PenCom: Contributory Pension Scheme Increased by N5.94tn in Three Years

James Emejo in Abuja

The Director General of the National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar, has said pension assets under the Contributory Pension Scheme (CPS) surged by N5.94 trillion over the last three years.
The CPS is an arrangement where both the employer and the employee contribute a portion of an employee’s monthly emolument towards the payment of the latter’s pension at retirement.

Speaking with journalists on the development of the Nigerian pension industry, the PenCom boss also said the commission had recorded remarkable strides in enhancing the efficiency and transparency of the scheme.
She said the scheme grew from N11.35 trillion in August 2020 to N17.29 trillion in August 2023.
She added that over one million new contributors had also keyed into the CPS within the period under review.
Umar also pointed out that the recapitalisation of the shareholders’ fund of Pension Fund Administrators (PFAs) from N1 billion to N5 billion remained one of the commission’s outstanding achievements under her watch.

According to her, “the significant increase in the number of registered contributors and pension assets under the management of PFAs had necessitated increased capital injection, to meet minimum service standards and address various operational needs in the pension industry.”
She stressed that following the successful conclusion of the recapitalisation exercise, PFAs have become financially stronger and better equipped to offer quality service to Retirement Savings Account (RSA) holders.

Among other things, Umar said the decision by the commission to allow a portion of the RSA to be used for mortgages had yielded positive results.
She said from the commencement of the implementation of the guidelines to August 31, 2023, PenCom had approved 339 applications amounting to over N4 billion for payment of residential mortgage equity contributions.
In 2022, PenCom issued the Guidelines on Accessing Retirement Savings Account (RSA) Balance towards Payment of Equity Contribution for Residential Mortgage by RSA Holders.

Essentially, the guidelines gave effect to the provisions of Section 89 (2) of the Pension Reform Act (PRA) 2014, which provides that “a Pension Fund Administrator may, subject to guidelines issued by PenCom, apply a percentage of the pension assets in the Retirement Savings Account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account.”

She said: “This landmark achievement by PenCom seeks to ensure that employees become homeowners while still in service.”
According to her, the Nigerian pension industry has witnessed significant growth in assets under management, pointing out that the pool of funds had significantly enhanced savings mobilisation, capital market development, and economic growth.

She noted that pension funds have been deployed for investment in infrastructure targeted at financing waste management, independent electricity generation, and road construction (Sukuk).

She added that pension assets have also increased the availability of long-term funds for investment in the real sector of the economy.
She listed the infrastructure projects financed with pension funds including roads built across the six geopolitical zones under the Sukuk programme, the Akute power plant, and the Island power plant.

Others are Pipp Genco, Gasco Marine Limited, and the construction of 1200 hostel rooms at the University of Calabar, Cross River State.
She said: “In the final analysis, an improved economy and financial system directly benefit individual pension contributors through improved returns on pension savings and enhanced payouts at retirement.”