Pension Funds Administrators Meeting

The Executive Secretary, National Universities Commission (NUC), last Wednesday, 5th October, 2022, organised an interactive session for staff in collaboration with the National Pension Commission (PenCom) and some of the Pension Funds Administrators (PFAs) used by the employees of the Commission.

In his address at the meeting, the Executive Secretary, represented by the Director, Human Resources (DHR), Mr. Boniface Odum, under whose Directorate the pension matters is domiciled, said the annual interactive is usually held to clarify and educate staff on various issues relating to PFA, latest developments on the subject and the challenges of Contributory Pension Scheme (CPS) in Nigeria.

While apologising for the earlier postponement the event suffered, he reiterated that with some novelties introduced in pension administration, the forum offered the staff opportunity to understand some of the innovations in the Pension Act and their implications on contributors as well as challenges.

He said that it was in that regard that the Director General of the National Pension Commission and PFAs used by the staff of NUC have been intended to among others, educate staff on the latest developments in the pension industry and retirement planning.

The Executive Secretary expressed his utmost desire to see that staff of the NUC received their retirement benefits as and when due, which also depended on the ability of the staff to understand and observe all the rules governing CPS. He used the opportunity to encourage staff to take advantage of the interactive session and seek clarification on any issue for better understanding of the Scheme.

In her remarks, the Director General of PenCom, Mrs Aisha Dahir-Umar gave a rundown of the pension scheme prior enactment of the Pension Reform Act (PRA) 2004 amended 2014. She recalled that prior to 2004, the Public Sector operated an unfunded Defined Benefits Scheme (DBS) and the payment off retirement benefits were budgeted annually. She noted that annual budgetary allocation for pension was often one of the most vulnerable items in budget implementation in the light of resource constraints.

The Director General, whose address was read by a staff in the Investment Fund Directorate, Mr. Ikenna Chidiebere, stated that the worst case was that employees in the private sector were not covered by the pension schemes put in place by their employers and many of these schemes were not funded. Even where the scheme was funded, she explained that management of the pension funds was full of malpractices between the fund managers and the Trustees of the pension funds.

Mrs. Dahir-Umar said the scenario necessitated a re-think of pension administration in Nigeria by the administration of President Olusegun Obasanjo, which initiated a pension reform to address and eliminate the problems associated with pension schemes in the country. She added that the PRA birthed the CPS as well as PenCom, which is now the regulatory body of the pension industry in Nigeria and the sole regulatory agency of government, charged with the responsibility of superintending over the pension sector (both public and private), in Nigeria.           

She stated that the CPS had since the last 18 years of existence recorded notable strides in ensuring that every employee who worked in the public or private sector, received his/her pension benefits as and when due. 

The PenCom DG stated that the Commission to ensure that pension operators exercised due diligence and care in the administration of the Scheme, had consistently issued guidelines, regulations, circulars as well as frameworks to guide their operators.

She used the forum to mention some of the merits of the CPs to include:

•           Growth in pension assets over (14.4Trillion) as at 31st August, 2022, which had impacted the growth of the Nigerian Capital Market;

•           Enhanced saving culture;

•           Regular payment of pensions; and

•           Transparency in pension management, among others.     

Despite the successes recorded, she highlighted that the Scheme had been fraught with challenges ranging from, Delay in payment of accrued pension liabilities of the Federal Government; Dearth of investible financial instruments; poor service delivery and incidences of cloned identity theft, forgery and fraud, among others.

Mrs Dahir-Umar pointed out some of the recent developments in the CPS to include: Micro Pension Plan, Opening of RSA Transfer Window, FGN Releases to offset outstanding accrued rights liabilities, Recapitalisation of Minimum Shareholders’ Capital as well as Accessing a portion Maximum 25%) of total RSA balance for Mortgage for housing.

She concluded by acknowledging the impact of the global Covid-19 pandemic, as well as the on-going Russian-Ukraine War, leading to rising inflation on the global economy. She argued that Nigeria was not insulated from these global issues but noted that PenCom in line with one of its mantras of ensuring safety of the pension funds, consistently develops robust regulations and guidelines, which ensured that the outlook of every worker at retirement, is not jeopardised at retirement.

The highlight of the meeting was the engagement of the staff with their various PFAs to a question and answer sessions on grey areas especially on the new developments in the Pension sector.