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Chuks Udo Okonta
The former Minister of Finance and Minister for industry, trade and investment, Olusegun Aganga, has canvassed that Nigerian pension fund managers should be able to invest a portion of their assets offshore and in index/inflation linked instruments.
He said this is very important, as the devaluation of the local currency and rising inflation could lead to an erosion of earnings for the pension funds and subsequently, old age poverty for pensioners and retirees.
He said the industry needs to get this going as soon as possible so that the industry could protect the gains of the pension reforms and truly provide financial security for retirees.
Aganga, who spoke at a training for board members and directors of pension fund operators in Nigeria which was organised by Pension Fund Operators Association of Nigeria (PenOp) and FITC in conjunction with National Pension Commission (PenCom), also mentioned that the directors of pension funds need to work together with the State Governments, the National Executive Council and the Federal Government to ensure that more states get onboard the contributory pension scheme and to ensure that those states already on the scheme remit both employer and employee contributions to the pension fund administrators as and when due.
He said it was quite regrettable that a number of states were deducting pension contributions from their employees, but were not remitting it, which he said does not augur well for the future of Nigerian workers and it should be discouraged.
Also, he said that as a former Minister of Finance, he realised that it is not sustainable to move any class of workers outside of the contributory pension scheme (CPS) and move them to the unsustainable defined benefit scheme.
This according to him was because the government cannot afford the burden of payment of pension liabilities which keeps growing as the workforce of the civil service keeps growing, adding that what needs to be done is for the pension operators, regulators and the government to find ways to meet demands of various groups within the framework of the CPS.
Aganga, who is also the Chairman of Leadway Pension PFA, urged directors to realise their critical positions in shaping policies, guiding directions and setting “the tone” at the top of their organizations.
He further mentioned that the tone at the top must embody the 4 Ps of corporate governance which he put as people, purpose, processes and performance.
He emphasized that pension funds should be creative and find structures to earn decent returns for their pension funds and their contributors while positively impacting the communities they operate and protecting the capital they manage.
Aganga also commended PenCom for its commitment to the principles of corporate governance and the growth of the industry in general.
The Chief Executive Officer of PenOp, Oguche Agudah, said these sessions that PenOp organises for directors was very important because it was an opportunity for directors of pension fund operators to come together and work towards the growth of the industry.
He said though they compete against one another other, there are so many things they can work on together and this is an opportunity to build camaraderie within the industry to align interests and to engage with one another and the regulator.
Agudah also thanked FITC for working with PenOp to provide the bespoke trainings and sessions for the industry.
The session tagged; “Effective Pension Fund Governance and Risk Management Oversight: The Role of the Board” had a number of seasoned facilitators including the former Chairman of KPMG Africa, Kunle Elebute and the former Managing Director of Shell Nigeria Closed pension Fund, Akeeb Akinola amongst others.