Pension Fund Operators Advised to Introduce Flexibilities in Their Operations

Ebere Nwoji

Pension fund operators have been advised to introduce into their operations some flexible options that will encourage contributors into the Contributory Pension Scheme to retain their various fund managers as their pension providers after their retirement.

Former Director General Lagos State Pension Commission (LAPEC), Mrs Folashade Onanuga, suggested this while speaking at the Annual Insurance and Pension Conference organised by the National Association of Insurance and Pension Correspondents (NAIPCO) in Lagos.

She said such flexibility like penalties for early withdrawal of pension savings; incentives like offer of basic levels of healthcare would encourage clients to remain with their pension provider after they retire.

“Are there opportunities to offer clients more within the ambit of the law? Such flexible options will give clients of pension funds more control over their future while also catering to the profit motive of operators”, she said.
She said as soon as pensions products began to be demanded by the average Nigerian worker either in the formal or informal sector and not impressed on them, then a major milestone in financial inclusion would have been achieved in the pension sector.

According to her, today, pension funds under management is over N13 trillion with enrolment less than 10million registered contributors.

She said with the inclusion of the informal sector under the micro pension plan, this could be much higher, but noted that pension fund administrators must understand the needs of the population group they wanted to serve.
“We cannot use conventional products with this market segment. In addressing these needs and concerns, we will be doing our part to creating lasting economic change in Nigeria.”

She said the opportunities, which exists for increased financial inclusion in both the insurance and pension sectors would only be achieved if operators design products that were perceived to meet the people’s needs and could be seen as improving their welfare rather than impoverishing them.

She said operators must constantly be engaged in strategic thinking; have a broad understanding of the economic situation of the country, understand the mindset and ways of life of different ethnic groups and then have a variety of products from which the people could make a choice from.

The former LASPEC boss said there had been a trust gap to be bridged in the pensions industry despite the potential benefits of the product.