating the economic pre-conditions needed for longer-term growth as well as to foster poverty alleviation.

    She said in achieving the set goals, African government must be mindful of the fact that our hopes and aspirations as a continent are primarily hinged on the evolution and development of retirement benefits into a veritable instrument of social change, not in a theoretical or abstract sense, but in terms of an intrinsic transformation of our institutions, and our operators.

    She said: “We need to attempt to set out what could be considered a set of challenges that pension professionals and regulators around Africa must surmount, in order to engender the evolution of a retirement pension system that will be rooted in our collective social consciousness.

    “We also need systems that are relevant to the fundamental needs of our continent, which are dynamic enough to initiate and also respond to developmental challenges facing the continent in an increasingly interdependent global economy.

    “Infrastructure development remains a key driver and a critical enabler of sustainable growth in Africa and the current favourable economic landscape on the continent provides a unique opportunity for the public and private sectors to collectively address the infrastructure gaps. Focusing on Africa’s infrastructure challenges will indeed help in creating the economic pre-conditions needed for longer-term growth as well as to foster poverty alleviation.

    “Given the size of pension fund assets across Africa, there is a real opportunity for policymakers to collaborate with pension professionals so as to effectively leverage these assets for sustainable progress.”

    Mrs Anohu-Amazu stressed that as the proportion of retirement income provided by private pensions continues to grow, the regulatory framework designed to protect those funds becomes even more crucial.

    She noted that the theme of the summit, ‘Shaping the Future’ underscores the imperative of institutionalising a risk-based approach, which ultimately allows the regulatory agencies to channel their resources towards, issues that pose the greatest threat to the stability of the industry.

    The Chief Executive, Kenyan Retirement Benefits Authority, Edward Odundo, while citing the Kenyan example, said pension operators in Kenya are not attracted to private equity and venture capital.

    He said they rather tilt towards lending to workers for housing purposes.He said: “One of the ways that pension fund could put to good use to the benefit of contributors is to allow Retirement Saving Account holders to borrow from the scheme.  If one has N10 million accumulated savings, instead of going to the bank to borrow at 21 per cent interest rate, he could be allowed to borrow from his accumulated fund and repay at a friendly interest rate while his savings serve as collateral for the credit.  This is the case with Kenya, he added.

    “Pension Reform in Kenya has resulted in a sea of change in the operations of retirement benefits schemes in the country. This has led to rapid growth of the industry coupled with enhanced member protection and security. Building on this success, the government has introduced further reforms aimed at securing and consolidating these gains.”

    Edo State Governor, Adams Oshiomhole who spoke on investment of the pension assets in capital market, faulted the investment of pension assets in the capital market saying the fund should rather be deployed to areas that would benefit contributors directly.

    He observed that the fund is largely being invested in government bonds and quoted stock in the capital market, saying it wasn’t the poverty of government that informed the scheme but old age poverty.

    He added that the instruments benefit the rich who have the capacity and connections to access the fund to do business and make profit while the workers who are contributing the fund don’t have access to it noting that investing pension assets in the capital market is tantamount to pooling the resources of the poor for the benefit of the rich.

    The Vice President, Nigeria Labour Congress (NLC), Issa Aremu, concurred with the Kenyan regulator, that pension assets should be used to provide houses for the working people. He charged pension stakeholders to deploy pension asset to financing home ownership schemes for workers. This is one of the ways to deploy pension funds for the benefits of contributors directly, he added.

    He said houses are expensive when mortgage institutions and other intermediaries build for sale to workers stating that Kenya workers are allowed to borrow from their retirement savings to build houses.

    Chairman of the Senate Committee on Public Service, Mr. Aloysius Etok on his part identified some lacuna in the new Pension Reform Act, 2014.He said the National Assembly was discovered though belatedly that the pension law left out employers and political appointees.

    He advised that the pension stakeholders should do everything possible to ensure that the law is returned to the National Assembly to be upgraded with a view to bringing both employers and government appointees under the contributory pension scheme.

    Niger State Governor, Alhaji Babangida Aliyu raised the issue of non-compliance by some states of the pension reform law.He said it is important that PenCom ensures the law permeates the states.

  • ‘$100b pension assets feasible’

    The $100 billion (N16 trillion) pension asset target set by the Federal Government will be realised in less than 20 years.

    Managing Director of UBA Pensions Custodian Limited,  Bayo Yusuf, who spoke at the just concluded World Pension Summit, Africa Special in Abuja, said the government’s set target will be realised before the set date with the absorption of the informal sector into the industry

    He said: “The informal sector has about 17.6 million employers with about 43 million employees. The pension industry has been growing at a rate of about 30 per cent without contributions from the informal sector. So imagine the type of growth we would record if this sector is brought into the industry.”

