Follow Us on Google
By Henry Uche,[email protected]
Riding on effective regulatory framework and efficient pension funds management system put in place by National Pension Commission (PenCom) and Pension Fund Operators, Nigeria’s pension industry has recorded significant growth trend to the delight of pensioners, thus attracting more enrollees.
At a strategic media engagement in Lagos put together by the Pension Fund Operators Association of Nigeria (PenOp), its CEO, Oguche Agudah, provided a scorecard with appreciative figures confirming the industry’s current growth rate. As the Chief Executive Officer of PenOp, Agudah leads the efforts of Nigeria’s pension industry in engaging regulators, the government, the media, financial markets and other stakeholders to ensure that the interests of the pension operators and retirees are protected and promoted.
Tagged ‘At the dawn of 20 years of pension reform, what are the gains?’ he x-rayed activities of PenOp in the last 20 years, how the industry grew in leaps and bounds, hence the need to map out modalities for further growth.
Excerpt:
What is PenOp set up to achieve?
Our vision and mission has not changed. It’s to promote the operations of the pension industry, provide for self-regulation and ensure that international best practices relating to the industry are observed by the operators registered in Nigeria;. Our mission is to be the central party that coordinates and harmonises activities of the pension operators and pension industry in general to ensure that pensions has a positive effect on all stakeholders and the economy in general. And we’re committed to meeting them.
You would be 20 in 2024, what are the gains?
To start with, the growth level for RSA registration as at July 2023 is 10,023,314 and counting.
So how would you describe the industry?
It has grown to become a highly regulated and protected industry, strong in transparency. At the moment, we have 19 Pension Fund Administrators (PFA’s), six Closed PFA’s and three Custodians.
It might interest you to know that since inception PFAs have paid a total of N665.23billion to 111.708 applicants as a lump sum on life annuity as of the second quarter of 2023, while retirees under Programmed Withdrawal, a lump sum paid on programmed withdrawal stands at N964,239.47billion in Q2, 2023. When added together this gives you a total of N1.63trillion to 442,000 as lump sum in 15 years.
What does this translate to?
With all these, operators are happy, striving to do more, retirees are happy and Nigerian economy is growing.
What about withdrawal of 25 percent from RSA balance on loss of job?
For those who decided to access 25 percent of their pension savings in line provision of the Pension Reform Act 2014, the industry has paid N208.86billion to 475,000 Nigerians who lost their jobs in Q2 2023, while approval of death benefits payment rose to N356.32billion paid to 91,214 beneficiaries of deceased employees in second quarter of 2023.
Additional note:
Section 7(2) of the Pension Reform Act 2014, provides that “Where an employee voluntarily retires, disengages or is disengaged from employment, as provided for under section 16(2) and (5) of this Act, the employee may, with the approval of the National Pension Commission, withdraw an amount of money, not exceeding 25 percent of the total amount credited to his retirement savings account, provided that such withdrawals shall only be made after four months of such retirement or cessation of employment and the employee does not secure another employment”.
How much have you recovered from recalcitrant employers so far?
According to the National Pension Commission (PenCom), N24.8billion of funds unremitted by employers in the third quarter of 2023 have been recovered. Note, PenCom recovered N23.3billion of such funds in the third quarter of 2022, and N2.23billion in the third quarter of 2021.
Pensions industry Assets Under Management (AUM)?
In this regard, the industry recorded N17.35trillion in second quarter of 2023 on Asset Under Management, and made investments of N349.97billion in infrastructure in the second quarter of 2023, up from the N333.02billion invested in the corresponding quarter of 2022.
It might also interest you to know that investments in infrastructure represented 2.02 per cent of total investments made in the second quarter of 2023. While the industry also invested N1.54trillion in equity market in the third quarter of 2023. This represents 8.88 per cent of total investments, as against the N964.84billion invested in the corresponding quarter of 2022.
You footprint in mortgage financing
According to Pencom, N7.8billion was paid to 649 Contributors from March to September 2023, thus enabling them to become proud homeowners.
Remember, for contributors under the CPS to be eligible to use their RSA balance for acquisition of residential mortgages, he/ she must have contributed for five years (60 months) cumulative of employer and employee’s mandatory contributions.
The maximum sum allowed is 25 per cent of the RSA balance, “where 25 per cent of RSA balance is more than equity contribution, the RSA holder can only access the amount equivalent to equity contribution required.
How well is the industry doing?
Well, the industry hasn’t fully dispelled the negative legacy of the old pension system over these years. We still grapple with lingering image issues. We shall get better going forward.
Target for 2024 and beyond
The pension industry would focus more on micro-pensions; revision of investment guidelines, infrastructure consortium; we expect greater number of Applicants and approvals for RSA mortgage; and possible kickoff on Offshore investment as we celebrate 20th year of pension reforms.
The aim is to present a fair assessment of pension funds and offer the public the necessary context to make informed decisions. You know what? PenOp will be the foremost provider of performance reporting for pension funds.
How would you do it?
PenOp will make use of audited historical data, including fund prices and net asset values, in collaboration with Bloomberg LP (a leading business intelligence company) to compute credible comparable benchmarks based on asset class weights for its reports.
