Revisiting the CPFA licence issued NNPC

Closed Pension Fund Administrator

The Pension Reform Act 2014 provides that any employer in the private sector wishing to manage its pension fund shall apply to the National Pension Commission (PenCom) to be licensed as a Closed Pension Fund Administrator (CPFA) to manage such pension fund either directly or through a wholly owned subsidiary of such employer dedicated exclusively for the management of such pension fund, provided that all its pension funds and assets are transferred to a custodian of its choice.

An applicant may be licensed by the Commission as a CPFA if it holds a minimum pension funds and assets of N500, 000, 000 and above; and satisfies the requirements stipulated for PFA in the Pension Act.

Every employer licensed as CPFA to manage its pension funds is being supervised and regulated by PenCom and is deemed to be PFA as all provisions in the Pension Act relating to the conduct and operations of a PFA apply to it.

 

PenCom licenses NNPC to operate CPFA 

In 2006, PenCom gave temporary nod for the Nigerian National Petroleum Corporation (NNPC) Pension Fund to operate as a CPFA, pending compliance of guidelines by the commission and the provision of the Pension Reform Act 2004.

 

Revocation of CPFA licence issued NNPC 

Few weeks ago, PenCom revoked the CPFA licence issued to the NNPC Pension Fund over failure to meet the stipulated requirements. The letter conveying the revocation notice by PenCom dated September 8, 2014, addressed to the Group Managing Director, NNPC, and signed by the Acting Director-General, PenCom, Chinelo Anohu-Amazu, said the commission had come to the conclusion over the unwillingness of NNPC to comply with the provisions of the Pension Act and the conditions attached to the approval granted it to continue with the scheme.

PenCom reminded NNPC that Section 50 (1) (g) of the Pension Act 2014 and clause b) (i) of the approval conditions provides that the scheme should be funded and that any shortfall should be made up within 90 days.

The letter said: “NNPC has breached this condition considering that the scheme has remained in deficit since inception in 2006. NNPC made an undertaking to transfer additional assets to address the deficit. Despite several commitments, NNPC has failed to provide the additional assets.”

“As at December 31, 2012, the deficit in the scheme was N133.56 billion (inclusive of the N182.26 billion receivable from NNPC). The commission is concerned that eight years after the grant of approval to continue with the existing scheme, NNPC has failed to honour its promises to fund the deficit despite several commitments.”

The PenCom letter also stated: “Clause b) (ii) of the approval conditions provides that the funds and assets of the scheme shall be passed to licensed Pension Fund Administrator(s) of NNPC’s choice for management. But NNPC is in violation of this condition and section of the PRA 2014 by failing to transfer all funds and assets to licensed Pension Fund Administrators for management…’’

 

PenCom reverses decision on NNPC CPFA licence

Due to the revocation of NNPC CPFA licence by PenCom, the main oil industry workers unions, Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas Workers (NUPENG) embarked on a nationwide strike few weeks ago.

The strike action was, however, called off after five days after the unions meeting with the Minister of Petroleum Resources, Diezani Alison-Madueke, who informed them that PenCom had agreed to rescind its decision.

The minister was said to have affirmed NNPC management’s commitment to closing the existing N86.5 billion pension fund gap on or before August 2015.

 

Conclusion

While PenCom did not announce that it has reversed it decision except the statement credited to the Minister of Petroleum Resources, stakeholders have argued that since the NNPC had demonstrated lack of capacity to run such a scheme in view of its inability to bridge the funding gap of the scheme, which climbed to about N85 billion between 2010 and 2014, PenCom should have ensured that the organisation takes concrete steps to address the observed problems before reversing its decision on the revoked licence.

Source : Independent

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