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Tag: pension

  • Stakeholders warn against withdrawal of N285b Police pension from PFAs

    Stakeholders warn against withdrawal of N285b Police pension from PFAs

    Stakeholders in the capital market and pension industry have called for a rethink of the move to withdraw pension assets of the Nigeria Police Force (NPF) estimated at more than N285 billion from independent pension fund administrators (PFAs) to a sole pension administrator under the Police authority.

    Industry analysts said the withdrawal may have unintended negative influence on the capital market where the large chunk of the funds are invested while the lack of independence and competition could thwart the laudable objectives of pension management.

    Independent PFAs manage Police pension funds, which are meant to settle men and officers of the NPF upon retirement in line with the Pension Reform Act (PRA) of 2004. However, the Federal Government has initiated plans to transfer the N285 billion of the pension funds to a new PFA to be known as NPF PFA. The NPF PFA will be managed by the Nigeria Police. The Police has however successfully ran a microfinance bank, NPF Microfinance Bank Plc, which is quoted on the Nigerian Stock Exchange (NSE).

    Stakeholders were worried that the potential for mismanagement and embezzlement of pension assets would be quite high under a sole PFA administrator.

    According to analysts and stakeholders, given the recent happenings relating to the embezzlement of Police pensions outside the PFAs, taking away the funds in the custody of existing professional PFAs to Police may spell doom for their future.

    Stakeholders, who spoke under conditions of anonymity because of the sensitivity of the issue, said the decision to arm-twist policemen into a sole PFA runs contrary to the principles of choice and competition embedded in the Pension Reform Act (PRA).

    “We have heard and seen how pension funds outside the management of the PFAs but belonging to the Police have been embezzled. Those embezzled funds are gone and nothing is being done to recover them. Now, the funds under the management of the PFAs are being targeted in the form of setting up a new NPF PFA to manage the funds. This will amount to entrusting the future of Nigeria policemen to the hands of few individuals. It is not only risky but it will also dampen the moral of officers and men of the NPF,” a top management executive in the pension industry stated.

    According to analysts, the setting up of NPF PFA and transferring of police pension from the PFAs violate the provision of PRA 2004, which section 11(1&2) allows individuals to choose their PFA.

    Stakeholders said the negative spillovers may also affect the Nigerian capital market as PFAs would have to adjust their portfolios to meet the exigencies of transfers.

    They urged the government to reconsider the idea and allow independent PFAs to continue to manage Police pension assets while the NPF concentrates on its core duty of protecting the citizenry.

  • New pension bill will protect assets, says PenCom

    New pension bill will protect assets, says PenCom

    Expectation is high in the pension industry following the passage of the new pension bill by the Senate.

    Acting Director-General of the National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu said when the bill is signed into law, it will enhance the protection of pension fund assets as well as unlock the opportunities for deploying the assets for national development.

    She said it will also review the sanction regime to reflect current realities and provide for the participation of the informal sector, adding that it will provide the framework for adoption of the Contributory Pension Scheme by states and local governments.

    Mrs. Anohu-Amazu who spoke with The Nation in Lagos also said in line with the joint resolution of the National Assembly to put a stop to corruption in various pension departments, the new bill will enhance the regulatory authority and efficiency of the Commission.

    This will also give the Commission opportunity to give greater oversight on, and reposition the Pension Transition Arrangement Departments (PTAD) for accountability in the administration and payment of pension under the Defined Benefit Scheme (Pay As You Go).

    With the passage of the bill by the Senate, she said the Commission is is awaiting the House of Representatives to also pass the bill.

    Last week, the Senate passed the “Pension Reform Act Cap P4 Law of the Federation of Nigeria 2011 (Repeal and Re-enactment) Bill 2014 (SB.288), sponsored by Sen. Aloysius Etok.

    The Senate, after an exhaustive debate on the bill at its Committee of the whole house voted for its passage into law and urged President Goodluck Jonathan to sign it into law as soon as possible.

    Chairman, Senate Committee on Establishment and Public Service, Senator Aloysius Etok, spoke on the penalties for defaulters under the Contributory Pension Scheme.

    Etok said the Head of Service and heads of different departments have directed all the accounting departments to make sure that whatever pension deduction made should be treated as a sacred and immediately transmitted to the receiving authority.

