PENOP PRESIDENT ‘S SPEECH AT THE 3RD PENOP – NASS RETREAT THEMED – 17 YEARS OF PENSION REFORMS: GAINS, CHALLENGES AND OPPORTUNITIES HOLDING AT THE MARRIOT HOTEL IKEJA ON THE 9TH – 11TH JULY, 2021
1. The Chairman, Senate Committee on Establishment and Public Service
Distinguished Senator (Dr.) Ibrahim Shekarau, CON
2. Distinguished members of the Senate Committee on Establishment and Public Service
3. The Chairman, House Committee on Pensions
Honourable Kabiru Al-Hassan Usman Rurum
Turakin Rano and Turaki Addini Kosofe Land, Lagos state
4. Honourable members of the House Committee on Pensions
5. The Director-General of the National Pension Commission
Hajia Aisha Dahir-Umar
6. Members of the Board of Trustees of the Pension Fund Operators of Nigeria here present
7. Management and staff of the National Pension Commission
8. Fellow members of the Pension Fund Operators Association of Nigeria
9. Members of the Press
10. Ladies and Gentlemen, Good morning.
It is my honour to welcome you all to this annual PenOps-NASS Retreat that brings together the key stakeholders in the pension industry. This forum provides the opportunity for open communication and a safe place for all stakeholders to express their views and proffer solutions as we collectively brainstorm on certain areas needed to address emerging challenges in the industry.
The growth of any industry is premised on constant dialogue and communication among the key stakeholders. Over the years, PenCom and the Operators have built a strong and robust stakeholder engagement framework which has significantly assisted in the growth and development of the Pension Industry. We have also developed a strong relationship with the National Assembly whom we recognize as key partners in the industry.
In the last 17 years, Nigeria’s pension industry has certainly come a long way from when the pension reform act was initially passed in 2004. The industry has moved from a largely unfunded pension system to one that is fully funded, professionally managed, and mainly private sector driven. We can all agree that the Contributory Pension Scheme practiced in Nigeria, has adopted international best practices, is technologically driven and has grown steadily over the period.
There is also a marked progress with respect to the level of professionalism within the industry. The pension industry has raised the bar for professionals locally. The investment, risk and compliance professionals within the industry can favourably compare to their counterparts anywhere in the world. Indeed, the industry has bred a new class of pension professionals across board over the years.
Having stated this, we also need to note the areas where our industry lags behind other countries. One area is the level of pension penetration. Nigeria currently has a pension penetration rate of approximately 11% of its labour force. This pales in comparison to 19% in South Africa, 20% in Kenya and 77% in the United Kingdom. Consequently, it goes without saying that the industry needs to deepen its level of penetration, especially in the informal sector.
Another area of improvement is the level of pension assets to GDP. Nigeria’s level of pensions assets to GDP is only a little over 7% while in developed markets, it’s typically above 100%. So, whilst the level of our pension assets are relatively large in absolute terms, when you look at it in relation to GDP, it is actually low. This further speaks to the fact that we need to increase the level of penetration of the pensions scheme in general.
So, in summary, whilst we can applaud the fact that the industry has grown in number of areas over the years, there are still areas that require improvement.
This is not lost on us as operators or as an industry. We continue to work with the regulator and other stakeholders, including the National Assembly, on several areas in the near and long term. These include areas like market development, Service delivery, National impact, upskilling of pension professionals and maintaining a sound and ethical environment within the industry.
– On market development, we are engaging with market operators, the exchanges, the regulators, and international organizations to develop new and alternative products that pension funds can profitably invest in. It is in ours and our contributors’ interest to continually find new products and markets that meet our objectives.
– On service delivery, we realize that the industry needs to reduce its cost to acquire and serve its current and future contributors. We need to increase the level of technology adoption and collaboration within the industry on shared services and the likes.
– In addition, we are working towards ensuring that the pension industry has a greater positive effect on National development by increasing our funding for infrastructure and transformational companies, sectors and projects in a sustainable manner that does not jeopardize our fiduciary responsibility to the pension contributors who are the ultimate beneficiaries of the funds.
– We also need to continue the process of improving professionalism within the industry by focusing on learning and development and adoption of international best practices in our operations
– Then, we must work to protect the integrity of the industry, by ensuring a level playing field for all operators and a process to address grievances and other issues through a self-regulatory framework.
I personally want to thank the National Assembly for their support in providing the necessary legislative framework for the industry to thrive. While we acknowledge the strides we have achieved, we look forward to your constant support and collaboration in our quest to provide a befitting retirement framework for Nigerians.
In conclusion, I would like to say that the continuous improvement of the Pension Industry rests on the shoulders of all of us at this retreat today. We all have our individual and collective roles to play. So, I call on us all to further actualize the dream of every Nigerian to retire knowing that their accumulated pensions would help to provide a fairly decent lifestyle for them throughout their retirement years.
Thank you for listening, and I look forward to the deliberations and a successful retreat.
Thank you all.