PenCom will continue to protect N18trn pension assets- Dr. Aisha Dahir-Umar, DG, PenCom

The Director General of National Pension Commission (PenCom), Dr. Aisha Dahir-Umar, says the Commission will do everything within its mandate to protect pension assets.

In a media parley with business journalists in Abuja, Dahir-Aisha, who was represented by Head, Corporate Communications Department of PenCom, Ibrahim Garba Buwai, also revealed that a total of N12.9 billion in principal contributions under Contributory Pension Scheme (CPS) and N12.5 billion in penalties have been recovered since 2012.

What is the current state of pension assets in Nigeria?

Today, pension assets are in excess of N18 trillion. I want you to understand that those pension assets do not exist in isolation. While we are happy that the pension assets should be in the public domain, that is the first proof that the Contributory Pension Scheme is working transparently.

The main issue we had in the past where people were helping themselves with pension money no longer exists. It is also against the backdrop of a similar scheme that was attempted in other sectors in Nigeria how they ended up.

For the first time, a scheme that is based on funds that is being managed by private operators has come this far and has succeeded, has remained solid and strong, confirmed by the consistent rise of pension assets.

What I want to draw your attention to is that the pension assets are not the news. The news is that every kobo of that N18 trillion actually belongs to a Retirement Saving Account (RSA) holder, a worker or a retiree.

These funds are consistently invested and the returns are automatically distributed back to the RSA holder except for the little allowable charges for the management and distribution of the pension funds. I want us to follow it in that it belongs to pension contributors and retirees.

As of today, we have 10.1 million contributors. What I am saying is that the N18.1 trillion belongs to the 10.1 million contributors and that there is no free money for anybody out of these assets.

Both as a regulator and the operator, our primary responsibility, that we have a fiduciary responsibility to carry out on behalf of these contributors and these retirees to ensure that these funds are safe, these funds are efficiently and effectively managed, and that they are available to be paid as retirement benefits to be paid as at when due.

I will commend you for the positive reportage of the activities of PenCom and pension industry and to assure you of the consistent support of the management to the media. Recognizing that the media is a good partner that will help us spread the message, so that we can reduce the gaps that the public has about the Contributory Pension Scheme. On our part, amidst challenges that exist, we would still see how best we can deepen the partnership.

There has been so much talk about using pension funds to address Nigeria’s infrastructure gap. Why are we not seeing much traction in that regard?

I know that if the headline reads pension funds to be invested in infrastructure, the public becomes jittery and wary because the thinking is that money is going to be given out as a contract by the government to somebody to construct roads or whatever. Nothing could be further from the truth.

As far as pension funds are concerned, you know they are invested in various investable outlets. The infrastructure funds and infrastructure bonds are just investment outlets. The story here is about structuring.

Direct investment in infrastructure is not allowed, and that is what takes care of your concerns and the concerns of the public that the funds are going to be lost, meaning being out of pension money and giving it to A to go and build a house or road, no! But by the time you go through this structure, it is investment professionals that give you a host of guidelines; unfortunately, because the guidelines are stringent that is why we are not seeing much traction on our part, because the safety of pension funds remains the cardinal principle of our regulations. We are not wavering; we have not made it lax or easy.

All those stringent guidelines are thoroughly outlined so that pension funds might be protected. In the event that these investment instruments might be available, those stringent requirements remain.

All we know is that if the pension funds are available, pension funds managers will review and take their decisions. I have to also clarify that PenCom does not partake in investment issues on the pension funds. All we do as regulators is that we set out general guidelines as contained in our investment regulations.

So, anybody that comes to us says, I want to float this, and this, we say take the regulations. All the requirements are there, if the instrument meets the requirement, the PFAs know. They will take their individual decisions whether to invest or not. But on our part, we do not tell PFAs not to invest in A or to invest in B. As long as they comply with those guidelines, they are good to go.

If they don’t, we know because we receive daily valuation reports. Not even weekly. The implication is that we are able to see if there is a deviation. It wouldn’t take one week or one month, harm will not be done before we see it and take the necessary action that we need to take. Since we are seeing the daily transactions, if you do it today, we ask you to reverse it tomorrow without the damage crystallizing, for instance. That is what it is regarding infrastructure.

