Pension regulator, operators reinforce growth potentials in micro scheme

The nation’s pension industry has continued to record increased growth in assets, as well as in the number of contributors, even as expectation heightens for greater mileagewith micro pension scheme.

Industry regulator, the National Pension Commission (PenCom) had disclosed during the third edition of the National Association of Insurance and Pension Correspondence Conference in Lagos that the number of contributors under the Contributory Pension Scheme(CPS) has grown by 312, 291, increasing from 7.89 million as at December 2017 to 8.14 million as at June, 2018.

According to the commission, the net assets value of the pension fund was N8.23 trillion as at June, 2018, representing an increase of N716.94 billion up from the value of N7.52 trillion as at 31st December, 2017.

This increase the Commission noted is attributed to new contributions received interest/coupon from fixed income securities and net realized / unrealised gains on equities and mutual fund investments.

Aisha Dahir-Umar, acting director general,PenComsaid feedback from the stakeholders and operators have been received, considered and incorporated after release of the draft Guidelines and framework on the Micro Pension Plan.

The PenCom boss who was represented by Lana Loyinmi, head, Contributions Bond said the final guidelines for the Micro Pension Plan(MPP) will be released as soon as they are approved, stating however that the Commission is developing the required ICT infrastructure to drive the process and this is critical to the success of implementing the scheme.

“It is envisaged that before the year ends, the plan will commence.”

Ronke Adedeji, president pension fund Operators Association of Nigeria (PenOp) said the planning and execution of micro-pensions is a missing link in increasing pension coverage in Nigeria, stating that the full implementation will be a major economic booster and will reduce the level of poverty associated with informal sector and old age.

Adedeji speaking on the topic “Exploring The Micro Pension Concept” said the final guidelines when released will provide unique regulatory framework to govern micro-pension arrangements, which shall address registration, investment of funds, risk management, membership, withdrawal of benefits and taxation incentives.

Section 2(3) of the Pension Reform Act, 2014 (PRA2014) provides that employees of organizations with less than three employees as well as the self-employed persons shall be entitled to participate in the Contributory Pension Scheme in accordance with the guidelines issued by the Commission.

Dahir-Umar at the NAIPCO conference also stated that in order to enhance the monthly pension of retirees in the Contributory Pension Scheme, the Commission initiated the Pension Enhancement Programme.

“It was discovered that the returns being generated by the PFAs on the balances of the RSAs of majority of retirees could be used to enhance their monthly pensions. Consequently, the Commission sought for and obtained the approval of the Secretary to the Government of the Federation to implement the pension enhancement, which resulted in increased monthly pensions for most retirees receiving pension under the Programmed Withdrawal arrangement.

Accordingly, the PFAscommenced the enhancement of pensions of all retirees under Programmed Withdrawal with effect from December 2017.

Dahir-Umar further stated that the implementation of the pension enhancement is one of the significant milestones attained since the commencement of the CPS. It confirms that the CPS has workable internal mechanisms to respond to legitimate demands of retirees as they seek a reasonable retirement income.”

On circular on Voluntary Contributions, she said the Commission issued a Circular on Withdrawals from Voluntary Contributions (VC) in November, 2017.

“The Circular was necessitated by the observed incidences of high rates of withdrawals from VCs by contributors, which appeared to negate the main purpose of using such contributions to augment pensions at retirement.”

“In addition, the Commission seeks to ensure strict adherence to Anti-Money Laundering provisions and relevant taxes laws. The main thrust of the Circular is that 50 percent of the VCs can be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal. Furthermore, the remaining 50 percent of VC shall be domiciled for augmenting pensions upon retirement.”