The sector witnessed many milestones but activities were also dampened by macroeconomic challenges, Omobola Tolu-Kusimo writes.
The year started on a robust note for the pension industry with total assets of the contributory pension scheme (CPS) at N10.43 trillion by January 31, 2020. The fund rose to N11.56 trillion by September 30, gaining N1.13 trillion or 10.83 per cent.
For safety, the funds were invested mainly in Federal Government securities, with an allocation of between 65 per cent and 70 per cent monthly. The investments were favourable to FGN bonds, Treasury Bills, Sukuk bonds, agency bonds and green bonds.
Besides, President Muhammadu Buhari confirmed the Acting Director-General, National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar as substantive helmsman.
The main drawback to the industry was the disruption from coronavirus pandemic to PenCom and pension operators’ activities.
Although the commission had earlier said payment of monthly pension was not affected by COVID-19, it announced in December 2020 that it is unable to conduct the physical verification/enrolment due to the pandemic.Those affected were employees of Treasury Funded Ministries, Departments and Agencies (MDAs) of the Federal Government due to retire from service between January and December 2021. Plans are however on to ensure seamless conduct of the annual verification and enrolment exercise by the first quarter of next year through an automated process that has just been put in place.
Stakeholders said the COVID-19 lockdown forced pension contributions and remittance down by at least 30 per cent. They stated that the pandemic had serious impact on pension contributions and remittance as most companies could not remit their workers contributions. The full impact according to them, would be determined when businesses fully commenced.
Meanwhile, the Defined Benefits Scheme (DBS) also got a boost with many old pensioners being paid outstanding pensions and gratuities, arrears, pension increase among others, by the Pension Transitional Arrangement Directorate (PTAD).
PenCom commenced the year attending to clamour by retirees for pension enhancement given the appreciable growth in their Retirement Savings Account (RSA) on Programme Withdrawal. The Commission then directed Pension Fund Administrators (PFAs) to implement the second edition of the pension enhancement for retirees on Programmed Withdrawal (PW) mode of retirement, having carried out the first edition in 2017. The pension enhancement was for Contributory Pension Scheme (CPS) retirees who have accumulated significant growth in their RSAs and had retired between July 2007 and December 2017.
In the same period, the Commission slammed employers without life insurance for workers and unremitted pension contributions. It directed employees to report any employer that fails to procure the minimum required life insurance policy in their favour not less than three times their annual total emolument and those failing to remit the deducted pension contributions into their RSAs. The Commission directed employees to ensure that all pension contributions deducted from salaries or contributed by employers are remitted to the Pension Fund Custodian (PFC) by the employer not later than seven working days from the date of payment of their salaries.
In May 2020, the commission handed the management of the troubled First Guarantee Pension Limited which it had taken over, to a reconstituted Board of Directors under the Chairmanship of Alhaji Kashim Ibrahim Imam with Hon. Tsegba Terngu, Hon. Ahmed Salik, Dr. Pat Asadu, and Hon. George I. Ozodinobi as members. The Commission had appointed Interim Management Committee for the troubled PFA in August 2011.
According to PenCom, as at February 26, 2020, only four states and the Federal Capital Territory (FCT) were paying retirees through the CPS. The four states included Lagos, Delta; Kaduna and Osun alongside FCT. These were states funding their workers accrued pension rights and also carrying out actuarial valuations.
After waiting for 16 years, RSA holders under the pension scheme who are not satisfied with their PFA now have the opportunity of switching their PFA. This came as PenCom finalised the process that enabled transfer from one PFAs to another. The Commission launch the transfer window entitled: “RSA Transfer System” on November 16, 2020. Since the launch, over 2,100 Retirement Savings Account (RSA) holders have applied to move their pension accounts from their PFAs to new ones.
In 2014, which was 10 years after the implementation of the Contributory Pension Scheme (CPS), the National Assembly repealed the Pension Reform Act of 2004 and enacted the Pension Reform Act (PRA 2014) to address implementation challenges and introduce improvements to the Contributory Pension Scheme. However, some challenges were subsequently encountered in the implementation of certain Sections of the 2014 Act.
In the last three years, there have been persistent clamour for amendment from individuals and interest groups as well as several legislative attempts on the amendment of some Sections of the PRA 2014. PenCom in the light of these developments initiated the process of the review of the PRA 2014 in order to address the identified challenges and public clamour.
In August 2020, the Federal Government released the sum of N14.92 billion for the payment of accrued rights for retirees under the CPS, an amount expected to cover four months arrears.
The accrued pension rights represent an employee’s benefits for the past years of service up to June 2004, when the Pension Reform Act (PRA) that birthed the CPS, came into effect.
In September 2020, PenCom and the National Insurance Commission (NAICOM) signed off the Revised Regulation on Retiree Life Annuity, the Guidelines on Group Life Insurance Policy for Employees and CPS Retiree Pack, after years of internal wrangling among the two agencies of government. The signing ceremony also included the signing of a Memorandum of Understanding between PenCom and NAICOM.
The revised Regulations and Guidelines provided clarity on the provisions of the PRA 2014 in areas relating to Retiree Life Annuity with focus on guiding stakeholders to make informed decision, ensure safety of Retiree Life Annuity funds and assets, address concerns of mis-selling and de-marketing by pension and insurance operators as well as bringing stability into the financial sector of the economy.
Also, in September, micro pension contributors hit 53,827. The 53,827 self-employed persons saving for retirement benefit under the Micro Pension Plan (MPP) since the commencement of the plan in March, last year consequently saved N4. 8 million in their RSAs. This was a major development.
“As this category of workers constitutes the larger percentage of the working population in the country, there is no doubt that to achieve the pension industry’s strategic objective of covering 30 per cent of the working population in Nigeria under the CPS by the end of 2024, efforts should be on deck to extend coverage to this important segment of the economy,” Dahir-Umar said.
In October, the Commission introduced the Data Recapture Exercise (DRE) to obtain complete, accurate and current data of all RSA holders (both active and retired). The Commission was desirous to ensure that RSA holders are able to exercise their rights of transferring their RSAs from one PFA to another. The DRE is a prerequisite for processing any RSA transfer request by RSA holders who registered before July 1, 2019.
Accordingly, PFAs were directed by the Commission to obtain the relevant information required for the DRE from RSA holders and the process is on-going. One of the information required for the exercise is the National Identity Number (NIN).
PTAD, on its part, concluded arrangements to remove 21,227 parastatal pensioners who were on the Directorate’s payroll with effect from October 2020.
Executive Secretary, PTAD, Dr. Chioma Ejikeme said affected parastatal pensioners were those that did not turn up for the Directorate’s 2019 PaPD nationwide and In-House verification exercises.
Also, they neither submitted documentary request for mobile verification nor registered as Diaspora pensioners. The documented Diaspora pensioners and pensioners who requested for mobile verification, but were not yet verified, have also been added to the documented pensioners pending when it would be convenient for them to be verified.
Meanwhile, pension operators under the umbrella body of Pension Fund Operators Association of Nigeria (PenOp) had not much activity in the year. All the same, it was a mixed year for the pension industry.