What is PenCom doing to ensure employers remit deductions from employees?

Our enforcement and compliance department continues to come out with strategies that would ensure that. But practically speaking, you know we have millions of employers. If you look at the corporate guidelines, any organisation that has at least three employees, so, if you go by that, you will realise that employers are in the millions.

There is the issue of the capacity to move around millions of employers. That is why in the issue of remittance, the RSA holder has a very strong role to play because these remittances ultimately belong to you as the worker.

If you realise that these remittances are not done, you have the responsibility to complain to PenCom. You can write it as anonymous; you can use a whistle blowing framework, for example. That is not saying something is not being done.

We have recovery agents that have been appointed, there are not so many actually, and this recovery process started in 2012. We continue to move around organisations.

When they go to assigned organisations, they have the mandate to review the records in relation to pension payment so that they can flag off these non-remittances. But for non-remittances, employers themselves, employees can also do well to educate them on the implication of non-remittances.

Under the pension reform act, which is a provision that we will continue to enforce, late remittances attract penalties, attract interest. So that we can make good what the employee lost and it’s at the rate of 2% per month.

If you calculate 2% by 12, for every month that you default, a penalty for that amount will be computed. When you look at our latest figure in terms of the recovery, from the inception of the exercise in 2012, you will see that the difference between the remittances and the penalty is almost neck to neck.

For example, if it was supposed to be N100 that should be the remittances, you will see that that N100 has been recovered and there is a penalty of maybe N60 over the long period. So, the issue of remittances is being given a lot of emphasis.

I will also quickly add that on the issue of uncredited contributions, we have the issue of employers not remitting. Second issue, employers remitted but if there is no company schedule that shows the employers that these monies belong to, PFCs cannot apportion to RSA holders.

We are not happy and that is why in 2023, we put out a statement on it and on our website, we have a long list of remittances that we saw were uncredited calling on the people concerned to come forward and make sure the remittances are done.

From the inception of these recovery agents programmes in 2012 to 31st December, 2023, the principal contributions that were recovered were about N12.9 billion while the penalty was about N12.5 billion.

So, you can see that it’s almost 50-50. All this is what has been recovered from employers and paid into RSAs. The good thing is that all this penalty and principal goes into the individual RSA individual account. Nobody takes a penny, not PFAs, not PenCom, nobody. All these money recovered were for RSA holders and it goes into RSA. What you can help us by way of employers is that it is not in their interests not to remit because it is cheaper to remit than not to remit.

Nothing much is being heard about the Micro Pension Plan. Can you bring us up to speed on the latest development in that regard?

The micro pension plan is supposed to provide a window for people in the general informal sector and other trades that are not covered like the artisans or say the lawyer that has an accountant and one other person.

It gives them the opportunity to save for retirement. While a lot of effort continues to go into enlightening that sector so they know the micro pension plan exists, both PenCom and the pension operators are collaborating in terms of ensuring that they enlighten people not only through the media but through participation in things like trade fairs, road shows.

But, I think the road is still far. Since the micro pension started, there are about 100,000 RSA that have been opened and the contribution is just over N500 million. That is to tell you that there is still a long way to go. But what we can do on our part is just to continue to enlighten people, to show them that the micro pension plan recognises the level of the participants.

It has been designed to take care of the peculiarity of that sector. Unlike the mandatory contributory pension scheme, under the micro pension plan, whatever you contribute gets split into 60/40 per cent.

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Sixty percent is locked for pension while 40 per cent is contingent withdrawals recognising that people in that state need can arise. You will be allowed to access 40 per cent of what you contribute. Most times in our life, it is hard for people to save for the future, preferring to say, it is what I see today.

But the future is real, if God gives us a long life. The future is something that is going to happen and it’s easier when someone still has the strength when they are working they set something aside. You’ll be amazed as to how these monies can multiply over a person of maybe 20, 25, 30 years.

You’ll be amazed at what the careless N500 can become. For those under mandatory pension, the platform that you can use to save more is to do it under your mandatory RSA contribution.

You can do an additional voluntary contribution month. Out of that your salary, you can ask your employer to remit additional 5,000 every month. You will be amazed at the big cut it can turn out if you do it over time.