By Rosemary Onuoha
Chief Executive of Stanbic IBTC Pension Managers, Mr. Eric Fajemisin, in this interview discusses how the proposed micro pension scheme will grow the pension sector. Excerpts
HOW will the proposed micro pension impact growth of the pension industry?
The proposed micro pension scheme is one initiative with great potential capable of landing the industry into its next phase of growth. Regardless of the inherent challenges, the micro pension scheme has the capability to deepen asset accumulation in Nigeria considering that 70 percent of Nigeria’s working population operates in the informal sector. Among its other benefits include improved standard of living for the elderly, safety of funds and access to other incentives, such as mortgage facilities, health insurance and estate planning.
In addition are flexible contribution remittances, the opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion in the country. The benefits are enormous indeed.
PenCom just introduced the multi fund structure, how will it work?
The multi-fund structure categorizes pension fund investments into four funds by aligning the age and risk profile of Retirement Savings Account, RSA, holders to match the four funds. Fund One is targeted at people of 49 years and below who want higher returns and are willing to take higher risks. Membership into this fund is strictly based on request.
Lowest risk profile
Fund Two is aimed at people who are aged 49 years and below and still working but are satisfied with moderate returns and levels of risks. Fund Three targets people 50 years and above but still working and have very low risk appetite. In Fund Four are retirees who have the lowest risk profile of all categories. The most outstanding feature of this scheme, apart from diversification of pension fund portfolio, is the resolution of risk appetite based on the various categories of funds. For PFAs, the multi-fund structure provides considerable flexibility in terms of risks associated with the four classifications.
How would you rate the performance of the CPS so far?
Nigeria has come a long way since the Contributory Pension Scheme, CPS, was introduced in 2004. The National Pension Commission (PenCom) said that the net pension asset under the CPS has grown to N7.94 trillion in March this year. Similarly, the number of contributors reportedly has also increased to 7.82 million as at December 2017.
From inception to December 2017, the industry has been able to pay about N8.44 billion to 223,051 retirees for both programmed withdrawal and annuity. These are significant accomplishments, considering the fact that the scheme is just 14 years old. This goes to show what is possible when there is a conducive operating environment, determination, organization and strategy. At the rate we are going, we can only imagine what the pension landscape would look like in the next 14years. There is no doubt that with the right templates and policy framework, the pension industry would become a pivot for capital formation that is required for economic development.
How is Stanbic IBTC Pensions contributing to the sector?
For us at Stanbic IBTC Pension Managers, we are delighted to be part of this laudable story. As you know, we are by far the largest pension fund administrator in Nigeria with assets under management in excess of N2.53 trillion and over 1.6 million retirement savings account holders nationwide. From inception to December 2017, SIPML has paid N66.5 billion to 37,772 retirees.