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Chuks Udo Okonta
The licensed pension fund operators under the auspices of the Pension Fund Operators Association of Nigeria (PenOp) and federal lawmakers drawn from the National Assembly – Joint Committee for Establishment and Public Service of the Senate and House of Representatives Committee on Pension, have agreed to work closely to ensure that the Contributory Pension Scheme (CPS) is protected and flexible to serve the current and future needs of contributors and the nation at large.
The resolution was reached at the 3rd annual retreat for National Assembly members and key stakeholders in the pensions industry, which held on Saturday, July 10, 2021. The theme of event was: 17 Years of Pension Reforms: Challenges, gains & Opportunities.
The theme according to PenOp was chosen to x-ray the industry since the passing into law of the initial pension reform bill in 2004. It was also chosen to enable the stakeholders discuss areas that require improvement in addition to projecting into the future possibilities of the pension industry.
The keynote speaker chosen to lead the discourse in this regard was the pioneer Director-General of the National Pension Commission (PenCom) Muhammed Ahmad.
In his paper, he itemized three major reasons why the scheme has been a relative success so far. He mentioned the legislators, the labor union and the pension operators. He went further to say that the fact that the scheme is driven by the private sector is the major reason for its sustainability. He said the role of the regulators was to promote a level playing field for all stakeholders which they have done well over the years.
Ahmad added that the Contributory Pension Scheme practiced in Nigeria has inbuilt checks and balances by virtue of the Pension Fund Administrator and Pension Fund Custodian model ensuring that pension assets are free from manipulation.
He commended the regulatory framework which ensures the daily monitoring of funds and continuous regulation of the system. He also urged the industry to move towards greater self-regulation, adoption of shared services in order to reduce costs and a deepening of the scheme to embrace those in the informal sector.
He said the operators should not wait in their offices for the informal businesses, but should go and chase these class of clients using innovative means.
After his keynote remark, there was a robust discussion by the legislators, with a number of them asking questions and stating their concerns. These issues ranged from documentation, lack of participation in the states, the need to increase the lumpsum payment, awareness and other such issues. Pertinent answers were given to the legislators concerns by the pension operators, PenCom or the keynote speaker as appropriate.
All participants agreed that whilst the scheme has recorded several giant strides in its 17 years of operations, there are still some issues that need to be addressed for the pension industry to create more value for all stakeholders.
The participants also unanimously applauded his excellency, President Muhammadu Buhari (GCFR) for approving the release of accrued rights and the backlog of the differential amount based on the 10 per cent employer contributions according to the PRA 2014 as opposed to the 7.5 per cent being paid earlier.
By all accounts, the debates were honest, passionate and all geared towards understanding the scheme better and putting across the views of each party to the other, which was the overall aim of the retreat.
The participants came out of the retreat with a resolution to work closely and better with each other to ensure that the Contributory Pension Scheme is protected but also flexible to serve the current and future needs of the contributors and the Nation at large.
The resolutions from the retreat include: The meeting resolved that public enlightenment is required to drive compliance among state governments to expose them to the benefits of embracing the contributory pension scheme and also educate them on how they can leverage pension assets to facilitate infrastructural development through the regulated financial markets.
The joint committees for establishment and public service of the senate and house of representatives committee on pensions along with the National Pension Commission (PenCom) should set up a task force to engage state governments and come up with innovative ways to help drive compliance by state governments.
The house committee on pension’s subcommittee on amendment of the PRA 2014 should note all point discussed at the retreat, in addition to the submission from other stakeholder and the national pension commission (PenCom) and work with the senate committee on establishment and public service to expedite work on the amendment of the PRA 2014.
A satisfaction survey should be commissioned by PenOp but handled by a third party to gauge the level of satisfaction with the scheme.
About PenOp
Pension Fund Operators Association of Nigeria (PenOp) is an independent, non-governmental, non-political and non-profit making body.
PenOp was established to promote the operations of the pension industry, provide for self-regulation and ensure that international best practices relating to the industry are observed by the operators registered in Nigeria.
It is the umbrella association for all the Licensed Pension Fund Custodians, Pension Fund Administrators and Closed Pension Fund Administrators (PFCs, PFAs and CPFAs) operating in Nigeria.
Its positioning is to be the influencer externally and the ‘mother to all’ internally.
Its role internally, is to add value to its members across all levels; information, education, visibility, networking, strategy, product development and more.
Externally its role is to increase the awareness and visibility of the pension industry and enable external stakeholders understand and participate in the development of this financial sub-sector wherever and whenever possible.
