10yrs of successful contributory pension scheme

The journey towards reforming the nation’s pension system which began 10 years ago, with the birth of the Contributory Pension Scheme (CPS), following the Pension Reform Act 2004 is one that has made many believe determination and hard work is key to any successful venture.

At the last count a total of 111,210 Nigerian retired employees have received their pay-outs totalling over N268bn since the inception of the CPS, and in good time. This is as the scheme has successfully achieved stability, providing a sustainable pension system that Nigeria and Nigerian workers can be proud of.

This was disclosed by Chinelo Anohu-Amazu, the director general of the National Pension Commission (PenCom), in the activities to mark the 10th Anniversary of the Pension Reform in Nigeria.

According to her, there has been a lot of improvement in the Nigerian pensions industry following the pension reform process which commenced in 2003 with the inauguration of the Fola Adeola Pension Reform Committee by former President Olusegun Obasanjo.

She pointed out that the reform had engendered a regime of regular payment of retirement benefits to all employees who retired under the scheme since 2007 without any delays as was the practice in the old system.

“Since inception, 111,210 retired employees have received pay-outs of over N268bn. Also, through an enhanced compliance regime, 6.26million contributors have so far been registered into the CPS,’” she revealed.

These modest achievements, she said, represents a milestone of a journey which sought to break Nigeria away from an endless cycle of despair in its pension sector and launch it into a new era of blissful retirement for all employees.

She recalled that the Nigerian pension reform was envisioned as a result of government’s commitment to address a catalogue of challenges that impeded pension administration in the country, namely, the failure to deliver on a promise of consistent and timely income for workers at retirement.

This failure, she added, came with negative consequences, foremost amongst which was untold hardship experienced by retirees especially in the public sector and the creation of estimated liabilities of over N2trn.

As such, the PenCom DG said, the CPS was novel and seemingly ambitious, such that not a few doubted if Nigeria could transit into it and implement successfully.

“Today, 10 years thereafter, the scorecard is somewhat self-explanatory. This emanated mainly from the fundamental structures upon which the Scheme was built. Indeed, the cardinal principle of separation of custody from management and supervision has resulted in a pension scheme with sound internal mechanism for transparency and accountability.

“Whereas the Pension Fund Administrators (PFAs) manage the pension funds, they do not have access to same as custody is vested in the Pension Fund Custodians (PFCs) and the Commission ensures both parties adhere strictly to regulations governing the pension funds.

“The ring fencing of pension fund assets and regulatory non-interference has resulted in the consistent growth in a large pool of pension assets of over N4.5trn which are invested in structured and safe financial instruments; a remarkable growth when compared with huge estimated pension liabilities in the public sector prior to the reform in 2004,” she said.

However, despite these achievements, she pointed out that there are still challenges ahead, including the issues around the old Defined Benefit Scheme in the public sector.

But she sees these challenges being overcome with the provisions of the Pension Reform Act 2014, which among other things stipulates the expansion of coverage for private sector employees, upward review of minimum contribution rate geared at enhancing the adequacy of pension benefits, upward review of sanctions and penalties against infractions, informal sector participation in the scheme, standards for the participation of States and Local Governments in the Scheme.

She commended the efforts of the icons of the pension reform, including former President Olusegun Obasanjo, President Goodluck Jonathan, members of the Fola Adeola Committee on Pension Reform, past and present members of the Senate and House Committees with responsibility for pension matters, the Labour unions, employers, the pioneer Executive Committee of PenCom, as well as states that have remained supportive of the CPS from the onset. She solicited the support of all and sundry in sustaining the gains of the past 10 years as the focus shifts to the provisions of the PRA 2014.

The dinner which held in Lagos was attended by eminent Nigerian personalities including CEOs of banks and insurance companies, government officials, and leading members of the public sector.

Some of the notable names at the event include: Fola Adeola, pioneer chairman of the Pension Reform Committee and PenCom Board; Paul Hinks, chairman and CEO of Corporate Council of America and also chairman and CEO of Symbion Power working on major projects in Nigeria; Aliko Dangote, CEO of Dangote Group; Femi Otedola, CEO of Forte Oil.

Other were Pascal Dozie, founder and chairman, Diamond Bank and chairman, MTN Nigeria; Aigboje Aig-Imoukhuede, president of council, Nigeria Stock Exchange; Yayale Ahmed, former secretary to the Government of the Federation; and Stephen Olabisi Onasanya, the group managing director/chief executive officer, First Bank plc.

Also included were Omar Waheed, president of the Nigerian Labour Congress; Alloysius Etuk, chairman, Senate Committee on Government Establishments; Udo Udoma, managing director of Legacy Pensions; Misbahu Yola, chairman PenOP; Chinedu Ekeocha, managing director, Diamond PFC, and Tunde Folawiyo, business tycoon, as well as past and current executive members of PenCom, among many others.

The event was part of the commemorative activities of the 10th Anniversary of the implementation of the Pension Reform in Nigeria which commenced at Abuja in July, 2014.

It would be recalled that these activities were kick-started with the successful hosting by Nigeria, through PenCom, of the maiden World Pension Summit ‘Africa Special’, organised in collaboration with the World Pension Summit Organisation, Amsterdam, The Netherlands.