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Expert proffers solutions to pension challenges

By on September 8, 2015

The Deputy Managing Director, Linkage Assurance Plc, Dr. Pius Apere, has identified and proffered solutions to some significant challenges visible in the pension system in the country.

Apere, who is one of the few actuarial scientists in the insurance and pension sectors, said this in his presentation with the theme, ‘Key challenges of Nigerian pension industry and possible solution from an actuarial perspective’.

He said, “The challenges arising from different areas of pension management include, but not limited to, transitional pension management, guaranteed minimum pension, additional voluntary contributions, pension protection fund, investment guidelines, public education and enlightenment, pension database, risk management and human capacity development.”

Apere stated that the different pension regimes operating in the country, which are the Defined Benefit and Contributory Pension Schemes, gave rise to varying set of problems that limit the capacity of key stakeholders within the Nigerian pension industry to meet pensioners’ expectations.

He said that Nigerian pensioners had high expectations on the new government to ensure an effective implementation of pension regulations existing in the country, because of the need to have sustainable standard of living in retirement and their benefits paid as at when due.

The actuarial scientist said that the establishment of Pension Transitional Arrangement Department and various penalties for pension funds mismanagement, introduced by Pension Reform Act 2014, would address some of the lingering challenges of pensioners in the public service pension administration in the country.

However, he added that other things had to be done, like creation of pensioners’ biometric database, “that is suitable for future actuarial valuation and demographic and financial projections, which would also eliminate ghost pensioners.”

According to him, there should be adoption of a pragmatic approach to pensioners’ biometric verification process (a self-verification system), automation of pension/gratuity calculation and payment system to ensure that pension increases are implemented on a timely basis relative to increase in workers’ salaries and also allowing pensioners to receive their pensions/gratuities as at when due.

The actuarial scientist said there was need for a periodic actuarial valuation of the old DB pension scheme as required by law to be carried out in order to ascertain the value of the pensioners’ liabilities at a given date as the scheme runs off.

He also said PTAD should set up a realistic pension stabilisation fund (to be invested) with the primary aim to stabilise the pension/gratuity payment system, which is always in arrears.

“In summary, the relevance of professional actuaries and information technology experts cannot be ignored in the implementation of the above suggested solutions,” Apere said.