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PenCom denies looting of funds by junior employees

By BusinessNews Staff on March 7, 2014

NATIONAL Pension Commission, PenCom, has denied media report that some of its junior employees were involved in the alleged looting of pension fund, stating that no official of PenCom was involved in any form of looting of pension fund.

The commission in a statement by Emeka Onuora, Head, Communication Unit, said media report quoting the Independent Corrupt Practices and Other Related Offences Commission, ICPC Chairman, Mr. Ekpo Nta, as saying that there were serious cases of fraud running into billions perpetrated by junior officials in the Pension Commission, but that only top officials were given attention in the chase for corrupt officers.

According to the statement: “The Contributory Pension Scheme, CPS, was created by the Pension Reform Act of 2004. The reform came into being when it became obvious that the Pay As You Go pension system could no longer fulfil the expectations of retirees in the country as it was fraught with irregularities and fraud that led to non-payment of benefits to pensioners who had hitherto served the nation meritoriously.

“The CPS is based on individual Retirement Savings Accounts that is managed by Pension Fund Administrators, PFAs, and supervised by the National Pension Commission. Its funding is on monthly deductions from employees’ salaries and the equivalent contribution by the employer. The pension fund assets are held by Pension Fund Custodians, PFCs, licensed by PenCom.

“The CPS is predicated upon structures that have adequate in-built control mechanism to prevent fraud.

“Under the CPS pension, funds are not left with employers but credited ab initio directly to the individual Retirement Savings Accounts, RSAs, of beneficiaries and neither the employer, the Commission nor the Pension Fund Administrator has access to the money.

“There are safeguards to protect the pension funds from all forms of misappropriation with the functions of custody and administration of the funds clearly delineated.

“While the PFCs are in custody of the pension funds, the PFAs manage and administer the funds.

“Furthermore, the PFAs and PFCs are mandated by the Commission to maintain high levels of transparency and accountability, such that enable individual RSA holders to have full access to any information relating to their pension contributions.”

“The Commission has also put in place, strict regimes for investments and payouts from the pension fund. Such regimes, which include daily monitoring of investment activities of PFAs by the Commission and the institution of strict payout authorization requirements, ensure that PFAs are prudent in their investment decisions and that only bonafide beneficiaries have access to their retirement benefits.

It is pertinent to note that there are enough checks and balances for contributors’ fund under the CPS which PenCom directly supervises. The Commission is constrained to clarify the issues in order to set the records straight as well as educate and assure contributors and the general public of the robust legal and institutional frameworks established to ensure the safety of pension assets under the Contributory Pension Scheme.”

[Vanguard]

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