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Pension operators struggling to generate returns on nation’s N5.9trn pension contributions

By Babajide Komolafe, Favour Nnabugwu & Rosemary Onuoha
Pension operators are struggling to generate returns on the nation’s N5.9 trillion pension contributions due to the biting impact of economic recession and rising inflation.

Director General, National Pension Commission, PenCom, Mrs. Chinelo Anohu-Amazu and President, Pension Operators of Nigeria (PenOp), Mr. Eguarekhide Longe disclosed this at the ongoing workshop organised by the Commission for finance, Insurance and Pension, Labour journalists and business editors in Calabar, Cross River State.

The PenCom DG disclosed that the pension contribution has grown to over N5.9 trillion, with registration of 7.2 million pension contributors and 170,000 retirees under the contributory lesion scheme, CPS.

Longe, the PenOp President how disclosed that average return on asset on the pension contributions is below 11 percent, which is far below the inflation rate of 17.9 percent. He said average return on assets for Retirements Savings Account stands at 9.48 percent, while that of Retirees Account stands at 10.55 percent. “You can see that we are really struggling”, he said.

On his part, Head of Benefits and Insurance of PenCom Mr. Olulana Loyinmi said that the economic recession has led to an increase in the number of disengaged workers seeking to access their pension contributions.

He said PenCom has noticed a beehive of requests from affected workers to access their contribution as the law stipulates, adding that requests from disengaged and sacked workers almost take about half of activity in the Commission in terms of processing benefits.

On implementation of 18 percent minimum contribution stipulated in the Pension Reform Act 2014, the Commission Secretary and Legal Adviser, Mohammad S. Mohammad said only the private sector have so far commenced implementation, while the Federal Government is yet to implement the Contribution rates of 18 percent.

Represented by the Commissioner, Inspectorate, Prof. Abubakar Kaoje, the PenCom DG said the need to address the challenges in the lesion industry led to the enactment of the Pension Reform Act 2014.

She said: “The re-enactment of the PRA in July 2014 provided a sound basis to guide the second decade of the Nigerian Pension Reform. The PRA 2014 sought to ensure that more tangible benefits accrue to retirees towards a more blissful retirement.

Some of the major developments introduced by the new law include an increase in monthly pension contributions to 18% from the previous 15%, in order to ensure that retirement benefits are enhanced under the CPS for the benefit of contributors; reduction in the waiting period for contributors to access their Retirement Savings Account (RSA) in the event of temporary loss of job from 6 months to 4 months; stiffer penalties and sanctions for infractions; establishment of the Pension Transitional

Arrangements Directorate (PTAD) to co-ordinate the smooth administration of the old DB Scheme of the public service; amongst others.

“The enactment of the PRA 2014 served as the basis for the implementation of our new Corporate Strategy Plan. Expanding the coverage of the CPS to the underserved economic sectors through our Micro Pension initiative is a key priority of our strategic vision. As we seek to increase registered pension contributors to at least 20 million by the year 2019, informal sector participation through the Micro Pension Plan is expected to provide impetus. The Commission has also enhanced its support to the States in facilitating their adoption and implementation of the CPS by providing a bespoke technical assistance, through our State Operations Department and Zonal Offices in each of the 6 geo-political Zones.”


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