Adequate measures in place for safety of pension funds – PenCom

By Favour Nnabugwu

 

 

The National Pension Commission (PenCom) said adequate structures have been put in place to ensure the safety of pension funds in the industry

PenCom also promised to continue to develop and implement innovative polices to foster safety and fair returns on pension fund investment as the pension industry and financial system evolves.

The Commission said it is taking strategic steps to encourage more participation of workers from the informal sector of the economy in the Micro Pension Plan in order to expand the Contributory Pension Scheme (CPS).

These disclosures were made yesterday by the Director-General, National Pension Commission, Mrs. Aisha Dahir-Umar, at the 2022 Workshop organized by PenCom to journalists in Lagos.

The DG who was represented at the Workshop by the Head of Corporate Communications Department, Mr. Abdulqadir Dahiru, said the theme of this year’s workshop, “Increasing Informal Sector Participation in the Contributory Pension Scheme (CPS): The case for Micro Pension Plan”, aligns with the Commission’s objective of expanding coverage of the CPS.

She stated that the objective is to bring in to the CPS, Nigerians working in the Informal Sector and those who are Self Employed through the Micro Pension Plan (MPP), noting that “it is of utmost importance to educate the media on the MPP and enlist your support to make the Plan popular amongst informal sector workers and the self-employed.

She said the Commission’s directive to increase the Minimum Regulatory Capital (Shareholders’ Fund) from N1 billion to N5 billion. was to ramp up the capacity of the Pension Fund Administrators to manage the increasing number of registered contributors, and the value of pension fund assets.

PenCom DG informed the journalists that as at June 30, 2022, the number of registered contributors and the pension fund assets stood at 9,795,957million and N14.27 Trillion, respectively.

She said it is expected that the recapitalization exercise will bring about increased effectiveness and efficiency as well as improved service delivery in the industry.

In his presentation at the Workshop entitled “What you Need to Know About the Investment of the Micro Pension Fund (Fund VI,”  Mr. Ibrahim Kangiwa, Head, Investment Supervision Department National Pension Commission listed the Benefits of Micro Pension Fund Investments to the economy and to the contributor, stating that the Commission is committed to ensuring the safety of Micro Pension Fund and the investments.

According to him, the Commission is committed to ensuring the safety of pension funds and structures have been established in this regard.

“As the pension industry and financial system evolves, the Commission would also continue to develop and implement innovative policies to foster safety and fair returns on pension fund investment,” he added.

The Head of Micro Pensions Department, Mr. Dauda Ahmed, in his presentation entitled “The Micro Pension Plan: Bringing Financial Security at Old Age to the Doorsteps of the Informal Sector,” he listed the benefits of Micro Pension Plan.

He said Micro Pension Plan will improve the standard of living of the elderly as it provides a regular stream of benefits at old age; provide access to other incentives and secures financial autonomy and independence of retirees amongst other benefits.

Speaking on the topic “The Administration of Retirement Benefits Under Micro Pension Plan,” the Head of Benefits & Insurance Department, Mr. Obiora Ibeziako, gave insights into the benefits administration of MPP which he said is divided into two – Contingent Withdrawal and Retirement Benefits Withdrawal

According to him, Withdrawals/accessing benefits shall be two types reflecting the flexibility incorporated in the treatment of the contributions.

PenCom, PenOp plan industry media campaign on MPP

By Favour Nnabugwu
The National Pension Commission, PenCom plans industry wide media campaign in collaboration with Pension Fund Operators Association of Nigeria to achieved broad  awareness among targeted groups under its Micro Pension Plan,  MPP.
The Director-General of PenCom, Mrs Aishat Dahir-Umar said the Micro Pension Plan, MPP was conceptualized to expand pension coverage to the informal sector, including small-scale businesses, entertainers, professionals, petty traders, artisans, and entrepreneurs.
The MPP was implemented to curb old-age poverty by assisting the workers, as mentioned above, to contribute while working and build long-term savings to fall back on when they become old.
“To create awareness of the Micro Pension Plan, the Commission, in collaboration with the Pension Fund Operators Association of Nigeria, is currently championing an Industry Media Campaign in major cities in the country’s six geopolitical zones”.
The Commission says strategic efforts to drive the Micro Pension Plan (MPP) remain one of its significant areas of focus.
Represented by Abdulqudir Dahiru, the Head of Corporate Communications of the Commission, said the capacity building workshop for Insurance and Pension Editors in Lagos on Thursday, explained that the MPP was conceptualized to expand pension coverage to the informal sector, including small-scale businesses, entertainers, professionals, petty traders, artisans, and entrepreneurs.
The theme of this year’s workshop, “Increasing Informal Sector Participation in the Contributory Pension Scheme (CPS): The case for Micro Pension Plan”, according to the DG, aligns with the Commission’s objective of expanding coverage of the Contributory Pension Scheme, CPS.
She noted that the objective is to bring in to the CPS, Nigerians working in the Informal Sector and those who are Self Employed through the Micro Pension Plan (MPP).
” Therefore, it is of utmost importance to educate the media on the MPP and enlist your support to make the Plan popular amongst informal sector workers and the self-employed.” Dahir-Umar noted.
PFAs recapitalization was important to accommodate more contributors- DG

