Stanbic IBTC Pension Managers Limited, a member of Stanbic IBTC Holdings PLC, has described the proposed micro pension scheme as having the capacity to deepen asset accumulation in Nigeria, which will also provide the vital capital required for investment in critical sectors of the economy.
Chief executive, Stanbic IBTC Pension Managers Limited, Eric Fajemisin, said as an initiative designed to cover over 70 percent of Nigeria’s working population in the informal sector, the mini or micro pension scheme offers enormous benefits to the society, even though there are also some challenges.
Fajemisin, who spoke during an interactive session with the media in Lagos, also reviewed some provisions of the 2014 Pension Reform Act and the impact on the Contributory Pension Scheme (CPS).
The micro pension scheme, when finalized, would ensure improved standard of living for the elderly, guarantee the safety of funds and may provide access to other incentives, such as mortgage facilities and health insurance, Fajemisin stated. Other benefits would likely include flexible contribution remittances, the opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion and attainment of economic stability objectives.
On the other hand, the initiative faces such challenges as insufficient awareness and negative perception towards pensions, modest financial literacy in the country, the high cost of carrying out awareness of the CPS, lack of reliable data on the informal sector and low buy-in by unions in the sector, among others. These challenges, he noted, are expected to be addressed prior to commencement of the scheme and thereafter.
On the enabling law, the Stanbic IBTC helmsman noted that the introduction of more stringent penalties for erring operators and directors, especially as it relates to mismanagement of funds, has engendered greater corporate governance, making it almost impossible to misapply pension funds by anyone. By increasing the contributions of the employer and employee to 10 and 8 percent respectively, Fajemisin said the Act has ensured the availability of more benefits to contributors at retirement. In addition, the Act makes the non-remittance of employees’ contribution by the employer an offence which the National Pension Commission (PenCom) can prosecute in court.
Amongst its provisions, which expanded the coverage net, private sector organizations with just three employees or more are now free to register under the scheme; while the law also compels an employer to open a Temporary Retirement Savings Account (TRSA) on behalf of an employee that fails to open a Retirement Savings Account within three months of being employed.
Fajemisin restated that the CPS, with 7.3 million registered Retirement Savings Account (RSA) holders, presents a clear path for employees to maintain and enjoy a life of comfort in retirement. He said as people head towards retirement, a decision about the type of life they wish to live in retirement should not be made from the hip, but rather through a well-structured financial planning process. The process, he said, should commence from the day one takes on a first job and it involves setting aside part of current income into a retirement savings account.
Stanbic IBTC Pension Managers Limited, he assured, remains committed to rendering impeccable service to its clientele. “We make a promise to our clients: that they will retire very well. It is a promise we keep. That explains why we are represented in virtually every part of Nigeria, so that our customers will not have to go over long distances in order to meet with us. Retirement is a time to rest and enjoy the fruits of your labour,” he said.
Since the Pension Fund Administrator (PFA) commenced operations in 2006, Fajemisin said the firm has paid over N204 billion to retirees, paying approximately N2.6 billion to over 42,000 retirees monthly. With assets under management in excess of N1.82 trillion, the PFA currently boasts of over 1.5 million retirement savings account holders nationwide. The shareholders’ funds are in excess of N14.51billion, well above the N1 billion capital base for PFAs.
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