The nation’s pension industry currently swelling with N4.5 trillion in assets and 6.2 million registered contributors as at June 2014 has strong growth potential to be driven by a huge working population, rising per capita income and the integration of the informal sector, analysts have said.
This, they said, would, however, require that operators in the industry increase awareness, deploy cutting-edge technology to increase returns on asset and strengthen capacity through mergers and acquisition to enjoy the benefit of synergy and shared services.
Speaking at a one-day conference on ‘The Pension Reform Act 2014’ organised by the National Pension Commission (PenCom) in Lagos, Oluwatoyin Sanni, group chief executive officer, UBA Capital Plc, said that out of the 60 million workforce, only 10 percent have enrolled in the Contributory Pension Scheme (CPS), meaning that the remaining 90 percent constitute opportunity for growth.
Sanni further observed that with Nigeria’s per capita income looking positive, the economy would grow, more people would gain employment and this in turn would boost pension contribution.
She said the industry regulatory agency, the National Pension Commission, has a role to play in driving this growth, recommending that PenCom should expand and create more investment windows to enable PFAs maximise their potentials.
“PenCom must strengthen its capacity to enable enforcement of the provisions of the pension laws, particularly the Pension Reform Act 2014, so that the opportunities therein can be maximised,” she said.
Bismarck Rewane, managing director/CEO, Financial Derivatives Company Limited, who emphasised on key drivers of growth, said savings will be boosted by growing population and demographic structure which favour the middle class.
Rewane stated that this will impact positively on growth of the pension industry both in the medium and long term.
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Chinelo Anohu-Amazu, director general, PenCom, in her welcome speech called on states and local governments that were yet to adopt the CPS to quickly do so in order to avail themselves and their employees of the numerous benefits of the scheme.
“The application of the CPS by local governments has also received a boost under the PRA 2014, by setting a standard which state governments are required to comply with for the benefit of their employees”.
She said the commission has established functional offices in the six geo-political zones in Nigeria and is now strategically positioned to facilitate and offer the needed technical assistance to state and local governments in their efforts to adopt and implement the CPS.
The PenCom boss added that the amended Act has provided wider coverage for private sector employees and an upward review of the minimum rate of pension contribution, adding that the PRA 2014 has also reviewed upwards the sanctions and penalties against infractions of the provisions of the Act.
Anohu-Amazu further observed that the PRA 2014 made provision that allows contributors seeking to own their primary homes to apply part of their retirement savings account balances as equity contribution for residential mortgage, subject to the guidelines issued by the commission.
“It is our expectation that when the Act is eventually implemented, this development would assist in bridging the housing deficit in Nigeria.”