By Favour Nnabugwu

 

 

The Director-General of the National Pension Commission, PenCom, Mrs Aishat Dahir-Umar revealed to that the government laid emphasis on the recapitalisation of the Pension Fund Administrators, PFAs, was to necessary to allow the accommodate more contributors in the country
With the theme of this year’s workshop, “Increasing Informal Sector Participation in the Contributory Pension Scheme (CPS): The case for Micro Pension Plan” which sahe said aligns with the Commission’s objective of expanding coverage of the CPS.
Dahir-Umar during the one-day workshop organised by PenCom for the Nigerian Association of Insurance Correspondents, NAIPCO, the Financial Correspondents Association of Nigeria, FICAN and Labour Correspondents in Lagos, was glad to announced that all the PFAs were able to meet up the recapitalisation from N1billion to N5billion.
“As you know, PenCom increased the Minimum Regulatory Capital (Shareholders’ Fund) requirements of Pension Fund Administrators (PFAs) from N1 billion to N5 billion last year. The recapitalization exercise had a 12-month transition from April 27 2021, to April 27 2022. As of the deadline, all Pension Fund Administrators (PFAs) have complied with the Commission’s directive to increase the Minimum Regulatory Capital (Shareholders’ Fund) from N1 billion to N5 billion”
The DG revealed, “The  reason for the recapitalization exercise was to ramp up the capacity of the Pension Fund Administrators to manage the increasing number of registered contributors, and the value of pension fund assets under which I am pleased to inform you stood at 9,795,957million and N14.27 Trillion, respectively, as at June 30, 2022”
 She said that the exercise is intended to make the pension industry sound and healthy,
“it is expected that the exercise will bring about increased effectiveness and efficiency as well as improved service delivery in the industry”
Dahir-Umar  said the Commission is aware of the importance of the importance of the media and the role they played in the pension industry which is why PenCom takes the workshop seriously for collaborations to be strengthen.
“The Commission is mindful of your critical role in disseminating factual information to its stakeholders. So, it is imperative to constantly interact and inform you of recent developments in the pension industry and some of the Commission’s significant activities.
“It is of utmost importance to educate the media on the MPP and enlist your support to make the Plan popular amongst informal sector workers and the self-employed’.
Public sector employers’ Pencom contribution in 2021 declined by 8.9% – PenCom

By Favour Nnabugwu

 

 

Public sector employers in federal, state and local governments contributed N492.43 billion as pension in 2021 as shown in the  National Pension Commission (PenCom) 2021 annual report

The figure represented an 8.29 per cent decline (year-on-year) when compared with the N536.97 billion recorded in 2020.

The Director-General of PenCom, Aisha Dahiru-Umar, admitted in the report that COVID-19 restrictions slowed down operations of the commission in the year under review.

PenCom said despite that, it paid N326.32 billion as retirement benefits.

The payments comprised retirement benefits and a 25 per cent payout due to temporary loss of job.

The commission noted that pension contributions credited into the Retirement Savings Accounts (RSAs) of public sector employees from inception grew from N3.43 billion on December 31, 2020, to N3.93 billion by December 31, 2021.

It added that the cumulative pension contribution received from the private sector from inception to December 31, 2021 rose from N3.27 billion recorded in 2020 to N3.66 billion.

The pension contribution credited into the RSAs of private sector employees also increased slightly by 4.61 per cent from N371.12 billion in 2020 to N388.23 billion by December, 31, 2021.

Total pension contributions remitted into the RSAs of employees, however, dropped to N880.66 billion at the end of 2021, representing a 3 per cent decline compared to the N908.09 billion recorded during the corresponding period in 2020.

“The total pension contributions remitted into the RSAs of employees in both the public and private sectors in 2021 decreased slightly from N908.09 billion recorded in 2020 to N880.66 billion as of December, 31, 2021.

