The Acting Director-General of the National Pension Commission (PENCOM), Mrs Chinelo Anohu-Amazu, has explained that the purpose of the Nigerian Pension Reform was to change the retirement experience of Nigerians and to develop better investment plans for pension funds, a mission they aimed to boost by hosting the World Pension Summit.
She spoke from the Abuja venue of the World Pension Summit Africa, during the special broadcast of Channels Television’s Sunrise Daily, where she disclosed that the mission of the summit was to create a platform to discuss retirement issues with a plan to ensure that pension funds in Nigeria serve their real purpose of helping retirees prepare for the future.
The World Pension Summit Africa had been going on in Amsterdam for 10 years but was coming to Africa for the first time with the theme, ‘Shaping The Future’. Part of the reason, according to her was “in recognition of Nigeria’s growing importance in the utilization of pension funds for the larger economy.”
She debunked reports that pension funds had been locked down, explaining that there had been strict regulations of the funds to ensure that it was well managed. She explained that the primary objective of the funds was for them to be available for the retirees at any time; therefore the mode of investing it must be regulated to have this mission well accommodated.
She noted that the employees’ contributions have been increasing and the regulators have been more interested in the safety of the funds in terms of investment.
The World Pension Summit, according to her, would be out to come up with innovative ways to utilize the funds in line with existing regulations – to design safe responsible instruments that would ensure that the Nigerian retirees truly get the benefits of their long term contributions.
There has always been the need to provide more information to Nigerians about the benefits of their pension savings and other details like the retirement age and processes involved. Mrs Anohu-Amazu revealed that there were already nearly 6million retirement savings accounts in the country, but with a working population of about 50 million people, indeed there was still need to give more sensitization to the Nigerian people.
She said that this borders more on general financial literacy education for all Nigerians to enable them make informed choices, adding that it was important to get the youths to understand the importance of pension savings early enough.
“The younger they are, the more they can save till their retirement age. A lot of young people nowadays, when you say pension they think ‘that has nothing to do with me, I’m not getting old yet’ but the beauty of the contributory scheme is that you start from day one to contribute towards your future.
“Those are probably the ones that will get the greatest benefits out of this system because they would have contributed for longer, their funds are invested for longer, so at the end of the day they would have a lot more to go with”, she explained.
She, however, expressed optimism that the commission would get more Nigerians among the 44million working population yet to sign up for pension contributions and also achieve more useful investments of those funds within the next decade.
She also explained the modalities for contribution, as this remains the area where information has always been needed; explaining that the contributory pension system was what the pension reform introduced.
“There’s a percentage contributed by the employer and a percentage contributed by the employee. In the 2004 Act, it was half-half – 7.5% for both (the employer and the employee).
She also added that this was just the minimum requirement according to the law, as some employees decide to contribute more, while some employers have also volunteered to contribute the entire 15% contribution on behalf of their staff.
The laws have also stipulated that all companies with more than 3 persons working for them must register with the pension fund to ensure that they and their staffs contribute. She admitted that this has been a challenge especially in terms of monitoring but that the commission has been working in partnership with other relevant agencies like the Corporate Affairs Commission.
She iterated, “these funds belong to the pensioners” and the PENCOM remained particular about doing all that is required to ensure that the retirees get their money as and when due. They are poised to ensure that pensions are paid directly to bank accounts and that no retiree would be made to queue for his or her entitlement.
The World Pension Summit ‘Africa special’ is billed to hold in Abuja between Monday, July 7 and Tuesday July 8, 2014.
This post was first published on Channels TV HERE