Nigeria’s N8.74Tn Pension Assets Can Transform Pace Of Economic Development-PenCom

Yemisi Izuora 

The acting Director General, DG, of National Pension Commission, PenCom, Aisha Dahir-Umar, has said that the Contributory Pension Scheme, CPS, has been very impactful in Nigeria since the commencement of its implementation in 2004. 

According to Dahir-Umar, the formation of long term domestic capital, represented by the over N8.74 trillion which is the value of pension assets as at January 2019, is gradually changing the Country’s financial landscape and by extension, transforming the course and pace of our socio-economic development. 

Speaking at the launch of the Micro Pension Scheme, in Abuja yesterday by President Muhammadu Buhari, the DG, disclosed that N6.51 trillion, representing 73 per cent of the total pension assets has been invested in Federal Government Securities issued to finance various activities of Government. 

Breaking it down, she said about N95.31 billion was invested in the N200 billion Sukuk issued by the Federal Government, to boost infrastructure supplies while out of the N10.67 billion Green Bond issued by the Federal Government, pension funds invested N7.19 billion. “Consequently, we believe that the enlistment of the informal sector into the pension savings net would boost the quantum of available long term investible funds that would galvanize national development efforts.”, she added.

 She said the Micro Pension launch is a remarkable milestone because it unveils a unique financial product, which democratizes the savings culture in Nigeria in a systematic and efficient manner, adding that the product also perfectly aligns with the current social empowerment prgrammes of the Federal Government as it seeks to ensure, in the long term, the sustainability of the benefits of the empowerment programmes for the participants, who may seize this opportunity to save for their old age.

 The DG, stated that the scheme targets the significant majority of Nigeria’s working population who, incidentally, operate in the informal sector and that participation is expected from various informal sector workers including market women, members of the National Union of Road Transport Workers (NURTW), members of Textile, Garment and Tailoring Associations, Keke Napep and Okada Riders Associations, Butchers Associations, workers in the Movie and Performing Art industry, mechanics and other workers in the automotive industry and single professionals like lawyers, accountants and many others.

In her words, “Micro Pension Plan is designed to fit the peculiarities of these informal sector groups. The National Pension Commission had extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements. The product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts. Access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms.”

 She added that the PenCom, has issued a robust Guideline on Micro Pension Plan pursuant to the provision of Section 2(3) of the Pension Reform Act 2014, which spelt out detailed legal, institutional and operational frameworks for the administration of the product by licensed pension operators from the point of enrolment to the point of accessing benefits from the pension account by participants. 

Already, the licensed Pension Fund Operators have, pursuant to the Guidelines, put in place appropriate structure, infrastructure and trained manpower to ensure adequate coverage and the provision of excellent customer service to the Micro Pension Plan participants, she said.

 The DG further explained that a prospective Micro Pension contributor is required to open a Retirement Savings Account (RSA) by completing a physical or electronic registration form with a Pension Funds Administrator (PFA) of his/her choice, while the contributors may make contributions daily, weekly, monthly or as may be convenient to them. 

“Every contribution shall be split into two, comprising 40 per cent for contingent withdrawal and 60 per cent for retirement benefits. The contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto. The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion. The remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years.

 Pursuant to its regulatory and supervisory mandate, the Commission had established a separate Department dedicated to the supervision of all matters relating to Micro Pension Plan, including enforcement of compliance with the Guidelines and customer complaint handling and resolution. Our objective is to ensure efficiency and effectiveness in service delivery as well as transparency and accountability in the administration of the product by licensed pension operators.” she said.

 Dahir-Umar stressed that With the formal launch today and subsequent successful implementation, the Micro Pension Plan would significantly expand pension coverage to greater number of Nigerians and further generate additional long term funds for Nigeria’s economic development and that the Commission would collaborate with relevant stakeholders to sensitize and enlighten the target participants and members of the public on the features and benefits of the Micro Pension Plan.

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