    UBA Pensions he said, has commenced the digitalisation of pension payments to help streamline payment procedures, as well as ensure prompt collection of pension benefits.

    Yusuf said the number of Retirement Savings Account (RSAs) is growing. “Right now we are just six million RSAs and we are talking of bringing the informal sector into it.

    “So we are working with the banks in such a way that for the informal sector, with your phones, you can remit your pension contribution. You don’t need to go to the bank. What this means is that technology is going to be a major game changer in pension administration in the few months and years to come,” he said.

    He also said the firm  pays  N3.5 billion monthly through Pension Funds Administrators (PFAs) to settle 25,000 retires across the country.

     

  • Edo set to announce PFAs for contributory pension

    Edo set to announce PFAs for contributory pension

    The process for appointing Pension Fund Administrators (PFA) that will manage the pensions of Edo State pensioners is ongoing, The Nation has learnt.

    Public Relations Officer to the State Head of Service, Sam Okpeaye, who made this known, said the PFAs will set the pace for the commencement of Contributory Pension Scheme (CPS) in the state.

    He said plans to implement the contributory pension scheme in the state civil service were concluded last year by the Governor, Comrade Adams Oshiomole adding that the successful PFAs would soon be announced.

    He explained that compilation of adequate data of pensioners was part of the reasons for delay in implementing the new pension scheme.

    He said efforts are also being made to pay arrears owed pensioners before the present government.

    The National Pension Commission (PenCom) had said that states in the federation have continued to make progress in implementing the CPS.

    PenCom said that as at first quarter of 2013, 21 state governments have enacted their pension laws, 14 states were at the bill stages, while one state was yet to commence the process of implementing the CPS.

    Specifically, the eight states that are in full compliance having enacted their pension law and commenced contributions are Lagos, Ogun, Delta, Kaduna, Jigawa, Osun, Niger and Zamfara.

    The 13 states that are in partial compliance having enacted their pension law but yet to start contributions are Edo, Kogi, Ekiti, Bayelsa, Kebbi, Taraba, Imo, Kano, Oyo, Rivers, Sokoto, Akwa-Ibom, and Nasarawa.

    The remaining 14 states in the process of enacting their pension law are Anambra, Enugu, Gombe, Ondo, Abia, Plateau, Bauchi, Katsina, Benue, Borno, Yobe, Cross River, Kwara and Ebonyi.

    Only Adamawa State out of the 36  is yet to take any step to implement the CPS.

  • ‘Proper project management key to accessing pension funds’

    ‘Proper project management key to accessing pension funds’

    There is a need for African governments to address the critical challenge facing the continent in managing projects financing and funding if they have to access pension funds to accelerate the implementation of critical high-impact infrastructure projects.

    The Acting Director-General, the National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu stated these at the just-concluded World Pension Summit, Africa Special in Abuja. It had as theme, “Shaping the Future.’’

    She, however, noted that given the size of pension fund assets in Nigeria and across Africa, there are real opportunities for policymakers to collaborate with pension professionals so as to effectively leverage these assets for sustainable progress.

    She said in Nigeria, the rate of growth of pension assets in relation to the Gross Domestic Product (GDP), has continued to rise from 1.47 per cent in 2006 to 9.57 per cent last year.

    According to her, the success of the contributory pension scheme has triggered an exponential growth in the pension funds and size of assets under management across the globe.

    She stated that the value of pension assets has grown from 1.47 per cent in 2006 to 9.57 per cent in 2013 of the national GDP.

    She added that as the population of retirement income provided by private pensions continues to grow, the regulatory framework designed to protect those funds becomes even more crucial.

    She said the theme of the summit thus underscores the imperative of institutionalising a risk-based approach to the supervision and control of pension markets across the continent.

    She said: “The risk-based approach focuses on the identification of potential risks faced by pension funds and strengthens mechanisms that are in place to attenuate those risks, which ultimately allows the regulatory agencies to channel their resources towards issues that pose the greatest threat to the stability of the industry.

    “Infrastructure development remains a key driver and a critical enabler of sustainable growth in Africa and the current favourable economic landsape on the continent provides a unique opportunity for the public and private sectors to collectively address the infrastructure gaps.