“This indicated a 3.02 per cent decline over the reporting period,” the report stated

Pension Asset gains N843 bn in 6 months, hit record high of N14. 27 trn

By Favour Nnabugwu

 

 

Nigeria’s pension fund assets rose by N842.7 billion in the first half of the year, hitting a record high of N14.27 trillion from N13.42 billion recorded at the beginning of the year, according to a report released by the National Pension Commission (PenCom).

On the other hand, a total of 27,157 RSA contributors switched their pension managers between January and June 2022, bringing the total number of RSA transfers processed by the Commission to 78,549 since the opening of the transfer window.

Since the launch of the PFA transfer window, which gives an opportunity for Retirement Savings Account (RSA) holders to switch from one pension fund administrator to another, Q1 2022 recorded the highest quarterly movements, increasing by 20.1 percent quarter-on-quarter, an indication of how competitive the industry has become.

Meanwhile, RSA registrations increased by 2.8 percent to stand at 9.79 million from 9.53 million recorded as of December 2021, which represents an increase of 266,830 new RSA registrations in six months.
Total pension funds increased by 6.28 percent from N13.42 trillion as of December 2021 to N14.27 trillion as of June 2022.

Investments in corporate debt securities rose significantly by 26.11 percent to N1.19 trillion in the review period (year-to-date).
PFAs increased their investments in real estate by 50.66 percent to N236.2 billion as of June 2022 from N156.8 billion recorded as of the beginning of the year.

Investments in private equity funds dipped slightly by 0.24 percent to stand at N38.87 billion from N38.96 billion.
Meanwhile, PFA allocations to FGN securities stood at N9.01 trillion, a 2.67 percent increase from N8.77 trillion in December 2021. It is worth adding that investments in FGN securities accounted for about 63 percent of the total pension fund.

This is likely to continue considering the growth in the interest rates of the FGN Bonds and BN Treasury Bills, which have been recording significant oversubscriptions.

A major incentive is that FGN securities are safer than other variable assets, which most RSA funds are averse to.
The RSA fund II accounted for most of the fund contribution with N6.24 trillion, representing 43.7 percent of the total pension funds, followed by RSA Fund III with N3.86 trillion, which represents 27 percent of the total assets.

Pension Fund Administrators earn N125.4bn in 2021 – PenCom

By Favour Nnabugwu

 

 

Pension Fund Administrators (PFAs) earned N125.39 billion in the financial year ended December 31, 2021, according to the National Pension Commission (PenCom)

PenCom in its 2021 annual report on its official website revealed

The commission said the figure indicated an increase of 14.33 per cent, compared to the total income of N109.68 billion earned in 2020 stated that the total operating expenses of the PFAs amounted to N65.58 billion, as against N55.20 billion recorded in 2020, while gross operating profits in the industry increased from N54.78 billion in 2020 to N59.52 billion in 2021.

According to the commission, the major source of income for the PFAs is fund management fees, which account for over 90 per cent of total income.

It noted that the PFAs recorded combined Return on Assets of 19.68 per cent and Return on Equity of 25.44 per cent, which indicated that the PFAs sustained their profitability in the year under review.

PenCom said the six Closed Pension Fund Administrators (CPFAs) generated total revenue of N3.65 billion, which was an increase of 19.67 per cent, when compared with the total inflow of N3.05 billion generated in 2020.

The commission explained that the major source of inflows for the CPFAs were receipts from their sponsor companies, which constituted 65 per cent of their total revenue, while management fees and investment income accounted for 32 per cent and three per cent respectively.

According to PenCom, the CPFAs incurred total expenditure of N3.55 billion and a net gain of N92.44 million for the year ended Dec. 2021.

It stated that the operating expenses consisted mainly of expenses on staff , which accounted for over 65 per cent of operating expenses.

2,987 micro pension contributors registered by 18 PFAs in Q1 2022

By Favour Nnabugwu
A total of 2,897 Micro Pension Contributors were registered by 18 Pension Fund Administrators, under the fist quarter of 2023, according to National Pension Commission, PenCom
Thi e above figure increased the overall number of Micro Pension contributors to 76,588 as at  March 31, 2022.

The first quarter report on the website of the Commission also revealed that 69 micro pension contributors converted to Contributory Pension scheme with a total of N245,805.93m transfered from Micro Pension fund (Fund V) to RSA Active Funds (Funds II & III).

The commission further said that a total of  N34.53m was credited into the RSAs of
8,668 MPP contributors in Q1 2022, bringing the total value of the Micro Pension Fund to N263.57m as at 31 March 2022.

