Pension sector in 2019 and tasks ahead Dahir-Umar in 2020

Although the pension industry experienced some hitches in 2019, however, the most remarkable the highlight of the industry in the year is the continued growth of pension assets which now stands at N9.81 trillion as at 31st October 2019, according to latest statistics from the National Pension Commission.

Only in October pension assets grew by N228billion which represents N1.27trillion growth over the period of 10 months as pension assets stood at N8.6 trillion in the preceding year, Daily Times observed.

A breakdown of the pension fund assets growth shows that the country’s pension assets grew by 22 per cent and 14 per cent in 2017 and 2018 respectively, and have so far grew by 13.59 per cent in 2019.

This situation which many industry players and stakeholders attribute to the Pension Fund Reform Act (PRA) which was enacted in 2014 as well as the massive sensitization on the need for civil and public assets to invest before retiring for. As a result, senior citizens are becoming more proactive in retirement plans and coverage by pension plans, which has directly resulted in increased contributions.

Also, analyst believe that the operating environment has quite maintained a suitable trend with the exemption of the investment horizon, which has been significantly affected by the slip of Nigeria’s economic indicators. This has affected the universe of eligible securities and marked a major shift away from the Capital Market due to the significant decline of the All Share Index.

Also, the growth was attributed of the PFAs in FGN securities and the relatively very high yields during the year, while investments in equities came down to just below 5 per cent in October due to the prevailing performance of the stock market indices.

Task before Dahir-Umar

Although, PenCom headed by Aisha Dahir-Umar have embarked on different reforms that have ensured the upward growth of pension assets across the country, however, there are some challenges which stakeholders have maintained their worry about.

For instance the constant delay as well as non-payment of pension entitlements and misappropriation of existing pension funds.

Similarly, Consistent and frequent verification of pensioners across all regions in the country by Pension Transitional Arrangements Directorate (PTAD) (section 42 of PRA 2014) leading to pensioners dying during verification exercises, thereby calling for a more digitalized system to reduce the burden of frequent verification.

Also, In the area of pension enforcement, many stakeholders have criticized the National Pension Commission over inadequate enforcement of the pension regulation.

Subsequently, over 10 years of existence of Contributory Pension Scheme, the majority of state governments had not enacted their pension laws to establish the CPS which many experts believe it’s a sign of regulatory weakness to enforce compliance.

Also, there is a rising concern on exact valuations of the old death benefits schemes required by the National  at the point of implementation of the new Contributory Pension Schemes have not been carried out even for those State Governments that have already established their CPS.

PenCom’s efforts

With the successes recorded especially in growing the pension fund assets, PenCom has also, beam its searchlight on other areas which include growth in Micro Pension Plan, Strict regulation of Pension Fund Administrators, ensuring the growth of Retirement Savings Account registration among.

On Retirement Savings Account RSA, it is understood that registration by Nigerian Pensioners have also been noticing a constant growth.

Also, the Acting Director-General of the National Pension Commission, Aisha Dahir Umar has only recently affirmed the growth.

“On RSA, the registration has grown by an average of 40,000 new contributors on monthly basis in 2019.

“Total registration was about 8.8 million RSAs as at 31 October 2019, which was very far away from reaching the target of 20 million RSAs by the end of 2019 as aimed under the Commission’s Corporate Strategy.

“Indeed, the late commencement of the Micro Pension Plan was a factor in this development, but it is expected that the registration would be greatly enhanced from the first quarter of 2020 when the Micro Pension Plan is fully implemented,” she said.

Also, Daily Times understands that multi-fund structure performance has also maintained a positive growth.  The structure is fund-based has so far showed that the conservative funds, Funds III and IV, had performed better at around 13 per cent (annualized).

Also the PenCom DG recently revealed the Enhanced Contributor Registration System has been completed and the recapture exercise has commenced.

She however noted that only recaptured RSA holders will have the opportunity of transferring their RSAs, adding that “Unlike banks, the asset transfer will involve cash transfers and transfers of other assets. Thus, it is imperative that care is taken in coming up with a strategy to effectively do the asset transfers,”

She said PenCom had already presented its plan to Pension Fund Administrators to also harmonize their views as the transfer window is expected to be opened within the second quarter of 2020.On PenCom’s plan for 2020, Aisha Dahiru had stated that “The Commission would continue to strengthen its processes and institutional framework to ensure continuous consolidation of the gains of the pension reforms. We shall continue to ensure sound corporate governance in the industry through full compliance with the reporting standards. 
Also, a special focus will be given to the development of eligible instruments for pension fund investments in alternative assets, which would drive economic development in the country.”

Speaking further, the head of the pension industry regulator believes that the framework for the implementation of non-interest Fund will be completed and implementation is expected to commence before the end of the second quarter of 2020.

This she said drive for the full implementation of the Micro Pension Plan, adding the Commission will develop a tangible parameter in effectively assessing the performance of Pension Fund Administrators.

With a well drawn plan for the year 2020, industry players, stakeholders and pensioners expect positive deliverable and that the acting director-general matches her words with actions.