    The problem which PenCom has continuously encountered, according to him, is that people fail to provide genuine and credible data on themselves including their PFAs.

    He noted that there were some who have not even appointed PFAs and therefore kept deducted funds in their accounts pending when they have the data to transfer them.

    He said: “We have like buffer stock funds pending in different places. But with the enactment and passage of this bill and (when it) is assented to by the president, all the penalties and all the prescriptions contained in this Act would be followed strictly by the various agencies.

    “We have penalties ranging from 10 years imprisonment. For even failing to give proper information, you have to pay N500,000. And if you embezzle pension funds now, you will pay not less than three times the amount of funds you embezzled. That is how serious this bill has treated pension funds.

    “If you embezzle N10,000 you are bound to pay a minimum of N30,000 and in some circumstances the presiding judge has the right to make you refund and even go to prison.”

    He added that the previous pension law had some clauses and those who had embezzled pension fund before the passage of the new bill would be tried with respect to the old law.

  • Detroit proposes deeper pension, bond cuts in debt plan

    Detroit proposes deeper pension, bond cuts in debt plan

    Detroit, the biggest city in the United States is seeking bankruptcy protection, proposed deeper cuts for police and firefighter pensions, as well as for some bondholders, as it pursues approval of a plan to reduce its $18 billion in debt.

    The city yesterday filed a description of its debt-adjustment plan that differs in some details from what it submitted in February in US Bankruptcy Court in Detroit.

    The disclosure statement, if approved by US Bankruptcy Judge Steven Rhodes, will be consulted by creditors in deciding whether to back the plan.

    Detroit filed for bankruptcy in July, saying it couldn’t meet its financial obligations and still provide necessary services. The city has since been in negotiations over cuts with unions, retired workers and bond insurers.

    General obligation bondholders, who had been set to receive 20 cents on the dollar under February’s plan, are now projected to get 15 cents.

    Pensions for police and firefighters would be cut about six percent if they vote for the plan, 14 percent if they don’t. In February, those proposed cuts were four percent and 10 percent respectively.

    The office of Kevyn Orr, the city’s emergency financial manager, said in a statement yesterday that the new numbers were included to offer “greater clarification for retirees on how much pension benefit reductions would be.” The statement didn’t say why the numbers had changed.

    Previous Proposals

    The new disclosure statement also incorporates proposals the city previously announced, including a plan to spend $1.5 billion to improve services and a proposal for foundations and the state to put more than $800 million into pension funds in exchange for a promise that art owned by the city wouldn’t be sold.

    Absent a deal with creditors, the city may have to battle unions, retired municipal workers, bondholders and bond insurers to win approval of the plan in court. The unions have asked an appellate court to dismiss the bankruptcy, while insurers have sued over proposed cuts to general-obligation bonds and retirees have said the pension cuts may push many of them into poverty.

    Detroit, meanwhile, has sued to void $1.44 billion in pension-related debt. Also, Orr is attempting to lease the city’s water and sewer department to a new regional public authority, a plan suburban leaders have resisted.

    A hearing on the disclosure statement is set for April 14. A trial on plan approval has been scheduled for July.

  • Stock market looks inward as pension assets hit N4.1tr

    Stock market looks inward as pension assets hit N4.1tr

    •UBA Capital harps on corporate governance

    More institutional investors are investing their funds in the Nigerian stock market as the latest count showed that pension funds assets have crossed the N4 trillion mark.

    The Nigerian Stock Exchange (NSE), National Pension Commission (Pencom) and independent market operators indicated symbolic increase in pension assets and capital market participation.

    Data obtained by the NSE from about 90 per cent of active stockbrokers at the stock market showed marked increase in the participation of institutional domestic investors.

    According to the latest update on retail and institutional investors participation in the stock market, institutional composition of the domestic market, which was about 46.80 per cent at the end of January, this year increased to 50.58 per cent at the end of February.

    The latest update came just as acting Director-General, National Pension Commission (Pencom) Mrs. Chinelo Anohu-Amazu, said pension funds assets had risen to N4.1 trillion by January.

    She spoke at UBA Capital’s domestic institutional investor forum which primarily focused on the pensions industry.

