The Nigeria Pension regulator, PenCom, has regretted the recent delay in the payment of accrued pension rights for the retirees of treasury funded MDAs, assuring that the situation will soon be resolved even as necessary buffers have been put in place to forestall future recurrence.
The Acting Director General of the National Pension Commission, Ms. Omolola Oloworaran, represented by the Head of Corporate communications of the Commission, Mr. Ibrahim Buwai, made the disclosure at Pension Correspondents Association of Nigeria (PENCAN) 2024 Conference with the theme: ’20 Years of Pension Reform Act: Gains, Challenges, and Prospects’, in Abuja on Thursday
The DG, who delivered the keynote speech at the event, listed some landmark achievements of the Commission while noting its shortcomings, which included the delay in the payment of retirees.
She said: “While there are many reasons to celebrate the CPS implementation over the 20-year period, PenCom remains mindful of some challenges and continues to spare no efforts at resolving them. The delay in the payment of accrued pension rights for the retires of treasury funded MDAs is one of such challenges. Although the current delay in the payment of retirees’ accrued rights negates the cardinal objective of the CPS of payment of retirement benefits as and when due, I would like to assure you that this situation will soon be resolved. It is also heart-warming to report that concerted efforts by critical stakeholders have reached advanced stages, to not only clear all outstanding pension liabilities of the Federal Government under the CPS, but to also put in place lasting solutions that will address the problems of inadequate funding and delay in fund releases for the payment accrued rights.”
Oloworaran went down memory lane of the Commission, from the enactment of the enabling Act, to some policies, programmes and initiatives embarked upon, and the positive results recorded. She highlighted the significant growth of pension fund assets from N2 trillion in June 2004 to a whopping N20.87 trillion in July, 2024.
“Distinguished participants, in 2004, the implementation of the CPS was heralded by the enactment of the Pension Reform Act of 2004 (later repealed and re-enacted as the PRA 2014), which transformed pension administration in Nigeria. The rationale for the reform has been severally rehashed, but suffice it to mention that it sought to reverse the inefficiencies of the Defined Benefit Scheme and instituted a sustainable pension system for Nigeria.
“The CPS introduced a paradigm shift in pensions resulting in a contributory scheme whereby both employer and employee were required to contribute monthly towards pensions for Nigerian workers. This ensured that retirement savings were fully funded, portable, and accessible to workers in both the public and private sectors. Most importantly, it empowered workers to make individual choices, with their pension contributions being remitted into individual Retirement Savings Accounts (RSAs), managed by Pension Fund Administrators (PFAs) of their choice and kept in safe custody by Pension Fund Custodians (PFCs).
“The consistent accumulation of pension fund assets since commencement of the CPS remains a key performance indicator. This is made even more significant considering the over N2 Trillion estimated pension liabilities prior to June 2004. This clear transformation resulted in the rise of total Pension Fund Assets under management to ₦20.87 trillion as at July 2024. The remarkable growth was enabled by a sound regulation and stringent oversight from PenCom. Correspondingly, the Retirement Savings Accounts (RSAs) have also grown to 10.41 million.
“While there are several other milestones attained over the period, suffice it to highlight just a few. The launch of the Micro Pension Plan (MPP) in 2019 was one of such landmarks in PenCom’s quest to extend the coverage of the CPS to workers in the informal sector. The informal sector is reputed to be the largest employer of labour in Nigeria, and the inclusion of self-employed individuals in the CPS is a critical achievement. Through this initiative, informal sector workers and other self-employed who were previously excluded from formal pension schemes now have access to a reliable retirement savings platform. However, the opportunities that the MPP provides remains largely untapped going by the enrolment numbers so far. Consequently, the Commission is currently focused at a complete transformation of the MPP in order to attract more participants with the ultimate goal of furthering social inclusion and reduction in old-age poverty.
“The Commission has also automated the annual verification and enrolment of process prospective retirees of Treasury-funded Ministries, Departments and Agencies MDAs) with the deployment of the Online Enrolment Application. This replaces the hitherto manual enrolment which entailed prospective FGN retirees to physically participate at the nearest centre nationwide. The Online Application now has the capabilities to register, verify, and enroll prospective retirees through mobile phones, computers and other devices.
“Other notable initiatives by PenCom include the Pension Enhancement Exercise, which ensures the periodic enhancement of retirees pensions due to growth in their RSA balances. The most recent pension enhancement conducted in 2023 benefited many retirees. Furthermore, the introduction of the Guidelines on Accessing RSA Balance for Residential Mortgages has made positive impact on contributors. RSA holders can now use a portion of their pension savings as equity contributions for residential mortgages. This initiative has already empowered over 5,000 workers to achieve homeownership, with ₦47.13 billion disbursed as equity contributions from their RSAs to mortgage lenders.”
The DG while appreciating the media urged PENCAN not to relent in the coverage and reporting of the Commission’s activities so as to enlighten and educate stakeholders and the public about its programmes as lack of awareness often engenders misconceptions about the scheme; “For instance, many are unaware that the rate of monthly pension contributions of 10% employer and 8% employee are just prescribed minimums. Consequently, an employer may increase the contributions or elect to bear the full responsibility of the 18%. Furthermore, the Commission has also introduced guidelines on Additional Benefit Schemes which employers can implement to pay employees additional end-of service benefits including gratuities.”
