Home Insurance Digest PenCom says it’s exercises caution investing pension funds

PenCom says it’s exercises caution investing pension funds

Stories by CHRIS EBONG

…As Adeola warns against indiscriminate investment

As the clamour for unlocking the contributory pension funds for infrastructural development in the country thickens, the Director General, National Pension Commission (PenCom), Mrs. ChineloAnohu-Amazu has said that the agency will be very cautious in making such a decision.
The PenCom boss who said this in Lagos recently stated that the contributory pension scheme (CPS) has accumulated a large pool of investible funds of over N4.5 trillion pension assets with over 6.2million contributors as at June this year.
She added that payment of pension under the CPS presently has been prompt and consistent since 2007.
“The investment of these funds has become necessary because from the 2004 Act, what has happened is that there have been a pool of funds and so the next stage is simply how to secure it because a lot of clamour has been made on how to unlock these pension funds for investments.
“But we need to recognise that these funds belong to retirees. These are monies that had been taken out of people’s salaries to fund for their retirement age.
“So, any investment of these funds really has to be prudent and we must ensure that the primary objective of this Act, which is to ensure that retirement benefits are paid as at when due is maintained,” she explained.
According to her, the review of the Pension Act was essentially an improvement on the 2004 Act, which after a decade of implementation came up with a couple of issues.
However, the PenCom boss acknowledged that there has been an increase in the rate of contribution as well as coverage in the country.
She added: “Also, we have increased the sanctions for those who are in any way, not in compliance with the regulations laid down for the administration of pension in the country and these three were the major increase in the Pension Act 2014.
“The 2014 Act is for PenCom to increase its powers to deliver to the pensioner, the contributor and the nation as a whole because it positions Pencom as the overseer of all pension matters in Nigeria and further enhances its powers to ensure compliance and coverage.”
Anohu-Amazu said recovery agents engaged by the agency have been charged to ensure compliance and make sure that every employer makes payment as at when due.
They are, among others, also expected to make sure that deductions are sent to the retirement savings accounts of the employees. So, we have recorded a tremendous amount of success on that,” she said.
This is as former Managing Director, GT Bank, Fola Adeola warns on investment of N4.5trillion pension fund saying that ensuring the safety of pension funds, which has grown to N4.5 trillion in the last 10 years, is more important than releasing it for equity or infrastructural investment.
Adeola, who was also the head of the committee that set up the Pension Reform Act 2004 under the administration of former President Olusegun Obasanjo, gave the warning while speaking at the commemorative dinner of the 10th anniversary of the pension reform in Nigeria organised by the National Pension Commission (PenCom) recently.
He cautioned the regulatory body, PenCom, to de-emphasise disclosing the figure of the accumulated funds to the general public so that people do not always think the money belongs to the commission.
He urged PenCom to advise all the people clamouring for investment of the money in the capital market, real sector, among others, including the President Goodluck Jonathan that the security of the fund is paramount.
He said the money is primarily for people who have worked all their years either in the private or public sector as he queried what would happen to a man who after 35 years of work cannot move or get his benefit.
Hear him; “In restructuring the 2004 Pension Reform, what we wanted to achieve was a system that will take money out of the system into private hands and regulated by government. Today, people are in constant touch with their money. I didn’t mind that there should be no interest but safety. Left to people in the capital market, all the money should be in equity; those in infrastructure want it in real sector. The fund was at zero 10 years ago and today it is N4.5 trillion but what will it be in the next 10 years if it is messed up.”
The former GTB boss noted that some organisations have to opt out of the scheme because they want to go back to the system they are used to which is open to fraud. “There is no amount of money that cannot finish and it is the way we handle the money that will determine whether it will be there forever.
“For PenCom, the idea is not to be telling people there is N4.5 trillion because it is not their money. They are not a signatory to it either. It is something that PenCom should educate the President and those who work with him. This is the anchor for my vision for the next 10 years and as we are getting bigger, let’s be careful on how we release money to infrastructure, among others. If you put out 10 per cent of the money and you lose it, you are dead. The greatest thing here is trust and when broken, it is an end coming.” He said.
PenCom Director-General, Chinelo Anohu-Amazu in her address, said the 10th anniversary of the pension reform in Nigeria commemorates the milestone of a journey, which sought to break Nigeria away from an endless cycle of despair in its pension sector and launch it into a new era of blissful retirement for all employees.
She stated that the assemblage brought together private sector leaders, the icons of the pension reform and other important stakeholders to celebrate as well as usher in the strategic focus of the reform as it transits into the next decade.

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