    According to her, pension fund assets have experienced a steady growth from N2.9 trillion in December, 2012 to N4.1 trillion as at January 2014 due to steadfast implementation of the investment regulations which has continued to ensure the safety of pension funds.

    Mrs Anohu-Amazu noted that since her assumption of duties in December, 2012, she has successfully completed the process of a major review of the Pension Reform Act 2004 which culminated in an Executive Bill, the Pension Reform Bill 2013, currently at the final stages of consideration by the National Assembly.

    She added that she has also continued to promote closer collaboration with other domestic regulatory agencies as well as multilateral development finance institutions in order to encourage secure outlets for pension fund investments.

    She noted that the success story of the pension reforms in Nigeria has attracted some positive responses from peer countries, which have come to scrutinise the model for adoption in their own markets.

    Group Chief Executive Officer, UBA Capital, Mrs. Oluwatoyin Sanni, urged institutional investors to remain very conscious of their rights and responsibilities in effecting the much-needed change in governance standards in the Nigerian financial markets.

    According to her, despite the goals of optimising returns, the effectiveness and credibility of the entire corporate governance system will, to a large extent, depend on institutional investors who make informed use of their shareholder rights and effectively exercise their ownership functions in companies in which they invest.

    “Let us demonstrate good corporate citizenship through best global corporate governance practices, ethical conduct, and environmental awareness,” Sanni said.

    Also, chairman, Pension Fund Operators (PENOP), Mr. Misbahu Umar Yola, called on key institutional investors such as pension funds, asset managers, investment banks, high networth companies insurance companies, and endowment funds to take up some responsibility and accountability in the pursuit of corporate governance.

    He noted that as globalisation pushes the boundaries of businesses across different geographic regions and markets, there is an increased demand for the boards of companies to be more transparent, accountable and responsible to various stakeholders.

    According to him, the increasing levels of public and regulatory scrutiny of corporate governance, in the wake of recent corporate financial scandals, growing dissatisfaction with financial statements, growing dissatisfaction with Boards, changing profile of the shareholder, birth of knowledge society, the increasing expectations of governments, regulators, accrediting bodies, academic and industry groups; and the demand for more disclosure and transparency are some of the major imperatives of good corporate governance.

    He outlined that institutional investors can influence corporate behaviour by taking control of significant stakes in companies and exercising significant influence on promoters and management to prevent abuses.

    He added that institutional investors can help to ensure that company funds are not diverted to non-core activities or for benefit of related parties while also leading shareholders in demanding corrective action where necessary.

    He pointed out that good corporate governance has been shown to help underpin companies’ long term profitability as investors, particularly institutional investors, have come to look beyond the figures and focus on intrinsic long term value brought to the organisation by such factors as the composition and structure of the investee company; duties and responsibilities of the board and the influence the chairman exerts on the board, among others.

  • Pension Reform Bill

    Pension Reform Bill

    •A welcome law, but we hope it will be enforced when finally assented to

    OVER the years, pensioners have suffered untold hardship and neglect, while many of them have died prematurely as a result of non-payment of their gratuities, pensions and arrears for years. Even the Senate President, David Mark, had at one time expressed concern over the horrible plight of pensioners when he not only lamented but pronounced a curse on pension thieves.

    The ‘pension house’ has turned out to be a gold mine for pension officials from grade level 4 and above. The scam became so rampant that a certain Alhaji Abdulrasheed Maina, Director of Pensions, was caught with over N21billion allegedly kept in his personal account and the account of one of his relatives. The scam became a celebrated one that led to an investigation and subsequent arrest. Unfortunately, the Federal Government failed to do anything about it until the culprit fled.

    Against this pitiful background, it is heartwarming that, at last, the Senate, on April 8 passed the pension reform bill which, if concurred to by the House of Representatives and assented to by President Goodluck Jonathan, would punish anyone who misappropriates pension funds with a 10-year jail term. This is apart from refunding three times the amount embezzled. The bill also goes further to stipulate that anybody who attempts to misappropriate pension funds would, on conviction, be liable to the same punishment. In addition, a pension thief would forfeit any property, assets or money with interest on the stolen money, to the Federal Government.

