By Chiamaka Ajeamo, [email protected]
In line with its objectives to regulate, supervise and ensure effective administration of pension matters and retirement benefits in Nigeria, the National Pension Commission (PenCom), has unveiled five strategic focus areas with the mandate of ensuring measurable impact on the economy and positioning the industry for sustainable growth in the post-COVID-19 era.
According to the Commission, the five strategic focus areas which are aimed at maintaining momentum on initiatives are: Increased portfolio diversification of pension fund investments, sustainable growth of the pension industry through expansion of coverage of the Contributory Pension Scheme with special emphasis on States and the informal sector, enhanced pursuit of the resolution of the pension liabilities of the Federal Government under the Contributory Pension Scheme, public awareness campaign efforts and; the vigorous improvement of customer service delivery.
The Director-General, PenCom, Aisha Dahir-Umar, while speaking at the 2021 PenCom Seminar for Journalists in Lagos, Monday, with the theme: ‘Positioning the Pension Industry in a Post COVID Era’, explained that the strategic focus plan was birthed following the termination of the corporate strategy in December 2020 and the need to provide strategic guidance for the Commission in the 2021 financial year, pending the development of a new corporate strategy.
According to Dahir-Umar, the focus areas highlighted in the plan will vigorously and steadily pursue the attainment of the Commission’s objectives.
She stated that the emergence of the COVID-19 pandemic necessitated a review of business processes across various organisations including the Commission.
“The COVID-19 pandemic indeed engendered socio-economic disruptions of the entire global order, with multifarious challenges in conducting hitherto routine activities. It was, therefore, imperative for the Commission to deepen technological innovation as it seeks to navigate through the challenges imposed by the pandemic.
“The theme of this workshop highlights the Commission’s laudable response to the pandemic through technology and engagement with relevant stakeholders.
“The most recent technological innovation introduced by the Commission is the in-house designed and developed online Enrolment Application, which has capabilities to register, verify and enrol prospective retirees of Treasury-Funded Federal Ministries, Departments and Agencies (MDAs).”
Dahir-Umar noted that by the deployment of this new application, mass gathering of people has been avoided while enhancing convenience for the prospective retirees through a seamless enrolment process.
She further stated that “Another notable technological innovation by the Commission was the design and deployment of the Retirement Savings Account (RSA) Transfer System (RTS), which was launched in November 2020. The RTS is a computer application developed by the Commission, through which RSA holders transfer their RSAs from one Pension Fund Administrator (PFA) to another. Indeed, the activation of the RSA transfer provision, which deepens individual choices, is a major milestone in the implementation of the Contributory Pension Scheme (CPS).”
Expansion of coverage of the CPS
The PenCom Boss disclosing the feats achieved with the CPS, reassured stakeholders that the implementation of the scheme remains on course.
“The number of registered contributors under the CPS has grown to 9.38 million while pension fund assets have accumulated to N12.66 trillion as at 30 June 2021.
“The maintenance of a consistent growth trajectory continues to justify the Commission’s overriding investment philosophy of ensuring the safety of pension fund assets,” she noted.
She stressed that the Commission places huge importance on the sustainable growth of the pension industry through the expansion of coverage of the CPS, adding that the registration of Micro pension participants and employees of the States and Local Governments have been prioritised.
In addition, the Commission has sustained drive to increase participation of the Organised Private Sector (OPS) through various initiatives and enforcement mechanisms, she stated.
Public enlightenment and education
Dahir-Umar stated that considering that 17 years after the pension reform in Nigeria, the knowledge gap on the CPS remains a major challenge faced by the Commission and operators on the implementation of the scheme.
To address this challenge, she said the Commission had developed various platforms to drive public awareness and education as well as committed to reinvigorating its enlightenment and education on the scheme.
Resolution of pension liabilities of the Federal Government
The PenCom DG expressed she was elated that President Muhammadu Buhari, recently approved the Commission’s submission on the payment of some outstanding pension liabilities of the Federal Government under the CPS.
She noted the approval covered the payment of outstanding accrued pension rights for verified and enrolled retirees of treasury-funded MDAs that are yet to be paid their retirement benefits, as well as the backlog of death benefits claims due to beneficiaries of deceased employees of treasury funded MDAs.
“The President also approved the payment of 2.5 per cent differential in the rate of employer pension contribution for FGN retirees and employees, which resulted from the increase in the minimum pension contribution for employers from 7.5 per cent to 10 per cent, in line with Section 4(1) of the Pension Reform Act (PRA) 2014.
“These payments would undoubtedly, boost the RSA balances of the beneficiaries towards better retirement benefits. The settlement of these outstanding accrued pension rights of verified and enrolled FGN retirees would result in reversing a major challenge that has lingered since 2014. Also, the commencement of payment of the reviewed monthly pension contribution rate by the Federal Government is another significant step in ensuring compliance with the PRA 2014,” Dahir-Umar said.
Increased portfolio diversification of pension fund investments
The Head, Research and Strategy Management, PenCom, Ibrahim Kangiwa, giving his presentation on the strategic focus, noted that the current profile of pension fund investment portfolio in Nigeria indicates about 70 per cent uptake in Federal Government of Nigeria (FGN) Securities, noting that PenCom intends to change this through diversification of the portfolio.
Kangiwa said the pension fund investments have remained largely in favour of FGN Securities due to the paucity of infrastructural or alternative asset products in the Nigerian financial markets.
He, however, stated that the Commission is determined to revise this by emphatically supporting an investment climate that mitigates single obligor risks and hedges pension fund assets against inflation.
“The focus is to have a more measurable impact on the Nigerian economy through diversified and increased investments of pension funds in infrastructure, real estate and other alternative assets.”
He further revealed that the Commission is making efforts to increase uptake of pension funds investments via engagement with relevant stakeholders in a bid to promote safe investment in infrastructure development; collaborations with relevant government agencies and the Organised Private Sector for viable public private partnership arrangements in infrastructure for pension fund investment.
He added that it was in view of the objective that the Commission recently establishment the non-Interest fund (Fund VI) among the fund types to be managed by PFAs. “It required the PFAs to invest Fund VI assets in ethical and non-interest compliant instruments in line with Islamic Financial Jurisprudence.”
Improvement of customer service delivery
Kangiwa said the Commission is focused on improving customer service delivery to address cases of service failure from both the Commission and the operators.
The initiatives would ensure the enhancement of the operational capacity and capabilities of the Commission’s workforce as well as the capacity building and institutional strengthening of the licensed operators.
To achieve these, he said the Commission has taken steps which include: Rendition of monthly Service Delivery Report (SDR) by PFAs, collaboration with SERVICOM office to ensure customer satisfaction on service delivery and deployment of info-mail, customer relationship management app, social media, letters etc. to monitor the level of service delivery and feedback. He disclosed that since the implementation of the SDR and other measures, the industry has recorded a 90 per cent complaints resolution rate.