Better Life Dawns For Nigerian Retirees

By Ating Enwongo The National Pension Commission (PenCom), the agency that regulates pension administration in Nigeria, has transformed the industry into one of the strongest sectors of the Nigerian economy. Not only has this momentum been sustained under the leadership of its Acting Director General, Hajia Aisha Dahir-Umar, but the pace of transformation has become more frenetic. A few years ago, self-employed Nigerians always fancied working in the formal sector just because of the pension plan available to fall back on. But since the appointment of Dahir-Umar, in April 2017, the narrative is changing. And one of the indications is the launch of the Micro Pension Plan (MPP), a Contributory Pension Scheme (CPS) that allows self-employed Nigerians tap into the retirement benefits offered by PenCom. The National Pension Commission had extensively engaged all relevant stakeholders and obtained their inputs before the MPP was developed to suit their requirements. The new management has attained several heights that would not only have multiplier effects on the economy but would grow the pension fund through its promotion of the following innovative reforms: Awareness Of The CPS: There is no doubt that the pension industry is rapidly expanding in the country but lack of public awareness of the operation of the industry has been a drawback. That is why in a bid to further enlighten the public on the CPS, the present administration on Monday 28 January 2019 launched a radio program titled “PenCom on the Radio” which is a weekly 30-minute program that air’s on Radio Nigeria Network every Monday at 8:00 pm. Safety And Growth Of Pension Fund Assets: upon the acting DG’S assumption of duty, she and her team restricted the commission’s priorities to focus on some fundamental aspects of the CPS, which indeed introduced a growth of N2.4trillion (37.4 per cent) to the pension assets, moving it from N6.42 trillion as at the end of March 2017 to N8.63trillion as at December, 2018. This, expectedly, impacted on the economy in a substantial way and made pension for retirees more secure and assured. Access Of 25 Percent Of Savings For Mortgage: As part of its on-going reforms to bridge the N16 trillion housing deficits in the country, the commission in accordance with Section 89 (2) of the Pension Reform Act (PRA) 2014 is currently working with institutions like the Central Bank of Nigeria (CBN), mortgage firms, and other relevant stakeholders to allow Retirement Savings Account (RSA) contributor to access and utilise part of their RSA balance towards equity contribution in respect of home-ownership mortgages. Diversified Investment Portfolio: To ensure a new dawn of better life for retirees in Nigeria, the new executive management team of PenCom has taken crucial steps to secure investments in federal government security issues like FGN bonds got N3.96tn; treasury bills, N1.68tn; agency bonds like the Nigeria Mortgage Refinancing Company and the Federal Mortgage Bank of Nigeria got N6.54bn; Sukuk bonds got N51.98bn; and green bonds, got N8.26bn. State government securities gulped N154.02bn; corporate bonds, N393.27bn; corporate infrastructure bonds, N8.36bn; banks, N662.80bn; commercial papers, N71.75bn; and real estate properties, N228.86bn. Other classes of assets are supra-national bonds, N8.21bn; open/close end funds, N10.16bn; mutual funds, N19.87bn; private equity fund, N37.27bn; infrastructure fund, N8.95bn; and cash and other assets, N96.13bn. Reduction Of Old Age Poverty: The commission in accordance with the Provisions of Section 2 (3) of the Pension Reform Act (PRA) 2014 has embarked on aggressive eradication of old age poverty with the introduction of the Micro Pension Plan where the informal sector worker would be able to save for retirement while active. The Micro Pension Plan will in turn enhance pension coverage and improve Gross Domestic Product, and ensure financial security for the family as contributions will pass to the next of kin in case of contributor’s death. There is no doubt that with its steady match towards being a pension industry with 20 million contributors delivering measurable impact on Nigeria’s Economy by 2019, PenCom’s MPP will ensure that the informal sector participants save towards their old age. It is also expected that the plan would expand the coverage of pension contributors by an estimated 30 million people by the year 2024. As plans are likely to face challenges, Dahir-Umar, in a newspaper interview, confirmed that MPP is not exempted from challenges but with the vigorous work that has been performed under her watch to improve the commission, it shows that her administration is capable of implementing the MPP to yield positive results for Nigerians and the Nigerian Pension. “Despite the benefits of the plan, there are a few envisaged challenges that may hinder the smooth implementation of the Micro Pension Plan in Nigeria,” she said. “For instance, some of the low-income earners, who constitute the third segment of the informal sector are mostly illiterate and thus, inexperienced with formal financial transactions and institutions. Unlike the high-income earners that can deposit in a lump sum, lower-income earners are daily wage workers and as such are unable to deposit large amounts. “The Commission expects that the implementation of the Micro Pension Plan will yield positive results for Nigerians and the Nigerian Pension Industry. There is, however, the need to create more awareness about the plan. The implementation of the Micro Pension Plan is expected to improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement,” she further assured. As a body saddled with the task of regulating, supervising and ensuring the effective administration of pension matters in Nigeria in accordance with the Pension Reform Act 2004, Pencom has faced a couple of operational and legal challenges over the years. The institution has however continued to ensure increased accountability in the regulation and supervision of the Nigerian Pension Industry to ensure that retirement benefits are paid as and when due. Recently, PenCom was awarded the outstanding regulator of the year 2018 by the Independent Newspapers Limited, publishers of Daily Independent Newspapers, due to their relentless pursuit of excellence in regulating the pension industry.