    Perhaps, the Senate ought to have included in the law a proviso that money owed to pensioners in form of arrears should equally attract accrued interests to the beneficiaries, as the stolen money fraudulently put in fixed accounts by the pension thieves belong to the pensioners.

    There are other penalties, ranging from the 10-year imprisonment to a fine of N500,000 to be paid daily by any agency which fails to give proper information about actual or attempted stealing of pension funds.

    It may be argued that this bill is rather late in coming, because hundreds of pensioners have died as a result of the greed and wickedness of some pension officials. However, it is better late than never. But then, one cannot but wonder why the need for this special legislation against corruption in the ‘pension house’ when there are existing laws against corrupt practices in Nigeria.

    It would appear however, that the new law is meant to revise the existing ones, particularly as the extant laws are out of tune with modern realities. But the problem of corruption in Nigeria is not about laws or legislations, which have always been there. Rather, it is the lack of political will to enforce these laws. Alhaji Maina, for instance, would not have got the opportunity to run away with over N21billion of pensioners’ funds if the extant law (in spite of its inadequacies) had been applied as appropriate. This is true of many other cases of embezzlement of public funds which are either being investigated or have been abandoned. This is an area where the prosecutors and the judiciary have failed the nation.

    It is now left for the judiciary and other relevant organs to revise all the existing laws that are outdated and therefore not in tune with the alarming rate of criminal activities in the country today. However, the bottom line, as we pointed out, is not about the lack of laws but lack of the political will to enforce them, irrespective of the status or ‘connection’ of the offenders.

     

  • N1b pension scam: Railways board meets this week

    N1b pension scam: Railways board meets this week

    The axe of the board of the Nigerian Railway Corporation (NRC) may, this week, fall on over 70 workers of the corporation, including some senior officials indicted by a panel of enquiry into the missing N1 billion pension funds.

    The board, under the chairmanship of Alhaji Bamanga Tukur, is expected to sit on April 16 and 17 to peruse the report submitted by the panel, headed by Director Mechanical and Electrical, Fidet Okhiria.

    The panel was set up by the NRC Managing Director, Prince Adeseyi Sijuwade, to probe the missing funds.

    The panel reportedly uncovered the scam, which is suspected to have been going on for three years.

    It blew open when the management asked the Accounts section to prepare the settlements of some of its directors who are to retire early next year.

    While two of the affected directors have been suspended, others, who are in the Accounts, Audit, and Personnel departments of the corporation, were asked to go on compulsory leave pending investigation into the level of their complicity in the N1 billion pension scam.

    Among those allegedly having a case to answer, according to a top official, are two top directors and a former Secretary to the corporation.

    Others, it was learnt, are two assistant directors and an accountant in the office of the NRC board chairman.

    Our correspondent learnt that many of the suspected scammers may lose their jobs, if the case is proved against them.

    The cat was said to have been let out of the bag when the Assistant Director Finance, Mr Euna Igbe, refused to buy an exotic Sports Utility Vehicle (SUV) to settle one of the directors.

    The Nation source said N16 million was traced to the account of one of the directors while N300 million was traced to a deputy director.

    An Accounts Department worker, whose bank account was allegedly used as the conduit pipe for sharing the stolen fund, allegedly had N70 million in his account.

    The exercise that exposed the scam was among those the management and the new board started to sanitise the corporation and improve its financial base.

  • How SGF sat on pension matters for four months

    Despite the directive of President Goodluck Jonathan to the Secretary to the Government of the Federation (SGF) to look into the grievances of pensioners, the SGF has not convened a meeting for four months, it was learnt yesterday.

    The pensioners, who had planned to protest, shelved the rally yesterday, following a foiled jailbreak at the headquarters of the State Security Service (SSS) in Abuja.

    Speaking to reporters in Abuja, the National President, Nigeria Union of Pensioners (NUP), Dr. Abel Afolayan, said the union would not want hoodlums to hijack the protest.

    He said: “Who are the people dragging feet? We do not want to embarrass them.

    “For the past four months, the meeting has not been called. We have made this clear to the SGF that the suspended meeting should be convened. The Nigeria Labour Congress (NLC) has written to that effect that we want the meeting to be called so that the directive of Mr. President can be addressed and all problems sorted out and solved.”

