Stakeholders gear for developed, innovative pension sector in Africa
Stakeholders in pension industry in Nigeria and other African Countries would converge on Abuja between 5-6 October 2015 for the second edition of the WorldPensionSummit “Africa Special” with a focus on developments in the pension industry in Nigeria and Africa.
The Summit with the theme “ Sustainable Pension Systems in Africa” being organized jointly by WPS of Netherlands and the National Pension Commission of Nigeria after a successful inaugural summit in 2014 will bring together pension professionals across Africa to debate on specific pension innovations, key scenarios, and scheme development. Global insights and best practices will be presented, shared and discussed by renowned international experts.
Since 2004 Nigeria has taken up a leading role with her pension reform. The enactment of the Pension Reform Act 2004 and 2014 has proven to be key starting point of a new era of pensions in Nigeria.
The aim of this Summit is to exchange expertise between all pension professionals in Africa and to stimulate pension market developments and pension innovation. This edition of the World Pension Summit ‘Africa Special’ will focus on key areas and experiences on relevant topics and developments such as pensions investments, risk management, funds management, pension fund administration, regulatory essentials and communications / financial literacy.
About the World Pension Summit
The World Pension Summit (WPS) is the only platform ‘for and by’ Pension Professionals, exchanging knowledge and innovative ideas on how to secure sufficient pension provision. It is an annual gathering of over 400 professionals from over 40 countries coming together to exchange expertise and best practices to promoteessential development in social security, innovation and pensions. The focus is majorly on cutting-edge developments and innovation in pensions; covering a broad range of areassuch as Asset management, Investments, Pension Fund Management, Scheme Developments, Ageing, Health Care for the Elderly, Social Security, Social Innovation and Communications.
The WPS was founded in 2010 with its inaugural and all other successive editions holding in the Netherlands. The unique blend of people broadens horizons and the many in-depth discussions give food for thought and inspiration for new ideas. As Harry Smorenberg, chairman of the World Pension Summit puts it, “The WPS is the place to exchange key developments and solutions and learn from each other”.
Pension industry in Nigeria
Prior to the enactment of the Pension Reform Act 2004, pension schemes in Nigeria had been bedevilled by many problems. The Public Service operated an unfunded Defined Benefits Scheme and the payment of retirement benefits were budgeted annually. The annual budgetary allocation for pension was often one of the most vulnerable items in budget implementation in the light of resource constraints. In many cases, even where budgetary provisions were made, inadequate and untimely release of funds resulted in delays and accumulation of arrears of payment of pension rights. It was obvious therefore that the Defined Benefits Scheme could not be sustained.
In the private sector on the other hand, many employees were not covered by anypension scheme and many of the private sector schemes were not funded. Indeed, by June 2004 when the pension reforms commenced, pension coverage in the private sector was estimated at 1.3 percent only. Besides, where the schemes were funded, the management of the pension funds was full of malpractices between the fund managers and the Trustees of the pension funds.
This scenario necessitated a re-think of pension administration in Nigeria by the administration of President OlusegunObasanjo. Accordingly, Federal Government initiated a pension reform in order to address and eliminate the problems associated with pension schemes in the country. The outcome of the reform was the enactment into law of the Pension Reform Act 2004, which was repealed by signing into law of Pension Reform Act 2014 by President Goodluck Jonathan to address necessary administrative and operational shortcomings.
In a 10 year period, the pension industry in Nigeria has experienced phenomenal growth from a deficit of 2 trillion naira in 2003 to a pension fund asset over N5trillion as at August 2015. The huge pool of fund that the contributory scheme has put together is a firm backing to the economy; and a testimony to the hard work and diligent service of PenCom’s management and staff under the able leadership of the Director General, ChineloAnohu-Amazu.
PenCom has been able to develop a unique contributory system that has pension administration and custodianship intertwined. Duly licensed Pension Fund Administrators (PFAs) open Retirement Savings Accounts (RSAs) for employees, invest and manage the pension funds in a manner as the Commission may from time to time prescribe after diligent research, 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.
Whilst Pension Fund Custodians (PFCs) are responsible for the custodian of the pension fund assets. The employer sends the contributions directly to the PFC, who notifies the National Data Bank (at Pencom) and the PFA of the receipt of the contribution, and the PFA subsequently credits the RSA of the employee.
The transactions of 21 pension fund administrators (PFAs) and 4 PFCs are constantly regulated on daily basis by the Commission.