The Sun News On-line|Abuja Reports

National Pension Commission (PenCom) recently declared a total assets of N815 billion ($15billion) with over three million registered contributors to the scheme.

Out of the amount, N600 billion represents legacy funds while N215 billion are new inflows into the system. This is a good development given the ugly past of National Pensions Fund (NPF), which previous administrations used to siphon workers’ hard-earned money.

With the benefit of hindsight of the NPF era, people are skeptical of the safety of their money in the hands of PFAs. The PenCom chief has for the umpteenth time assured that the PFAs are closely monitored and it is in this regard that a seminar has been planned to educate them on the best way to safeguard people’s money.

"The seminar on Alternative Asset Classes for Pension Funds is aimed at looking at other ways of financing infrastructure. That is basically one issue. The second issue, of course, is how do we educate our fund managers? This is because the participants are not just Pension Fund Administrators (PFAs), we also have other asset managers like some of the big investment banking institutions. We thought we have created that awareness and also given them the necessary skills.

“The third level is also to identify the challenges, both from the perspective of the operators, regulators as well as even the government. What do we need to do to promote this asset classes. We have had facilitators from so many countries like South Africa, Botswana, Chile, Mexico, Germany and United States.

“They came to share their experience on how they have done it in terms of financing housing; infrastructure and creating corporate bond market. So, we believe to a larger extent we have achieved that," he said.

Pension Act
On the clamour for a review of some regulatory portions of the PenCom Act, the DG said: "Quite a few comments have been made, and we will go back and look at those issues and see how we can react and also be responsible to the developments in the market.
“In terms of regulatory environment, there have been comments about our investment regulations. This is because no big investment can be made or loans can be generated if you don’t have a track record. How do you provide that track record? Do we need certain guarantees to be provided or do we need certain information to be provided? These are some of the challenges.
“Beyond that is how do we make our PFAs and institutional investors to promote market discipline?
“This is because there is no substitute to market discipline. No matter how effective you are as a market regulator, if you don’t have a strong market discipline, you can’t get things done. So, we are trying to see how they can promote corporate governance and how they (if they are investors, PFAs) can insist that certain things must be done correctly.
“We don’t have any cause to doubt the compliance of PFAs because we are a very small industry. In other words, any regulation that we issued is a regulation that has been accepted by all of us. It is not only a regulation that is acceptable but also understood by all of us. And therefore, compliance becomes pretty easier. Today, we have no cause to be worried about compliance or non-compliance," Ahmad maintained.

PFA licence
The pension chief also stated that there was no pending application for new licences while assuring that the industry is a viable one.
"There is no pending application for a licence of PFA to my knowledge. Now, we have licensed 25 PFAs and have also given approval-in-principle to one or two, and there is one pending application that we are yet to process because they have not provided the necessary information" he noted.

Viability
Talking about the viability of the industry he asked:
"Well, is it the issue of viability or the issue of looking at what the industry is all about? I don’t think it is an issue of viability. People have realised that PFA business is a long-term business.
So, if you are going in, you are going in for a long shot. And to that extent, you have to be prepared for it. The second issue is that we don’t have tollgates.
You can go to our websites and download the forms and fill them. If you need our guidelines, we will give you. We need to ensure that we are in every part of this country and PFA will have to be there. Today, we have over 200 branches and we need more of that so that in every corner they can go and market and ensure that every employer that has five workers or more can open retirement savings account and contribute on behalf of its employees."

Compliance
However, the director general regretted that in spite of the legal implication in not complying with the pension act, some firms are still flouting the order to enter the pension scheme. "We are aware that some employers have not complied with the Pension Act. What we are trying to do is, first and foremost, on a monthly basis, PFAs are now required to give us statements of unfunded accounts. We then write to the employers. That is for those who have opened accounts and their employees are not benefiting and we ask for feedback. We have been receiving a few responses.
“Those who would remain difficult or fail to respond, the next action is to impose fines on them and even publish their names. But the last action that we may eventually take for those who consistently refuse to comply is to take legal action against them. And we are prepared to do that.
“I can assure you that we are in the process of doing that. We have the list of names of employers who have not complied with the Pension Act. We have written to them and we are expecting a feedback, and some have responded to say they have paid with evidences and others have given one reason or the other and we have been discussing with them.
“But the bottom line is that if an employer defaulted, he or she has to pay the arrears because the effective date for the private sector is January 1, 2005. If anyone defaults, we will compel that person to pay and we are prepared to take legal action against such a person," he insisted.