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Chuks Udo Okonta
The Former president Olusegun Obasanjo has called on the National Pension Commission (PenCom) and pension operators to sustain the successes recorded since the inception of the Contributory Pension Scheme (CPS) by ensuring adequate protection of workers’ funds.
The former president said this today at the ongoing World Pension Summit (WPS) in Abuja. He also urged pension operators to intensify efforts in getting more salary earners into the scheme.
He tasked the operators to be innovative, stressing that they should not compromise the law as the they embrace new concepts. He also advocated the need for the enactment of laws to support investment in infrastructure and housing.
He urged the operators to sustain the tempo of protecting workers contributions, whilst urging them not to reduce the confidence reposed on them by the contributors.
Obasanjo also tasked operators to focus on the self-employed, especially now that the nation is in recession.
He listed some challenges facing pension schemes across Africa to include untimely release of allocations to pay pensions, weak, inefficient, less transparent and cumbersome structures.
“Poor coverage and non-inclusion of the private sector, the self-employed and informal segment which is increasingly becoming an important pillar of African economies are also issues which African countries are grappling with.
“Establishment of a viable pension structure for the informal sector is essential. It constitutes 61 per cent of the share of urban employment across the continent.
“It is expected to rise due to projected growth in population fuelled by decline in infant mortality. Urban population growth is projected to reach 60 per cent by 2050.
“These are sufficient incentives to push African governments and relevant authorities to meet the drive for extension of universal coverage of pension and social security benefits, particularly to self-employed and informal sector employees, a major priority,” he told the gathering.
The former Nigerian leader said pension had posed a challenge to his administration, forcing him to consider setting up a structure that could address it.
He said a professor had sent a letter to him at that time saying he had not received his pension, lamenting that he had faced financial challenges, a development he said was displeasing.
“I had to think hard. What do we do? We formed a committee led by Fola Adeola. We ordered them to go round the world and get a solution.
“I am happy that what we put in place about 10 years ago has now become so successful that we have well over seven million employees captured from both the public and the private sector.
“We have almost six trillion Naira in pension assets,” he stated.
He reiterated that those were issues he expected the summit to capture within the few days it would hold
he cautioned that whatever innovation that must be considered should be done with caution to ensure that people’s contribution do not go down the drain due to faulty innovation plan.
“We must bring about innovation and sustainability, but they must be with caution and security so that any time people want their money they will get it.
“We must never reduce trust or eliminate trust from the pension service,” he further warned.
Over six trillion Naira is lying idle as pension contributions from those captured in the scheme.
But the former President stressed the need to look at how to invest the money, suggesting that housing deficit could be reduced if the money is properly invested.
The National Pension Commission of Nigeria and the World Pension Summit of the Netherlands which began in 2014 has resulted in the convergence of great minds in Abuja for another summit to address issues that have been identified as impediments to proper pension administration in Africa.
They have gathered to discuss and explore ways of making the pension and social security system in Africa more efficient and more effective.
The Director-General PenCom, Mrs. Chinelo Anohu-Amazu, said the challenges in the economy influenced the choice of this year’s theme, stressing that she believes the challenges would resonate with delegates and provide a platform for the exchange of ideas and experiences on innovative practices in pensions and social security to advance the African agenda of addressing economic and social challenges.
“I would like to leave you with a few posers: how do we build deep and efficient capital markets and financing models that would enable institutional investors such as pension funds to invest in Infrastructure? How can pension fund managers in Africa mainstream Environmental Social and Governance (ESG) principles in their investment decisions with a view to promotingsustainable impact investments? How do pension fund managers and regulators leverage technology to stimulate the impact of pensions on socio-economic systems? What specific action steps can be taken today to begin the process of developing these practices?,” she said.