The commission also said it issued a  total of 10,541 Pension Compliance Certificates, PCC, to organizations in the first quarter of 2022.

PenCom received 11,200 applications from private sector organizations for the issuance of PCCs. Out of this number, 659 applications were in the approval process as at 31 March 2022.

The records showed that the 10,541
organizations had remitted a total sum of N59,39bn into the Retirement Savings Accounts (RSAs) of their employees, totaling 45,170.

FG has not borrowed money from pension funds – Pencom assures

By Favour Nnabugwu

 

 

The Federal Government has not borrowed money from pension fund in the country,  National Pension Commission (Pencom) assured

This, the Commission said, was to address complaints and rumours in some quarters that a large chunk of the government’s recurrent spendings were done by borrowing from pension funds.

Pencom’s Head of Corporate Services, Alhaji Abdulqadir Dahiru, gave the hint while speaking at a Stakeholders Forum/Interactive Session organised by the Public Complaint Commission with the theme: ‘Effective Administration of the Contributory Pension Scheme in Nigeria: Challenges and the Way Forward’.

He clarified that instead of the government to borrow pension funds, it was the investment teams of pension fund administrators that seek and put money into government bonds to balance their return and risk considerations.

Some stakeholders at the forum had said, “The speculation that the Government is borrowing from the Pension fund is a threat to the contributors.

“The safety of the Fund is paramount to contributors and other stakeholders alike.

“There is need to ascertain the authenticity of the allegation of borrowing to possibly curb any threat to the Scheme.”

Responding, Dahiru stated: “Pension funds are invested in government securities like banks, insurance companies, and foreign investors who are interested in government debt.

“The Federal Government has not borrowed pension funds, because people are giving the impression as if these monies are kept somewhere and government has dipped its hands into it.

“Pension funds are invested. It is a deliberate policy of individual pension fund administrators and their investment teams to look at the investment instruments available, whether government or private, and decide which one they want to invest in, to balance their return and risk considerations.

“Therefore, government does not borrow pension funds. Instead, they are invested in government debt instruments.”

Earlier, the Secretary, Public Complaint Commission, Mr Philip Enyali, explained that the dissatisfaction of many retirees and the need to address their many petitions to the Ombudsman, regarding their entitlements necessitated the interactive meeting with Stakeholders in the pension industry.

He identified the inability of the government to release funds as and when due, delay in payment of group life insurance policy, non-funding Retirement Savings Accounts, inadequacy of pension payment remittances etc. as some of the complaints by retirees to the ombudsman.

“One of the greatest challenges that stares the typical employees in the face throughout their working life is life after retirement. As part of proactive efforts by the Commission, this interactive session is being held to systematically examine the challenges of the administration of the Contributory Pension Scheme currently in operation in the country,” he said.
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House Committee demands PenCom audited accounts from 2019 – 2022

By Favour Nnabugwu

 

The House of Representatives Committee on Public Accounts has demanded audited accounts of the National Pension Commission (PENCOM)) from 2019 to 2022.

The chairman of the committee, Hon. Busayo Wole Oke, demanded that the office of the Secretary to the Government of the Federation (SGF) and the Director of the Budget office to furnish the committee with the four audited accounts

Oke also directed the Clerk of Committee to write the SGF and the Budget Office to get these details when the Director General of PENCOM who was represented by the Commissioner in charge of Technical, Anyim Nyerere, appeared before it on Thursday .

The Auditor General of the Federation in a query to the Committee had said that the Commission had failed to render its audited financial accounts since 2013 till date.

However Nyerere said that the Commission failed to submit its audited financial account because it did not have a board at the time under review to ratify it as required by law.

He further explained that PENCOM had prepared the audited accounts from 2013 to 2017 which it submitted to the Office of the Auditor General but were rejected because they had no board in place and that the SGF was in charge of the budget of the Commission during this period.

Nyerere also said that the 2018 to 2020 budgets, by which time a board was constituted, for the Commission had been approved but yet to be submitted.

He said the 2021 and 2022 budgets were still at the draft stages and would be ready for submission within the next 30days.

Chairman of the Committee, Oke, excused the commission for not having a board saying it was not within their powers to constitute a board.

He decried a situation where sensitive agencies of the government like the PENCOM were being allowed by the Executive arm of government to run without boards for long periods of time.

He therefore declared that it was wrong that an agency whose assets had hit N14 trillion would be managed in such a shoddy manner.

He said that the Committee would decide the next line of action on the Commission upon the receipt of the copies of its budgets for the years under review from both the SGF and the office of the Director of Budget.