Second World Pension Summit ‘Africa Special’

Today Monday 5th of October, in Abuja His Excellency President Muhammadu Buhari will declare open the second edition of the World Pension Summit in Africa hosted by the National Pension Commission (PenCom) of Nigeria which partners with the World Pension Summit headed by Harry Smornberg. The first ever inaugural edition of the Summit took place […]

Today Monday 5th of October, in Abuja His Excellency President Muhammadu Buhari will declare open the second edition of the World Pension Summit in Africa hosted by the National Pension Commission (PenCom) of Nigeria which partners with the World Pension Summit headed by Harry Smornberg. The first ever inaugural edition of the Summit took place July 2014 with as many as over 425 delegates and speakers from African countries. The inaugural summit also marked the 10th Anniversary of the pension reform in Nigeria that led to the enactment of the Pension Reform Act 2004, which introduced the Contributory Pension Scheme (CPS) and established PenCom as the regulator of all pension matters in Nigeria. At the personal level this year’s summit assumes a special importance.
Yours truly on the 24th of September, Thursday (Eid-Day of Mubarak) lost his mother, Hajia Afusatu Amoke Aremu at 90 years in Ilorin after a brief illness. One of the take-aways from my mother is hard work and productivity. Having worked for decades in a public secondary school my mother was a pensioner of the old Direct Benefit System.  I bear witness through the worthy life and times of my mother that there is dignity in labour and that indeed we can all live on our sweat without recourse to self-help and corruption.  Pension is and indeed must be a legitimate right of all workers. It is a deferred payment, which both the workers and employers must set aside so that workers at old age will not be living on some charity as if they are destitute. The truth is that ultimately every working woman and working man must get fatigue one day; senility must eventually replace today’s abundant energy.  Hence the need to prepare for the proverbial raining days by setting aside some funds that will at least meet the subsistence needs of the aged workers.  The only sustainable safe guard against workers being vulnerable to corrupt practices is a functioning pension system. The challenge lies in how to make this principle work in Nigeria and Africa as a whole.
Pension Act of 2004 in Nigeria 11 years ago by former president Olusegun Obasanjo represents a progressive labour legislation because it attempts to address the naughty issue of compensation after work. The principle of income adequacy for retiree is ever valid whether the scheme takes the form of publicly funded/administered pay-go defined benefit (DB) or privately administered mandatory individual defined contributions (DC).  The bane of old public sector pension DB lies in its non-contributory character as well as sheer corruption and diversion of funds even allegedly for partisan political purposes. On the other hand, the new contributory pension scheme is strong on corporate governance arrangements that are radically different from the past mismanaged public sector schemes. National Pension Commission supervises the Pension Fund Administrators and Custodians. The successes recorded in the implementation of the CPS have resulted in a fully funded pension scheme that delivers on the promise of timely payment of retirement benefits to retirees, as opposed to the inefficiencies of the past. Pension Assets have reportedly grown to some over N4.21 trillion as at March 2014.  The proportion of the assets to Nigeria’s GDP grew from 1.4% in 2006 to 9.5% in 2013, an average yearly growth of 30%.  The CPS has generated appreciable pool of long term investable funds for the first time in Nigeria which could be utilized towards reducing the huge infrastructure deficits in the country through safe and secure investible instruments in tune with the recent change Agenda of the Federal Government.
From initially licensed 26 Pension Fund Administrators (PFAs), 7 closed Pension Fund Administrators (CPFAs) and 5 Pension Fund Custodians (PFCs), it is presently reduced to 20 PFAs due to mergers and acquisitions, 7 CPFAs, 4 PFCs, 19 Approved Existing Schemes (AESs). The number of registered contributors was 6.02 million as at the end of March, 2014 with the public sector (including States & LGAs) accounting for 49.71% of the total registrations while Private Sector accounts for 50.29%. In terms of Redemption of Retirement Bonds the sum of N404.32 billion was released by FGN into the RBBRF account with CBN from inception to December, 2013. N410.94 billion redeemed into Retirement Saving Accounts (RSA) of FGN mandatory/voluntary retirees and Next of Kin (NOK) of deceased employees.  On payment of retirement benefits, a total number of 86, 628 retirees on Programmed Withdrawal (PW) have been paid as at March, 2014 with FGN Retirees – 66,874, State – 3,746, and Private Sector – 16,008. Similarly, number of retirees on Annuity paid as at March, 2014 amounts to 9,212 (FGN Retirees – 7,270; State Government Retirees – 940; Private Sector Retirees – 1,002). Lumpsum payments (PW and Annuity) amount to some N236.19 billion as at March, 2014. Average monthly payment for PW is N2.45 billion while Annuity is N367.52 million.
The National Pension Commission with Chinelo Anohu-Amazu as the Director General, must be commended for building on the gains of the past, ensuring effective supervision, improved service delivery through establishment of Zonal Offices, establishment of call centre and collaborating with other regulatory agencies to expand investment outlets and stepped up enforcement activities.
Former President Goodluck Jonathan signed the Pension Reform Bill 2014 into law The new law, which is meant to govern and regulate the administration of the uniform pension scheme for both public and private sectors in Nigeria, repeals the Pension Reform Act, No.2, 2004 and features new clauses that include the power vested in the pension commission to institute criminal proceedings against employers for persistent refusal to remit pension contributions.
The 2014 Act also empowers PenCom, to bring into the scheme the huge informal sector workforce in self-employed micro enterprises. The hope is tomorrow’s Summit offers another opportunity to reposition the pension market in Africa.