    Commenting on the suspended protest, Afolayan said: “We have shelved our protest because of the volatile security situation. As elderly people, we are praying that the situation should improve. We have members all over the country. We have members in Adamawa. We have members in Borno. We have members in Yobe. We have members in Benue.

    “We are peace-loving people. We want these security challenges to be addressed. We want peace. It is not that we will shelve the protest indefinitely. But as time dictates and when we consider it right, if our problems are not addressed, the NLC and the Trade Union Congress (TUC) will lead us in the protest.”

  • Pension savers lament inability to change PFA

    Pension savers lament inability to change PFA

    Pension savers under the new pension scheme, the Contributory Pension Scheme (CPS), are craving to change from their Pension Fund Administrators (PFAs) as a result of the poor services.

    To this end, the workers and retirees are appealing to the National Pension Commission (PenCom) to fast-track the transfer window that will enable them to change their PFA.

    PenCom aims to introduce a software application window that will enable seamless transfer of Retirement Savings of Accounts (RSAs) from one PFA to another by savers who may wish to explore the window.

    This is in accordance with Section 11(2) of the Pension Act 2004, which provides that the employee may, not more than once in a year; transfer his RSA from one PFA to another PFA without adducing any reason for such transfer.

    The estimated date for the opening of the transfer window was December 2012, but the Commission has been unable to commence the process as it is still battling with challenges, especially biometric issues which are considered a clog to the transfer process.

    The Commission and pension operators will also deal with the huge capital involvement, data processing time, partnerships and the need to ensure an efficient system once it starts.

    Sixty-year-old retiree of Dangote Agro Sack Limited, Mr. Rotimi Ogunyemi said he had been having problems with his PFA before and after retirement in April, last year.

    Ogunyemi, who said he could transfer his RSAs account to another PFA.

    He lamented that his PFA has not paid him any of his benefit since he retired last year because they claim not to be able to locate his file.

    He explained that they kept promising him that they would sort the problem out for about a year.

    He said: “I come from Ogun State to their office in Lagos State and I am finding it hard to survive. I cannot even pay the school fees of my daughter who is in the university.

    A Chevron pensioner said he retired in 2005 and had been battling to receive his pension contribution transferred from NPF to his PFA since July, last year.

    He also complained that the PFA’s service to him had been poor.

    He said: “I retired since 2005. My contribution to the NPF during the old pension scheme has been transferred to my PFA. I applied to them since July 2013 and I am just got a response from them last week. I also spend a lot of time in their office before I could get their attention”.

    Welfare Manager, African Insurance Brokers, Julius Aluko, said his firm had been having problems with their PFA over two months’ omission of payment of the company’s employees between October 2010 and October 2012.

    He said he had written to the PFA twice, but the PFA kept pushing him around without a solution.

    He stressed that the staff were not happy, adding that it is affecting those that have retired from been able to receive their pension either in lump sum or monthly.

    He added the contributors in his office were anxiously waiting for the transfer window for them to move.

    Chairman, Pension Fund Administrators of Nigeria (PeNop), Mr. Misbau Yola said operators were concerned about having the window opened and that due to some challenges, operators and PenCom would not start the process soon.

    He noted that part of the process was ensuring that operators’ records were accurate, adding that the identification method was aimed at achieving a seamless transfer.

    According to him, data process has is a challenge in the subsector.

  • Budget 2014: The road to pension’s liberation

    Budget 2014: The road to pension’s liberation

    Revolutionary changes to the way savers can withdraw money from pensions, unveiled by George Osborne in the Budget last week, represent a remarkable victory for The Telegraph, which has repeatedly called for an end to years of rip-offs.

    From April next year the over-55s will be able to treat their pension funds like bank accounts, withdrawing as much as they require and using the cash for whatever purpose they deem fit.

    In a landmark reduction of the state’s involvement in British savers’ financial lives, the Chancellor said: “People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances.

    “Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, any time they want. Let me be clear. No one will have to buy an annuity.”

    For the past nine months The Telegraph has worked tirelessly to expose how the broken pensions system has allowed the insurance industry to sell annuities to 400,000 people a year, locking them into a fixed annual payment for life.

    These products are a type of insurance, until now considered the “safest” route to a retirement income and appropriate for the majority of savers.

