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Private sector workers’ contribution to pension fund hits N383.7bn

By on March 28, 2011

More than six years after the commencement of the 2004 Pension Reform Act, only 2.01 million private workers have contributed to the contributory pension scheme.

The Director-General, National Pension Commission, Mr. Mohammad Ahmad, disclosed this in an exclusive interview with our correspondent.

He said, “2.01 million private sector workers have contributed to the Contributory Pension Scheme as at the end of February, 2011, while the private sector contribution as at February 2011, stands at N 383.71bn.”

He added that the total pension fund was N2tn as at February.

Ahmad, who noted that the private sector’s contribution to the scheme was still low, expressed worry that there was still a general misconception on the workings of the scheme.

He, however, added that the commission was facing that challenge headlong by engaging more in the enlightenment of the populace.

He added that 3,203 private sector pensioners had already been paid a total sum of N1.9bn under the new scheme as at the end of February, 2011.

Section 4 of the Pension Act states that a worker shall not withdraw his savings at retirement but shall utilise it either as annuity or programmed withdrawal.

He, however, noted that the figure of retirees who had, embraced annuity rather than programmed withdrawal was low.

He said, “There were 128 retirees under annuity as at the end of February, 2011. They were paid the total lump sum of N435.5m and the premium of N479,645,074.30 was paid out in return for average monthly annuity of N4.4m.”

He noted that the attitude of pensioners to annuity could be a function of education and enlightenment, adding that there was the need for both the PenCom and the NAICOM to collaborate to enlighten the public.

He said, “Our requirement is that no retiree should be compelled to adopt any form, the choice is given, you either take a programmed withdrawal or an annuity, that is basically the point.

“We have issued the regulation jointly with NAICOM, we even revised it, we had a workshop, we have interacted with the Nigerian Insurers Association, we hope that one day that product will be developed.”

He noted that the commission had been having series of stakeholders engagement with different bodies such as the Nigeria Labour Congress, the Nigeria Employers Consultative Association and the Nigerian Union of Pensioners, on issues of common concerns in the industry and how to surmount them.

He stressed the need for all the bodies in the sector to collectively ensure the progress of the industry.

Source : Punch