PFAs target cost reduction on back of shared infrastructure, service platforms

Pension Fund Administrators (PFAs) are looking seriously at consolidating part of their operations through shared infrastructure and services platforms that would reduce operational cost. This accordingly would enhance productivity and increase companies’ bottom line.

Dave Uduanu, managing director, Pal Pensions Limited and chairman, Pension Fund Operators Association of Nigeria (PenOp) said during an interview that members of the association after its retreat recently came up with a number of decisions that would help reposition the industry for better performance.

PFA’s manage and administer retirement savings contributions of employees in Nigeria as a result of the Pension Reform Act of 2004 for which they charge an administrative fee of N80 monthly.

Uduanu said one of the plans is having shared services platform for the industry. “This will help us reduce areas of duplication, so that things that can be shared as a group like archiving, infrastructure can be done for the benefit of the entire industry.

Another plan Uduanu disclosed is the institutionalisation of PenOp to be able to perform optimally.

“One other decision we took during the retreat is the institutionalisation of PenOp where it will have an Executive Secretary, unlike where it is being run from the office of the managing directors of the different PFAs. Now we have an Executive Secretary and we are going to institutionalise PenOp,” he stated.

He hinted that implementation of other plans were being delayed following changes in the leadership of the National Pension Commission (PenCom) as well as the ongoing reform of the Pension Bill 2013.

According to him, “the last one year has been very eventful for the pension industry, where we had to do a lot to correct the wrong impressions about the pension industry resulting from corruption and embezzlement in the old pension scheme. This year alone, we have done more than we ever did since the last six to seven years of the scheme.

“This is the year we also organised a retreat among stakeholders, where we agreed some far reaching decisions targeted at repositioning the Contributory Pension Scheme.”

Currently, there are 19 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, maintain books of 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.