..As mgt. tackles transparency challenges, low liability coverage
Apparently determined to address challenges impeding the growth of the pension industry in Nigeria, the National Pension Commission (PenCom) said it is taking steps to enhance transparency in pension administration, and address issues arising from accumulation of huge pension liabilities and absence of retirement benefits coverage in the private sector.
Speaking at the conference on Pension Reform Act 2014 for the South West Zone, held at the Lagos City Hall, yesterday, the Director General, PenCom, Chinelo Anohu-Amazu, said the Contributory Pension Scheme (CPS) Fund has within a space of 10 years risen from N2 trillion investible fund to over N4.5 trillion.
She noted that the scheme has registered more than 6.2 million contributors since inception, adding that the purpose of the conference was to sensitize major stakeholders in the South West geopolitical zone on the new provisions and developments ushered in by the Pension Reform Act (PRA) 2014.
According to her, the PRA 2014 has introduced new developments that included wider coverage for private sector employees and reviewed upward the minimum rate of pension contribution. “The PRA 2014 has also reviewed upwards the sanctions and penalties against infractions of the provisions of the Act.
“The application of the CPS by states and local governments has equaly received a boost under the PRA 2014 by setting standards which state governments are required to comply with for the benefit of their respective employees. The 2014 Act has made provisions for voluntary participation in the CPS, thereby paving the way for the coverage of the informal sector,” she said.
In her presentation at the session, Mrs. Oluwatoyin Sanni, Group CEO, UBA, Capital Plc, noted that the effort of the managers of the commission has made the scheme to grow at a speed of 58 per cent per annum even as penetration remained at 5 per cent.
Mrs. Sanni noted that one of the highlights of the scheme was that tax exemption is clearly defined in deduction with a provision for access of the fund by contributors for a period of four months.
According to her, despite the fact that the industry has created job opportunities, it has increased the number of Nigerians who are at home with the model and have accepted to cue in.
She advised Pension Fund Administrators (PFAs) to improve technically and technologically to be at par with current trends, adding that with the way things are going, there will be mergers and acquisitions in the industry.
This, she said, would introduce serious competitions among operators for improved performance through liberal approaches.
Sanni tasked PenCom on investment of pension funds in equities that would yield profits for contributors while urging PFAs to expand their coast to meet the increasing interests of contributors stressing that the industry has positive outlook.
Also speaking, Mr. Bismarck Rewane, CEO, Financial Derivatives Co. Ltd, who spoke on the importance of CPS, noted that pension fund has remained the largest form of saving in any economy. He stated that although savings started with the primordial method of keeping money under pillows, it has grown so sophisticated from the esusu, through CPS to saving through passbooks in the bank.
Rewane noted that saving is low among young people because at that stage, it is investment while older people save more because demography is important to saving. He noted that the more sophisticated an economy is, the less savings the people make.
According to him, pension fund is currently at $27 billion while pension savings for both employers and employees are at 8 per cent and 10 per cent respectively, stressing that Nigeria’s $350 billion infrastructure deficit makes her an important destination for private equity as top tier private equity funds have performed 7 per cent better than the market on average historically.
Source : SunOnline