Confidence grows as PenCom prepares take-over of old pension scheme

There is growing confidence among stakeholders in the pension sector including retirees in the old pension scheme, that the eventual take-over of administration and management of the pension fund in the old scheme would finally settle the crises bedeviling the country’s pension system.

The confidence is coming on the heels of a recent approval by the Federal Government, mandating the pension industry regulator, the National Pension Commission to become the omnibus of the entire pension system.

This will require that the remaining retirees under the old scheme would come under an arranged scheme to be funded by the government, supervised by PenCom and administered through the Pension Fund administrators until the last retiree exits.

Stakeholder’s expectation is that by the time the scheme is set up and it takes properly, the issue of pension fund mismanagement and diversion would be a thing of the past, given the level of success achieved so far under the contributory pension scheme, under the Pension Reform Act 2004.

An industry stakeholder who spoke on the development said, it will be the best thing that can happen to the Nigerian economy and the life of the remaining retirees. “The new pension sector under the supervision of PenCom is fraud proof, because the administrator of the money is different from the custodian of the money, so there is no avenue for an individual or a group of people to embezzle money, as found in the old scheme.”

Here, the pension fund is in individual’s account and only such individuals will have access to the money. It is like a bank account and there is a personal Identification Number (PIN), which only the retiree can have access to at the point of retirement, the stakeholder said.

This is further enhanced with the level of supervision and regulation in the industry, as there is serious monitoring of the Pension Fund Administrators, who are under compulsion to make monthly and quarterly returns to PenCom.

BusinessDay learnt on Monday that the Jonathan administration has recently approved the scheme called “PITAD”, which brings all existing retirees in the old scheme under one umbrella, to be verified and inputted into a strong IT platform.

According to the source an Inter-ministerial Committee made up of officer in PenCom; Office of the Head of Service; Office of the Accountant General of the Federation; Office of the Auditor of the Federation among others are currently structuring the new platform.

This scheme is being funded currently and would take off as soon as the necessary structures are put in place, the source further stated.

Role of PFAs:

The pension scheme regulated by PenCom requires pension funds to be privately managed by licensed PFAs duly licensed to open Retirement Savings Accounts for employees, invest and manage the pension funds in a manner as the Commission may from time to time prescribe. They are also to maintain accounts on all transactions relating to the pension funds managed by it, provide regular information to the employees or beneficiaries and pay retirement benefits to employees in accordance with the provisions of the Pension Reform Act 2004.

Role of the PFCs:

Pension Fund Custodians (PFCs) will be responsible for the warehousing of the pension fund assets. The PFAs shall not be allowed to hold the pension funds assets. The employer sends the contributions directly to the Custodian, who notifies the PFA of the receipt of the contribution and the PFA subsequently credits the retirement savings account of the employee.

The Custodian will execute transactions and undertake activities relating to the administration of pension fund investments upon instructions by the PFA. The custodian shall hold pension fund assets on trust for its clients.

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