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Oriental News Nigeria
Home»Pension»State Governments Jostles For Pension Fund
Pension

State Governments Jostles For Pension Fund

By orientalnewsngMarch 30, 2015No Comments4 Mins Read
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Yemisi Izuora

Anohu-Amazu
State are now striving to comply with the requirements of the Contributory Pension Scheme (CPS) as only fully compliant States would be eligible to float infrastructural development bonds.

Currently,the CPS has reported a N4.6 trillion is under its purview, while Pension Fund Administrators (PFAs) collectively occupy the centre of attraction in the economy.

Corporations, particularly those in the power sector are also jostling want to access the fund to grow their businesses.

Similarly, the federal and States Governments need  to tap from the huge fund to develop critical infrastructure such as roads and bridges while contributors want it used to finance housing programmes just as other Nigerians want it used to fix roads, electricity and specialist hospitals among other things.

While pension assets constitute a veritable source of long term investible fund in the country with relevant stakeholders angling for a share of it, pension operators are still insisting on a secured structure.

The National Pension Commission (PenCom) has however advised stakeholders who want to access pension fund to securitise investments they want it to finance and ensure accountability and transparency in the management of the investment.

Speaking on “Redimensioning Retirement Benefits for Growth,” the Head of Benefits and Insurance at PenCom, Mr. Olulana Loyinmi said securitisation of investment to attract pension funds is a challenge for market operators.

He urged financial advisers, leasing houses and estate managers to go back to the drawing board and develop instruments to enable PFAs mobilise funds under their custody to grow the desired sectors.

It will be a good idea to use pension fund to grow real estate and provide home for Nigerians but the major inhibitor in this direction is  lack of an objective and generally acceptable valuation methods for real estates, he said.

Loyinmi further said that transparency and safety are major considerations in pension administration even as he urged real estate operators to work with relevant professionals to securitise investments to enable pension operators channel funds to critical sectors.

“PFAs cannot create investment outlets; they are only sublime operators in this aspect of business.  The instruments that pension funds could be invested in must ensure transparency, accountability and safety such that the aims of pension reform will not be defeated,” he stressed.

In addition to the securitising, States have additional eligibility hurdles to cross to qualify to use pension assets to grow infrastructure in their respective domains.

The Federal Government has made it clear that it wants pension assets deployed for infrastructural development through the states.

The Director General of PenCom, Mrs. Chinelo Anohu-Amazu said hurdles have already been set for states, which means that only States that are fully compliant under the Contributory Pension Scheme (CPS) would access pension fund for development purposes.

She defined full compliance to mean  that a State has enacted its own Pension Reform law, registered its workers for the CPS and opened Retirement Savings Accounts (RSA) for them, deducting and remitting both employer and employee contributions into its  employees’ RSAs and having in place a group life assurance programme for its workers.

The State is also expected to value and transfer the accrued pension rights of its workers into their respective RSAs and issue Retirement Bonds in lieu of this debt obligation to workers as provided in the Pension Reform Act, 2014.

So far about six states are fully compliant, while about eight others have reached an advanced stage of full compliance under the scheme.

Many more States are still at various stages of compliance while a few are still at the rudimentary level with Adamawa State at the bottom of the table.

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