    However, last month the head of the insurers’ trade body, Otto Thoresen, finally indicated to reporters that too many people were sold annuities. The City regulator has concluded that hundreds of thousands of people are sold poor-value contracts each year.

    Our articles have led the agenda, warning readers of the dangers involved in purchasing an annuity, which is an irreversible transaction.

    Last October we disclosed how thousands of men were locked into artificially depressed rates in the final six months of 2012.

    We have implored readers to take matters into their own hands and approach their pension provider with extreme scepticism when they reach retirement. In November we called on Steve Webb, the pensions minister, to tackle excessive annuity charges.

    A report published that month in The Sunday Telegraph disclosed how insurers pocketed £63m a year by directing savers into pensions designed for “super-healthy” people who lived to an average age of 93. In the worst cases, savers were dying before their original capital was returned to them.

    We gave practical guidance on the alternative to annuities: keeping your pension invested and taking a gradual income through “drawdown”.

    However, our report in December exposed how insurers – which make hefty profits on annuity sales – were obstructing savers who wanted to use this option.

    Reporters from this newspaper have given presentations to members of the House of Lords and our reports have been used in Parliament to highlight the need for reform.

    Finally, our calls for action have been answered. As we explain on page 6, a raft of new measures is to be introduced next week to alleviate the burden on pensioners nearing or in retirement that have not yet purchased an annuity. Then, from April next year, the choice of whether to buy an annuity will rest entirely with customers.

    Simon Blowey of Brewin Dolphin, the wealth manager, said: “We now have pensions for grown ups; the nanny state has been withdrawn.”

    This is only the start of the pension’s revolution. The Telegraph will endeavour, over the coming weeks and months, to publish comprehensive guidance to help readers take advantage of the new rules.

  • Canada pension enters insurance business with Wilton Re

    Canada Pension Plan Investment Board, the nation’s largest pension fund manager, agreed to buy Wilton Re Holdings Ltd. for $1.8 billion to expand into the life insurance business.

    The reinsurer is being acquired from investors including Stone Point Capital, Kelso & Co. and Vestar Capital Partners Inc., the Toronto-based fund manager said today in a statement. The purchase is Canada Pension’s first direct investment in the insurance sector. Wilton Re is “an ideal platform through which CPPIB can deploy significant follow-on capital at scale in the U.S. life insurance sector,” Andre Bourbonnais, senior vice president of private investments at the pension fund, said in the statement.

    Reinsurance is attractive for pension funds as they seek long-term cash to match their liabilities. Reinsurers such as Bermuda-based Wilton Re have found opportunities in recent years by taking on business from primary carriers that are seeking to simplify operations or limit risks.

    Wilton Re struck deals this year to assume liabilities from CNO Financial Group Inc. and CNA Financial Corp., the insurer controlled by Loews Corp. Wilton Re, run by ex-Swiss Re Ltd. executive Chris Stroup, won backing in 2004 from investors including insurance broker Marsh & McLennan Cos., and Vestar. Since its creation in 2005, Wilton Re has invested at least $1.7 billion in acquisitions and risk-transfer deals, according to the statement.

    Canada Pension favors investments in closed blocks of coverage, in which insurers collect revenue and pay claims on policies issued in prior years, without seeking new clients. Such business accounts for about 40 percent of premiums written in the U.S. and U.K., according to a July 2012 report by research and consulting firm Celent.

    Stone Point, which counts former Goldman Sachs Group Inc. director Stephen Friedman as chairman, has backed insurers before, including Enstar Group Ltd. (ESGR) and Harbor Point Ltd. Kelso also invests in the industry and worked with billionaire hedge-fund manager Dan Loeb to establish Third Point Reinsurance Ltd., which had an initial public offering last year.

    Reinsurance Group of America Inc., which also backs life policies, gained 2.5 per cent to $81.02 in New York, the most since January 31 and the highest since the company was listed in 1993. Enstar Group rose 1.5 per cent to $140.39.

    This is Canada Pension’s largest public acquisition since it led a consortium to purchase Neiman Marcus Group Ltd. last year. Canada Pension manages C$201.5 billion ($179 billion) for 18 million Canadians excluding the province of Quebec.