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PenCom directors can’t own pension firms – Bill

By BusinessNews Staff on June 27, 2014

The Federal Government may bar all board members of the National Pension Commission and their relatives from having shares in Pension Fund Administrators and Pension Fund Custodians under the Contributory Pension Scheme, investigation has revealed.

Sources at PenCom told our correspondent that when the new Pension Reform Bill was eventually signed into law by the Federal Government, key officials such as members of the board of PenCom and other related parties would be prohibited from owning shares in the pension companies.

Section 19 (5) and (6) of the bill states, “The PRA 2013 bill seeks to prohibit members of the board of PenCom or their related parties from owning shares in operator companies. This is in order to remove conflict of interest situations and entrench the principles of good corporate governance.”

The amended bill has passed through the necessary readings at the National Assembly and is being harmonised prior to being passed into law by the legislature and assented to by the President.

PenCom also noted that the sanctions provided under the PRA 2004 were not sufficient deterrents against infractions.

It noted that there were more sophisticated mode of diversion of pension assets such as non-disclosure of interests and commissions accruable on pension fund assets, which were not addressed by the PRA 2004.

According to the commission, the proposed law seeks to create new offences and provides for stiffer penalties that will serve as deterrent against mismanagement or diversion of pension fund assets under any guise as well as other infractions of the provisions of the Act.

According to the latest report on the commission’s activities in the third quarter of last year, PenCom carried out routine examination on some of the operators.

It said that the examination covered such broad areas as information and communication technology, pension administration, benefits administration and funds under management.

Other areas were risk management and compliance as well as internal control systems.

It said these were to help the commission evaluate the quality of the PFAs’ investment decisions as well as their corporate governance practices.

During its offsite examination, PenCom stated that some of the issues observed from the compliance reports forwarded by the PFAs indicated cases of non-compliance with investment limits by some PFAs; delay in the payment of retirement benefits; receipt of pension contributions without appropriate schedules; unresolved customer complaints; failure to fill vacant management positions; and non-implementation of disaster recovery plans.

[Punch]

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