PenCom, Pensioners and Improved Living Standards

Ifeanyi Omokwe

A few years ago, anyone about to retire, especially from the public sector had loads of reasons to be apprehensive.
Gratuities were not paid at the right time and there was no reliable pension plan to fall back on. And to compound the problem, no federal government agency was always available to prepare the potential retirees adequately for life in retirement.

But things are looking bright now, and the negative narrative is fast becoming a century old history following years of consistent reform of pension administration and regulation. Pension contribution has now become a norm in public and private service through the Contributory Pension Scheme.

Nigerians have also become more educated about contributory pension fund as a cushion for life in retirement.
The National Pension Commission has transformed the pension fund industry into one of the strongest sectors of the Nigerian economy.

The roller coastal drive gathered further momentum with the coming of the Acting Director-General, Aisha Dahir-Umar. Since coming on the scene last year, PenCom has continued the reform of pension administration with more vigor and transparence.

Pension assets has risen from N7.52 trillion in December 2017, to N8.14 trillion in May 2018. The growth has been meteoric and historic. For instance, as at December 2017, pension assets stood at N7.52 trillion; it moved up to N7.8 trillion as of February, and soared to N7.94 trillion in March, then to N8.14 trillion in May.
This, expectedly, has impacted on the economy in a substantial way and made pension for retirees more secure and more assured.

In a recent statement, PenCom spokesman, Mr Peter Aghahowa, had revealed that N5.2 trillion had been invested in federal government securities by the Pension Fund Administrators, which represented 70.08 per cent of the N8.14 trillion pension assets.

A breakdown of the investment showed that FGN bonds got N3.96 trillion; treasury bills, N1.68 trillion; agency bonds like the Nigeria Mortgage Refinancing Company and the Federal Mortgage Bank of Nigeria, N6.54 billion; Sukuk bonds got N51.98 billion; and green bonds got N8.26 billion.

In addition, state government securities gulped N154.02 billion; corporate bonds – N393.27 billion; corporate infrastructure bonds – N8.36 billion; banks – N662.80 billion; commercial papers – N71.75 billion; and real estate properties -N228.86 billion.

Other classes of assets are supra-national bonds -N8.21 billion; open/close end funds – N10.16 billion; mutual funds – N19.87 billion; private equity fund – N37.27 billion; infrastructure fund – N8.95 billion and cash and other assets, N96.13 billion.

This diversified investment portfolio would not only have multiplier effects on the economy, but would surely grow the pension fund and make pensioners more secured. It is truly the dawn of better life for retirees in Nigeria.
Pre-retirement workshop for prospective retirees has become more regular for those in public and private sectors. These talk and enlightenment gatherings comprise all stakeholders in the pension industry including pension fund administrators, PenCom officials and representatives of the financial and investment communities.

The workshops and seminars are organised at zonal and state levels to educate prospective retirees on what life awaits them. At one of such workshops in Lagos, the PenCom boss called on 
pension contributors across the country to contribute positively towards their comfort at retirement. She noted that the workshop was tailored towards addressing the challenges that prospective retirees might face as they enter retirement life under the CPS.
To make the on-going reforms more engaging and participatory, she urged the would-be retirees to feel free to offer constructive suggestions during and after the workshops, on the best way to make retirement life more comfortable to all retirees.

She stressed that the achievements recorded by the commission since the commencement of the implementation of the scheme would not have been possible without the support and understanding of all stakeholders, especially the contributors.

The Acting Director-General, however, stated that one area where the Commission still requires the cooperation of contributors is the remittance of workers’ pension contributions by employers.
Many organisations, especially in the private sector are failing in the remittance of their workers’ pension despite deducting this from their salaries. This is still a major challenge PenCom needs to tackle to avoid retirees falling into despair upon their retirement.

The challenge of non-remittance of pension contributions by employers is a major area of concern for Dahir-Umar, who strongly feels it is an unacceptable situation.

In a recent interview, she said the Commission was displeased with the series of reports of non-remittance of monthly pension, especially by media proprietors, and promised that very soon, PenCom will begin to beam its searchlight on erring media firms to ensure that they invest in the future of their workers.

Dahir-Umar further noted that the essence of the new pension scheme was to ensure that contributors can still enjoy a good life at retirement from their robust RSA balances.

That means both the employers and the employees must jointly contribute a minimum of 18 per cent of their incomes monthly into the RSA of employees, which would accumulate with time to make them spend their retirement life happier.

Pension fund administrators are also weighing in on the problem of non-remittance.
The President, Pension Fund Operators Association of Nigeria (PenOP) Aderonke Adedeji, also in a recent interview, said the issue of non-remittance of workers’ pension contributions into their RSAs has become very challenging, even as there are provisions in the law on how to handle such.

Adedeji noted that “one of these is that when you have an employer who has not been remitting regularly, we are supposed to get the regulator informed about it. But before we do that, we try to find out what is responsible for such because the implication of making an official report is that it could lead to one or two things for your customers.

“The law says that seven days after salaries are paid, deduction from employees’ salaries and employers should be remitted. So, when you have a situation where an employer is not making such remittances for two, three, four months and above, we go there to ask why it is so.

“But when we find a situation where employers seem to be nonchalant, careless and things like that, we inform the regulator, and recovery agents to go to such employers to do all that are necessary to recover the debts,” she said.

While it is good that PenCom carries all stakeholders along in the reform of the sector, matters of pension fund remittance must not be at the discretion of individual companies or organisations. PenCom must ensure compliance with the law for the benefit of workers, so that they can have life after retirement. The Commission is doing a great job. This must, however, be sustained and continuously improved. The workers expect no less.

Omokwe wrote in from Abuja