The pension industry did not have a moment to crouch after the first Pension Reform Act 2004 was accented by President Olusegun Obasanjo; the Pension Fund Administrators PFAs hit the road to set straight the crooked defined pension benefits administration which had over a trillion naira debt with thousands of retirees on the queue to receive benefits that the federal and state governments do not have the funds to pay.
The task to come clean was herculean because the perception of pension was seen through the cracked mirror of Defined Benefits. So rather crouch they were on their toes looking across the horizon if there would be some who believe their report that contributory pension system has nothing in common with the old pension system. Simply put the two pension sy stems have no common platform.
Federal and private sectors contributors moved from apprehension to cautious observation of the new pension sheriff and Olumide Oyetan, President, Pension Fund Operators Association of Nigeria PenOp put the experience this way, “They (contributors) decided to give it a chance and that is how we are here now. But we cannot be complacent. We must stand as custodian and guardian of the fund and we have to do it together.”
The Head Investment Supervision Department, National Pension Commission, Ehimeme Ohioma who was at the same venue with the PenOp President late last year where he represented the PenCom DG Aishai Dahiru Umar at an anual seminar for pension journalists, said there have been several success stories from zero contribution in 2005 when operation started to N17.65tr as at 31 October 2023 and 64% of those assets are invested in federal government securities, 11% in corporate debt security , 8% in quoted equity on the Exchange and less than 1% in guided equity and infrastructure bonds.
A venture waiting to be turned into a success story Ohioma narrated, is the still infant guided equity and infrastructure bond because the product is not available as it should be. “The pension operators cannot create these products the money market has to create those products for the pension funds operators to invest.
“So its a challenge we have been engaging with the various stakeholders in the money and capital markets to ensure that we have good products for the PFAs to invest in. He said investing in these class of products ensures good returns on investment.
Another point where PenCom Investment Chief expressed confidence in the CPS is the promptness of payment of benefits, “By the 25th of every month, every retiree under the CPS gets his pension credited. It has never failed. Thus far since inception over 1.26 million retirees have been paid one form of benefit or the other and N2.7tr have been processed and paid as benefits from inception to December 2023.”
Also showing steps to new frontiers of investment he said is the guideline for foreign currency denominated investment by PFAs. According to him its another medium for pension fund to earn real returns on investments.
Fresh on the stable of PenCom and PFAs is the reconciliation and resolution of long outstanding unaccredited contributions. He said this came about because of incomplete inaccurate schedule sent by employers for their employees. It has created a lot of challenges but the Commission is working with the PFAs and have put in place measures to address that working with some payment service solution banks and thus far from September to October about N622million of those long outstanding contributions have been resolved and credited into the retirement savings account of the beneficiaries.
He also mentioned the on going transfer of pension funds of contributors of defunct banks and other institutions into their RSAs. He said most of these employees do not know that they have those funds with the PFAs. “In September what the Commission did was to put a list of those beneficiaries on its website according to each PFA where these funds are located and we expect these people to go to the Commission website and go through the list to make it easy. These funds are there even if its N200000.00 a lot of people will be happy to have that transferred to their RSA. Its not a cash payment but transfer to their RSA. These funds are close to N12bn, since September only N58million have been transferred to beneficiaries.”
