October 29, 2018

Micro pension scheme will enhance financial inclusion – IEI boss

Micro pension scheme  will enhance financial inclusion – IEI boss

•Glory Etaduovie

Managing Director/Chief Executive Officer, CEO, of IEI Anchor Pensions, Mr. Glory Etaduovie in this interview talks on ways the micro pension will improve living standards. Excerpts:

By Rosemary Onuoha

THE micro pension scheme is expected to kick off next year, how will this impact the economy?

•Glory Etaduovie

FEC approves N8.73trn 2019 budget proposal, 2019/2021 MTEF

The micro pension scheme will expand coverage of the Contributory Pension Scheme, CPS, to include self employed individuals such as artisans as well as employees of organizations with less than three people on their payroll.  This will form a major part of the government’s financial inclusion objectives. Apart from the inherent pension benefits, the target population is estimated above 60 percent of the entire Nigerian populace.

Heritage Bank partners NPA to support improved ports infrastructure

Harnessing them into the culture of long term savings and pension benefits will have multiple benefits and increase living standards overtime because of related economies of scale.

How has the huge pension fund impacted the economy so far?

From the common man’s viewpoint, not much can be said on present pension’s impact in repositioning the Nigerian economy. It has however created an enabling environment for a whole lot to happen in the business world from its core objective of social security for the elderly, provision of long term funds for investment in the private sector to availability of funds to government for critical infrastructure development. The potentials are even larger to diversify our economy fully.

The success of the funds will be used for self funding projects like the railways and the Nigerian airline project. These two will have a direct impact on every Nigerian if they run efficiently. Road maintenance costs and travel comfort will be greatly improved. The fortunes and employments these two create for Dubai and Turkey is massive.

These alone, with ancillary services will create thirty to fifty thousand jobs. Infrastructure like these will also stimulate economic adventure and growth. Foreign investments will be stimulated as people see a business friendly environment. There can be no measuring of all possibilities.

What are the challenges facing the pension industry?

Pension in its new setting, is budding.  Given our previous history when pension funds were abused, there are strong cautionary measures in the control and safety of funds. Overtime, it is reasonable to think that the industry regulators will encourage a more creative and competitive environment, as it is already doing with a variety of financial instruments.

Hence, Pension Fund Administrators, PFAs may, at some point in time, be allowed to initiate certain products relating to infrastructure and economic development as long as they are bank-able, with entry and exit points and meet security and regulatory standards.

Also, the current level of growth of the pension funds vis-a-vis available investable instruments suggests that shortly, more funds will begin to chase lesser available investment products. This will create demand and supply related challenges. As such, the investment and development related ideologies need a revamp.

We might thus just begin to waste great development opportunities, if not addressed urgently. Part of the greater challenge facing the country, which cascades down to pension investment, is the absence of a strong sciences and technology background. This reduces national initiatives and productivity which should create wider circles of growth, development, financing and dynamics of financing. This must be addressed on both long and short term basis.