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Fourth Quarter 2018: Pension contributions rise to N5.09trn as enrolment in CPS hits 8.5m

By Peter Egwuatu

Total pension contributions rose, year-on-year, by 13.4 percent to N5.09 trillion in the fourth quarter of 2018, Q4’18 from N4.49 trillion fourth quarter ,Q4’17.

Data obtained from the Nigeria Pension Commission, PenCom for Q4’18 shows that the aggregate total pension contributions of the private sector increased year-on-year (y/y) to N2.53 trillion at the end of the quarter, representing 15.5 percent increase from N2.19 trillion recorded in Q4’17.
Whereas the aggregate total pension contribution of the public sector increased by 11.3 percent to N2.56 trillion in Q4’18 from N2.30 trillion in of Q4’17.,
Also, no fewer than 8.5 million people have been enrolled into the Contributory Pension Scheme (CPS) since its inception 15 years ago.

Mrs. Aisha Dahir-Umar

The data shows the private sector taking the lead on Retirement Savings Account, RSA remittances and have remained key contributor to the Central Bank of Nigeria’s (CBN’s) financial inclusion plan meant to bring in the underprivileged or low income segment into the financial system.
PenCom through the RSA remittances is helping to deepen the pension industry, financial system and economy.
A review of the report released by PenCom for the Q4’18 shows that the total monthly pension contributions made by contributors from both the public and private sectors was N5.09 trillion as at the end of the fourth quarter, 2018. This shows an increase of N145.41 billion representing 2.94 percent growth over the total contributions as at the end of the previous quarter.

During the fourth quarter of 2018, the total contributions received from the public sector amounted to N50.03 billion (34.41 percent) while the private sector contributed N5.38 billion (65.59 percent).
Further review of the aggregate total contribution shows that N2.56 trillion or 50.35 percent of the contributions came from the public sector, while the private sector contributed the remaining 49.65 percent (N2.53 trillion).
Also, the PenCom report shows that the private sector recorded N7.42 billion in the RSA remittance in the Q4’18, representing 65.3 percent increase from N4.49 billion recorded in the corresponding period of Q4’17.
The RSA report for the fourth quarter of 2018 released by PenCom showed that the funds were remitted into 966,155 employees’ accounts, out of 2,044 organisations but the private sector still controls the larger proportion of RSA. Beyond the RSA remittances, PenCom has for years taken major steps to deepen the pension industry and protect contributors’ investments.

The remittance data, analysts say, raises lots of hope for pension contributors and the industry. It also shows the private sector still ahead of public sector in terms of RSA remittances.
The PenCom exists for the effective regulation and supervision of the Nigerian pension industry to ensure that retirement benefits are paid as and when due.
According to the report, PenCom received a total of 3,046 applications for the issuance of Pension Compliance Certificates, out of which 2,044 were approved and issued. Also, 1,002 applications were rejected for failing to meet appropriate requirements.

How we’re tackling non-remittance of pension fund – PenCom boss(Opens in a new browser tab)

The report shows that the cumulative number of applications received during the year was 16,536 out, of which 16,100 were approved and issued certificates while 436 were rejected. PenCom reiterated that it continued to apply various strategies to ensure compliance with the provisions of the Pension Reform Act of 2014.
Head of Communication Department of PenCom, Peter Aghahowa, said: “PenCom has enrolled no fewer than 8.5 million people into the Contributory Pension Scheme (CPS) since its inception 15 years ago.”
The scheme introduced in 2004 by the federal government was a process where certain percentage of enrolees’ salaries was saved on monthly basis in a pool with the employers also contributing.

The scheme had PenCom as the regulatory body with Pension Fund Administrators (PFA) working in their behest.
Aghahowa said the scheme had made the life of retirees much easier, unlike the defined benefits scheme which it replaced.
He however, said it was sad that in spite of the enormous advantages inherent in the scheme, some state governments had yet to embrace it to make life better for retirees in their respective states.
“The federal government went into the contributory scheme as the old scheme became unsustainable due to huge debt deposits.
“This new scheme is funded ab initio by government and it reduces the financial load on government,” he said.

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