    “Focusing on Africa’s infrastructure challenges will indeed help in creating the economic pre-conditions needed for longer-term growth as well as to foster poverty alleviation. However, disruptive market, demographic, fiscal, and environmental dynamics are fundamentally reshaping Africa’s economic landscape. In this new reality, national governments must think of infrastructure, not in general but in the specific, understanding the ways in which different infrastructure sectors such as transportation, energy and water are governed, financed and sustainably delivered.”

  • ‘New Pension Reform Act’ll boost economy’

    The new Pension Reform Act, 2014 will further concretise the statutory foundation of the pension industry and position it for the attainment of greater heights, the Managing Director, Premium Pension Limited Wilson Ideva has said.

    Ideva who spoke to The Nation in Lagos, commended the Federal Government on the signing into law of the Pension Reform Bill, 2014.

    According to him, the industry is  set to witness unimaginable growth that has never been seen in any sector of the Nigerian economy.

    The new pension law repeals the Pension Reform Act, No.2, 2004, which has been in operation for the past ten years.

    He added that the Nigeria’s CPS has recorded tremendous success in its first decade of operation enlisting 6.4 million Nigerian workers and raking in about N4.3 trillion  as funds under management.

    He said: “It is widely believed that the growth in the industry would have even been more expansive if the previous law allowed the application of very stringent measures on noncompliant institutions and individuals.

    “Moral suasion yielded little results hence it is expected that when the new pension law is fully applied, majority of the country’s working population in the public or private sector or even artisans would be covered by the scheme.

    “The Pension Reform Act among other things, enhances the enforcement responsibilities of the regulatory institution, National Pension Commission (PenCom).”

    Ideva said it will also ensure further airtight protection of pension funds and unpacks guidelines and possibilities of creatively and professionally applying pension funds for national development.

    With the provisions of the Pension Reform Act, 2014, the pension industry in Nigeria is the sub sector to watch in the course of national development in the coming years. The industry is already well positioned to assert its centrality to social and economic development, he added.

  • Pension contribution now 18% of pay

    Pension contribution now 18% of pay

    Pension contributions have gone up to 18 per cent of monthly emolument – up from 15 per cent.

    Employers are to contribute 10 per cent. The remaining eight per cent will come from the employee, according to the Pension Reform Act 2014, which was signed into law yesterday by President Goodluck Jonathan.

    The Special Adviser to the President on Media and Publicity, Dr. Reuben Abati, broke the news on his Twitter (social media page), saying the upward review will provide additional benefits  to workers Retirement Savings Accounts, thereby enhancing their monthly benefits at retirement.

    Pension contribution is shared equally at 7.5 per cent by employers and employees.

    The law, which repeals the Pension Reform Act, N0 2 of 2004, also created new offences, providing for stiffer penalties against diversion of pension funds assets. According to the Act, “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 misappropriated  or both imprisonment and fine”.

    The Act empowers the National Pension Commission (PenCom), subject to the fiat of the Attorney General of the Federation, to institute criminal proceedings against employers who persistently fail to deduct/remit pension contributions of their employees within the stipulated time.

    Also, as a departure from the provisions of the Pension Bill 2004, the law empowers PenCom to take proactive corrective measures on licensed operators whose actions or inaction jeopardize the safety of pension assets.

    Instructively, the new law has also reduced the waiting period for accessing benefits in the event of loss of job by employees from six months to four months. This was done to identify with the yearnings of contributors and labour.

    Other changes in the law include 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. This will ensure that pension benefits are paid directly into pensioners’ bank accounts – in line with the current policy of the Federal Government.

    The Pension Reform Act will also enable the creation of additional permissible investment instruments to accommodate initiatives for national development. Such investments, according to the new law, will be in real sector, including infrastructure and real estate development. However, there are provisions that will ensure such investments do not compromise the paramount principle of ensuring the safety of pension fund assets.

    Under the law, the coverage of the Contributory Pension Scheme (CPS) has been expanded to three employees, which is in line with the drive towards informal sector participation. An employer can also be compelled to open a Temporary Retirement Savings Account (TRSA) on behalf of an employee who fails to open a Retirement Savings Account (RSA) within three months of assumption of duty.

    The Pension Reform Act 2014 also consolidated earlier amendments to the 2004 Act. Among these are the Pension Reform (Amendment) Act 2011, which exempts the personnel of the Military and the Security Agencies from the CPS. It also includes the Universities (Miscellaneous) Provisions Act 2012, which reviewed the retirement age and benefits of university professors. It incorporated the Third Alteration Act, which amended the 1999 Constitution by vesting jurisdiction in pension matters in the National Industrial Court (NIC).