PenCom Boss, Mrs Chinelo Anohu-Amazu
By ZAKA KHALIQ
Despite the devaluation of naira and double digit inflation rate that impact businesses negatively and put the economy in recession, the nation’s Pension Funds may hit N7.2trillion by December 2017, LEADERSHIP exclusively learnt.
As at November 2016, the funds stood at N6.2 trillion from about N5.1 trillion it was in January, 2016, gaining over N1 trillion in 2016. Industry sources disclosed that the fund could increase by a minimum of N1 trillion in the current year as well, while they expect it to grow even beyond N7.2 trillion, if some states and federal government as well as private sector employers pay the pension arrears they owe.
However, LEADERSHIP investigation shows that the fund has been growing with an increase of at least N50 billion and in some cases over N150billion on a monthly basis, for the last two years.
The fund is growing despite the fact that federal government has accumulated about N185 billion pension arrears under the Defined Benefit Scheme (DBS) and Contributory Pension Scheme (CPS), even as most states as well as some companies in the private sector are still defaulting in remittances to the Retirement Savings Accounts (RSAs) of their workers.
The reason for the constant growth in pension assets, Leadership learnt, is not unconnected to the fact that pension contributions are made on a monthly basis to the RSAs of employees, while the PFAs also make a lot of profits from investment of these funds into Federal Government Bonds, stock market and other less risky investment windows, which also goes into the pension funds pool.
Moreover, with some states now ready to join the CPS, as well as the readiness of the FG to settle some of it arrears, and the National Pension Commission (PenCom) going after defaulting employers, experts said, this could push the fund even beyond the aforementioned amount.
Speaking in an interview with LEADERSHIP, the managing director, AXA Mansard Pensions, Mr. Dapo Akinsanya, said the fact the contributions are made every month and new sets of people are regularly subscribing to the scheme, means the funds will keep growing.
On investment income that has further soar the volume of the pension funds to N6.2trillion, the Chairman, Pension Funds Operators of Nigeria (PenOp), Mr. Eguarekhide Longe, said, over N2 trillion of the pension funds is investment income, meaning that the managers(PFAs) of that money have received over N3 trillion pension contributions over the last 12 years and that they (pension funds operators) have added over N2.5 trillion to it from investments they made.
“It shows you that the money has been active. So, the philosophy of managing this money is to add to it. It means that the money has been used profitably. Now if you think about how pension fund should be used and so on and its objectives, you find out that it is being used by the managers for the right objectives, so that when people retires, they earn their money seamlessly,” he pointed out.