BusinessDay 22 Aug 2018

Wednesday 22 August 2018
Pension Today
C002D5556
BUSINESS DAY
In Association with
25
Reassessing role of stakeholders in
developing the pension industry
The nation’s pension industry has continued to record increased growth with
different stakeholders playing their parts, with some doing excellently well, and
some others underperforming. Here, Ivor Takor, executive director, Centre for Pension
Rights Advocacy looks at their roles and proffered solutions.
For Takor, there
was no pension
industry pre 2004
pension reform in
Nigeria. Pension
schemes operated in both
the public and private sector
before the 2004 reforms,
were burdened with a lot of
problems. Principal among
them was that the schemes
were unregulated; Suffered
from poor administrative
structures; the public sector
scheme was unfunded,
causing it to become unsustainable,
with an estimated
N2 trillion deficit. In
the private sector, with the
exception of the National
Social Insurance Trust
Fund (NSITF), the schemes
were as many as there were
companies. They were voluntary,
being products of
collective agreements with
no law backing them. Section
1 of Pension Reform
Act 2004, the forerunner of
the current Pension Reform
Act 2014 as well as section 3
of the 2014 Act, established
the Contributory Pension
Scheme and made it to apply
to employees of both the
public and private sectors.
Herein lies the beginning of
the pension industry.
The Act therefore laid
down stakeholders in the
pension industry and went
ahead to set out the roles
they are expected to play
for the sustenance and development
of the industry.
The Act didn’t stop at laying
down roles for stakeholders.
It went further, to stipulate
sanctions for non compliance.The
stakeholders in
the pension industry are the
regulator, employers, em-
ployees and the operators
(Pension Fund Administrators
(PFAs and PFCs).
Section 17 of the Pension
Reform Act 2014, which
henceforth will be referred
to as the Act, established the
National Pension Commission
(PenCom), while section
18 states the objectives
of PenCom to be, to enforce
and administer the provisions
of the Act; co-ordinate
and enforce all other laws
on pension and retirement
benefits; and regulate, supervise
and ensure the effective
administration of
pension matters and retirement
benefits in Nigeria.
Since the establishment
of PenCom, the Commission
has strived to achieve
the objectives of the Act,
effectively performed the
functions given it in section
23 and judiciously utilized
the powers bestowed upon
her in section 24.There is
no other way to justify the
establishment of the Commission
and adequately
highlighting the role she
has played in the establishment
and development of
the pension industry than
to point to a non existing industry
in 2004, with a public
sector pension deficit of N2
trillion in 2004 to a pension
industry with a pension assets
of N8.23 trillion as at
July 2018.
The Commission has
succeeded in building and
maintaining a culture of
healthy compliance in the
industry: This has not only
helped the industry to stay
out of trouble, but has built
a reputation for the industry
as being trust worthy,
which has led to the continuous
development of the
industry. Being a friendly
regulator, PenCom exposes
draft guidelines to operators
for inputs before finalizing
them. There is a monthly
consultative fora with licensed
operators and holds
regular consultations with
the operators “union” the
Pension Operators Association
(PenOp).
The next set of stakeholders
in the industry is the
employers. This is the group
that provides the greatest
challenge to the industry.
Principal among the challenges
being that of non
compliance with the provisions
of sections 4, 5 and 6
of the Act, which deals with
paying the contributions of
the employer; deductions
and timely remittances of
both the pension contributions
of the employer and
employees pension deductions,
as well as maintaining
Group Life Insurance policy
in favour of employees as
provided for in section 4(5)
of the Act. Governments,
federal and states are the
biggest employers of labour
and also happen to be the
greatest culprits in this regard.
This will continue to
be the greatest challenge
the industry will be facing
because owners of businesses
in the private sector
will continue to be greedy
in their desire to maximize
profit, while governments
will continue to avoid the
responsibility of adequately
addressing the welfare of
workers. The regulator and
employees must do everything
within their powers
to get employers to comply
with the provisions of the
Act.
The primary stakeholders
in the pension industry
are employees.Section 1
paragraph ( c ) states one
of the objectives of the Act
“ensure that every person
who worked in either the
Public Service of the Federation,
Federal Capital
Territory, States and Local
Governments or the Private
Sector receives his retirement
benefits as and when
due. The Nigeria Labour
Congress (NLC), the Trade
Union Congress (TUC) and
Industrial Unions, whose responsibility
it is to campion
the cause of improvement of
the welfare of workers and
pensioners, must be at the
forefront of efforts to grow
the industry. The labour
movement should ensure
that employees open Retirement
Savings Accounts
(RSAs) and understand salient
sections of the Act that
need their attention; and
they should put pension
issues as principal items for
discussion/negotiations, in
every meeting and negotiation
with employers especially
governments.
The last but not the least
stakeholders are the operator,
Pension Fund Administrators
(PFAs) and Pension
Fund Custodians (PFC). The
Act segregates the management
and custody of pension
fund. While PFAs are
responsible for the management
of the funds, the PFCs
warehouse the funds and
invest them in line with the
directives of the PFAs, based
on guidelines issued by Pen-
Com. In an attempt aimed
at insulating pension fund
from fraud and forgeries, it
is imbedded in the Act, a lot
of compliance obligations
for the operators, which the
Act also empowers PenCom
to enforce and apply sanctions
for noncompliance.
Operators will help in the
continuous development of
the industry if they comply
with the provisions of the
Act and all regulations and
guidelines issued by Pen-
Com; render good customers
services and additional
services.
So far, the pension industry
remains the most rapidly
growing industry in the
country and will remain so
for a long time. This position
will be strengthened when
the micro pension targeted
at getting the self employed
in the informal sector to key
into the Contributory Pension
Scheme commences.
RC634453
Diamond Pension Fund Custodian Limited
1A, Tiamiyu Savage Street, Victoria Island, Lagos State.
Tel: 01-4613753, 2713680, 2713954
Fax: 01-2713955
Email: info@diamondpfc.com
Website: www.diamondpfc.com
This section is
created to increase
awarness and deepen
knowledge about
the contributory
pension scheme.
If you have enquiries
or contributions,
send to this e-mail:
diamondpfcbusday@yahoo.com