Pension assets hit new high of N7.41trn

by | February 6, 2018 1:35 am

The nation’s pension assets grew by N990 billion between March 2017 and November 2017, a growth of 15.42% on the back of the National Pension Commission (PenCom) strict enforcement of its investment regulations.

Pension assets within the period increased from N6.42 trillion to N7.41 trillion with an average monthly growth of N123 billion. The PenCom gave security of pension assets a renewed impetus since April 2017, a cardinal indicator of the efficacy of the Contributory Pension Scheme (CPS).

“Given the positive market indicators especially the bullish trend in the Nigerian Stock Market, the outlook for the year 2018 indicates an appreciable increase in assets accompanied by good returns on investment,” a document from the commission seen by BusinessDay showed.

In the same vein, the Commission’s strategic objective of expanding coverage of the CPS to the underserved sectors is being pursued vigorously. Accordingly, the number of contributors had grown by 390,000 as it increased from 7.50 million in March, 2017 to 7.89 million as at December, 2017, out of which 99.18 percent (7.82 million) represented the RSA membership.

The Aisha Dahir-Umar-led management intensified effort to grow pension assets and the CPS; the management also continued effort to encourage States to key into the scheme. Though in acting capacity, Aisha Dahir-Umar and her team at PenCom had not only ensured that more states adopt the CPS but that more have begun remitting Employer and Employee contributions.

Currently, eleven States and the Federal Capital Territory (FCT) are remitting Employer and Employee contributions, while only two states are remitting Employee portion of pension contributions. The States remitting both Employer and Employee contributions are: Jigawa, Kaduna, Ekiti, Osun, Ondo, Ogun, Lagos, Edo, Delta and Rivers. The two States remitting only Employee portion of pension contributions are Zamfara and Kebbi.

Similarly, eight States have Bills with their Houses of Assembly to enact laws that would enable the implementation of the CPS in their States. The States are: Akwa Ibom, Cross River, Benue, Plateau, Bauchi, Kwara, Borno and Katsina.

Others have either enacted the laws and not remitting contributions or are yet to commence pension reform, according to the PenCom documents seen in Abuja.

It is expected that pension assets would grow in leaps and bounds when the PenCom in pursuant to the provisions of the Pension Reform Act (2014) which expanded the coverage of the Contributory Pension Scheme (CPS) to the self-employed and persons working in organizations with less than three employees is implemented under the micro-pension scheme.

PenCom had earlier in 2016 set up a department whose primary responsibility is to kick-start and implement micro-pension in Nigeria.

A piece of information on PenCom website indicated that micro-pension would be operated on three levels: the low income earners, the high income earners and the SMEs. These will include artisans – roadside motor mechanics, hair-dressers, taxi drivers, barbers, tailors, vulcanizers, among others, in the low income earners; the high income earners which include architects, medical doctors, lawyers and other self-employed professionals. The third level would ordinarily refer to people running and working in, small enterprises.   

Micro-pension has hit the front-burner in recent years and many countries have embraced the scheme as a tonic to fight old age poverty, and source of long term funds for economic development.

Various countries have adopted various methods for its implementation. According to Amos Gitau Njuguna of the United States International University, Nairobi, Kenya, in his paper titled: ‘Critical Success Factors for a Micro-Pension Plan: An Exploratory Study,’ published in the International Journal of Financial Research Vol. 3, No. 4; 2012, “Different countries have varying forms of micro-pension systems; for instance Bangladesh and India  have a model operated on the Grameen principles, Chile  has a government subsidized and co-sponsored scheme, China has a scheme characterized by compulsion, minimum income guarantees and micro  life insurance products, Kenya has a voluntary defined  contributory scheme and South Africa’s informal sectors  workers are covered by the public pension system (Hu  & Stewart, 2009). It is apparent that policymakers need to review success factors for different micro-pension models in use.”

John Osadolor