Don't Miss

Consolidation looms in Nigeria’s pension industry

By BusinessNews Staff on November 6, 2014

Driven by the need to ensure that Pension Fund Administrators (PFAs) in the country are well funded and managed, the National Pension Commission (PenCom), may compel smaller operators in the sector to merge with better capitalised ones.
THISDAY investigation revealed that PenCom, the regulator of retirement savings management in the country and major players in the pension industry are concerned that smaller PFAs are involved in sharp practices and are cutting corners thereby endangering trust in the sector.
THISDAY reliably gathered that PenCom has ruled out the option of directing the smaller PFAs to raise additional capital because the Commission reasoned that raising more capital was not all that was required to create bigger PFAs with adequate expertise on fund management.
Currently, there are about 21 PFAs as against 27 licences granted since the commencement of Contributory Pension Scheme (CPS) in Nigeria.
A top operator in the industry who pleaded anonymity told THISDAY the consolidation in the sector is long overdue given the way it is currently structured.
According to him, “It will better for the industry. It is evolve better pension administration. A small size well-funded and managed will be better than the aggregated number where PFAs are not strong enough. It is better for the industry to have strong players, the stronger the industry, the better for all of us including the subscribers. Consolidation will eliminate sharp practices and all form of vices that may tarnish the image of the industry.”
PenCom last week confirmed it had not recorded any case of fraud with regard to the contributory pension scheme in the country.
A reliable source at the commission who confirmed this on condition of anonymity, said under the contributory pension scheme, the country was yet to record any case of fraud 10 years after it was established.
“No record of any form of fraud. It is not even possible. To a great extent, that objective that retirees get their pension as at when due has been met toddy. Of course, there are issues and challenges,” the source said.
Section 7 of the Pension Reform Act, 2014 provides that a Retirement Savings Account (RSA) holder shall, upon retirement or attaining the age of 50 years, whichever is later, utilise the amount credited to his RSA for withdrawal as a lump sum from the total amount credited to his RSA provided that the amount left after the lump sum withdrawal shall be sufficient to provide a programmed fund withdrawals or annuity for life in accordance with the extant guidelines issued by PenCom from time to time.
Giving an update on the lot of pensioners under the scheme, the source confirmed that a total of 111, 210 pensioners have retired under the contributory pension scheme and were receiving their pension monthly. The source added that N239.08 billion and N3.05 billion had been approved and paid out as lump sum and monthly pensions respectively to 97, 808 retirees by way of programmed withdrawal as at September 2014.

It was also confirmed that N2.90 billion and N6354.99 million had also been paid as lump sum and monthly life annuity to 13,402 retirees in return for payment of N62.29 billion premium as at the same date.

[This Day]

headline