The National Pension Commission (PenCom) yesterday said it is putting in place measures that would raise the contribution of pension funds to the country’s Gross Domestic Product (GDP) from five per cent presently, to about 10 per cent by next year.
The Acting Director-General of the Commission, Mrs. Aisha Dahiru-Umar, who stated this in a chat with journalists yesterday in Abuja, said the cut of over N3 billion from the amount budgeted to offset the backlog of pension benefits to retirees by the National Assembly, is affecting the payment of accrued benefits to retirees from Ministries, Departments and Agencies (MDAs).
The said the payment was meant for accrued benefits of the retirees in the MDAs, adding that the accrued rights were part of the pension benefits due to employees prior to the introduction of the Contributory Pension Scheme (CPS). Sais the CPS has facilitated a pool of pension funds that stands at N8.3 trillion as at June 2018.
“As you have rightly noted, there are enormous potential for growth of Nigerian pension funds to account for a significant proportion of the GDP.
“Indeed, the commission’s ongoing strategy implementation, aims at attaining an increase in the ratio of pension funds to GDP to at least 10 per cent by 2019,” Dahiru-Umar said.
She said some of the measures being put in place to achieve the target, include firstly, the expansion of coverage of the CPS to the underserved economic sectors through micro pension and renewed enforcement of compliance.
Mrs. Dahiru-Umar said: “Our objective in this direction is to attain at least 20 million contributors by the year 2019. Secondly, we seek to grow the assets through more investments in variable income instruments that generate higher returns.
“In order to achieve this, we have commenced implementation of the multi-fund structure in July 2018, which segregates the funds based on the risk profile of contributors and gives them an opportunity to choose, subject to age parameters.
“Furthermore, the increase in contribution rates in the Pension Reform Act 2014, from a total of 15 per cent, to 18 per cent, comprising 10 per cent by employer and eight per cent by the employee, would also increase the size of pension funds when fully implemented for treasury funded federal government’s MDAs.”
In addition, she said the commission has also intensified efforts at ensuring the payment of all outstanding pension liabilities, including accrued pension rights, and pension increases that were yet to be implemented.
“The industry is already leveraging information technology (IT) to deliver better services to the contributors and retirees. The Pension Fund Administrators have been expanding their branch networks in order to ease customer interface, while the Commission has been operating its zonal offices in each of the six geo-political zones of the country.
“We are also intensifying efforts at ensuring the adoption and implementation of the CPS by all the states in the federation. Other measures include a wider public enlightenment and education of the CPS in order to attract a wider participation,” he said.
Meanwhile, Dahiru-Umar stressed that the cut of over N3 billion that was in the 2018 Appropriation Bill prior to its assent by the president would affect the payment of retirees’ benefits.
She explained, “As at today, there are outstanding arrears for retirees from May, 2017. The commission would continue to engage all the relevant stakeholders such as the National Assembly, the Presidency, Budget Office as well as the Federal Ministry of Finance to ensure that all the Accrued Rights and other pension liabilities are paid.
“We are also aware that efforts are being made to accommodate the outstanding liability in the supplementary budget so as to bring succour to teeming Federal Government’s retirees who are currently waiting for the payment of their retirement benefits.”
She said the outstanding amount for Federal Government employees had been communicated to the government and in previous times, what was appropriated; it was short of the amount advised.
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