ON Friday, June 28, the National Pension Commission, PenCom, submitted a position paper to the Senate Committee on Establishments and Public Service and the House Committee on Pensions, at the joint public hearing on the Bill for an Act to repeal the Pension Reform Act 2004 and enact the Pension Reform Act, 2013, to make provision for Contributory Pension Scheme, CPS,  and for connected matters. For record purposes, beginning from this edition, Pension and You, will publish the presentation of PenCom, the regulator in the Pension industry.

1-0 Introduction

1-1The National Pension Commission (“the Commission” or “PenCom”) expresses its profound appreciation to the Senate Committee on Establishment and Public Service and the House Committee on Pensions for the opportunity to appear before the Committees at this Public Hearing to provide further clarifications regarding the Bill for an Act to Repeal the Pension Reform Act 2004 and Enact the Pension Reform Act 2013 to Make Provision for Contributory Pension Scheme and for Connected Matters (HB 13.04.487). Indeed the Commission acknowledges the tremendous support of both Committees of the Senate and the House of Representatives in the establishment and consolidation of the Contributory Pension Scheme in Nigeria.

1-2 A memorandum clarifying the objectives and focus of the PRA 2013 Bill as well as the position of the Commission on the provisions of the Bill becomes imperative especially against the backdrop of the recent unwarranted negativities and misrepresentations from certain quarters following the submission of the Bill to the National Assembly by His Excellency, Mr. President. Accordingly, the Commission seeks to provide a succinct explanation on the genesis, objectives and scope of the PRA 2013 Bill as well as make further submission to the National Assembly for consideration.

1-3 It is apposite to commence with the background information on the reasons that necessitated the review of the Pension Reform Act 2004 (PRA 2004). During the early period of implementation of the PRA 2004, certain challenges were identified by the Commission.

There were also calls and agitations on the need for the Commission to address emerging issues that had come to the fore due to changing socio-economic realities of Nigeria. At that time, the Commission took the position that any amendment of the PRA 2004 should be deferred until after its full implementation in order to fully benefit from the lessons learnt from implementation.

1-4 Accordingly, in May, 2009 the Commission in conjunction with the Senate Committee on Establishment and Public Service and the House Committee on Pensions, jointly organized a National Stakeholders Conference on the Review of the Implementation of the Pension Reform with the following objectives:

Determine the suitability and/or adequacy of certain provisions of the PRA 2004; Identify ways to fully integrate the informal sector, States and Local Governments into the Scheme;

Examine ways to diversify pension fund investments to provide adequate returns while guaranteeing safety of the pension assets;

Draw lessons from other jurisdictions on how to promote best practices in the pension industry; and harvest inputs from all stakeholders and professionals with a view to conducting a comprehensive review of the PRA 2004.

1-5 Distinguished Senators and Honourable Members, PenCom is delighted to state that the above objectives were largely achieved. A comprehensive review of the implementation of the pension reform in Nigeria was undertaken, challenges identified and recommendations made by experts and stakeholders.

The PRA 2013 Bill which is being examined at this Joint Public Hearing today is a product of an exercise initiated not only by the Commission but also by the National Assembly and all Stakeholders in the pension industry. The Bill has, in the main, captured the recommendations of the National Conference.