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Foot dragging by the National Pension Commission (PenCom) in the processes which should lead to the take-off of Nigeria’s proposed micro-pension scheme is undermining a 30 percent target coverage in the contributory pension scheme (CPS) proposed for the nation by 2024.
The Pension Commission had since 2015 set out a coverage target of 30 percent of the working population in Nigeria under the CPS by the end of 2024, with the informal sector being strategic to the realisation of this objective.
However, the instability and sectional politics surrounding leadership appointments at PenCom since the removal of the former director-general, Chinelo Anohu-Amazu, are blurring policy direction, industry watchers say.
As at 20th December 2017 only 7.71 million workers in Nigeria had registered under the CPS, out of a workforce of over N58.7 million as at the end of September 2017, according to figures released by the Nigeria Bureaus of Statistics (NBS).
The implication therefore, is that only about 13 percent of the current labour force is covered under the CPS, while over 80 percent are still not captured, which according to analysts, makes a mockery of the 2024 coverage projection, without a running micropension scheme.
The Micro Pension Plan is an initiative conceived within the context of an industry-wide strategy by PenCom to bring informal sector workers on board. In implementing this initiative, PenCom had segmented the informal sector into three broad categories- low income earners, high income earners and the SMEs, with a plan to drive the process under the micropension scheme.
According to the Commission, each of these categories is going to be targeted with appropriate pension products and sensitisation programmes suit meet their peculiarities.
Susan Oranye, executive secretary, Pension Fund Operators Association of Nigeria (PenOp) said “Yes, operators are looking forward to the guidelines on micro pensions because it will change the face of the industry to greatness.”
Oranye also said, “a draft guideline has been issued by the Commission on it and I do know that work is going on.”
Glory Etadovie, managing director/CEO, IEI Anchor Pensions Limited, said, “we are waiting on the regulator to come up with a final guideline for takeoff, but on our side as operators ,we are doing underground preparations in terms of human capital development, technological capacity, and other necessary structures, so that when this happens, it does not take us unawares.”
Maxwell Udo, an analysts at Pension Mandate, said the lack of a De-facto head at the Pension Commission has affected policy direction in the industry, as the people in acting capacity are being careful in taking major decisions.
Udo said this affects micro pension as well as other policy decisions like the Transfer Window, which has lingered for so long. So, from the regulator side, there is a major delay that is now affecting the industry.
According to figures from the NBS, between April and June 2017, there were 97,713 Retirement Savings Account (RSA) holders registered under the CPS, with 77,023 contributors from the private sector.
Similarly, 9,148 workers from the Federal Government registered, while state governments recorded 11,542 contributors, bringing the total number of pension contributors from the inception of the scheme in 2004 to 7.6 million.
As at the end of November 2017, total pension assets managed by Pension Fund Administrators had grown to N7.41 trillion out of which N6.28 trillion has been invested in Federal Government securities, equal to 70.67 percent.
The data revealed that N662.72 billion, which is 8.95 per cent of the funds was invested in domestic ordinary shares; while N102.89 billion, amounting to 1.39 per cent was invested in foreign ordinary shares.
Furthermore, N148.21 billion (2.00 per cent) is in State Government’s Securities. Corporate Debt Securities got N255.21 billion (3.44 per cent); Supra-National Bonds got N11.33 billion (0.15 per cent); commercial papers, N44.59 billion ( 0.60 per cent) and BanksN564.68 billion (7.62 per cent).
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