Pencom Investigates Complaints Against Operators, Employers

It is within the powers of National Pension Commission (PenCom) to investigate complaints against pension operators and employers of labour, Muhammad Ahmad, PenCom Director General has said.
He stated this while presenting a paper on “Dynamics of the Nigerian Pension Industry” at the conference for Directors of Pension Operators organised by the commission in Lagos recently.
Apart from regulating and supervising pension schemes, he PenCom is empowered to receive and investigate complaints against Pension Fund Administrators (PFAs), Pension Fund Custodians (PFCs) and employers.
Ahmad listed other roles of PenCom to include formulating, directing and overseeing the overall policy on pension matters in Nigeria, as well as approve, license and supervise PFAs, PFCs and other institutions relating to pension matters.
The commission is also empowered to issue regulations and guidelines; maintain a national data bank on pension matters, as well as enforce sanctions and penalties.
Membership of PenCom includes Nigeria Labour Congress (NLC), Nigeria Employers Consultative Association (NECA) and National Union of Pensioners, Securities and Exchange Commission (SEC), Central Bank of Nigeria (CBN), Ministry of Finance and Head of Service of the Federation.
The PenCom boss also justified the pension reform in the country, saying it was meant to ensure that every worker receives his/her retirement benefits as and when due and assist workers to save in order to cater to their livelihood during old age.
He added that pension reform became necessary to empower workers, stem the growth of outstanding pension liability as well as establish a system that is financially sustainable, simple and transparent.
Pension reform was equally designed to safeguard pension assets and promotes savings, while also establishing uniform rules, regulations and standards for administration of pension matters as well as establishing strong regulatory and supervisory framework.
Although reforms in pension systems are a global phenomena, he pointed out most are complete paradigm shifts, while others are parametric adjustments. Several reasons inform pension system reforms of existing Defined Benefit (DB) or Pay-As-You-Go schemes. the reasons include demographic shifts due to increased ageing, increase of early retirement despite increased life expectancy and improved health profiles among older workers, climbing cost of supporting retirees and huge pension liabilities, as well as the need for sustainability of pension.
The commission’s regulatory principles are to remain and promote the independence of PenCom, to be accountable to all stakeholders and general public, as well as be accountable for its actions and be subject to public scrutiny.
PenCom seeks to mitigate greatest risks to pension assets by adopting risk-based supervision approach, ensure safety and fair returns on pension assets at least cost to all stakeholders, zero tolerance for non-compliance while remaining honest and upright in its dealings.
He further highlighted PenCom’s expectations from operators, saying the directors of pension operators bear ultimate responsibility for good governance, and that the directors must ensure skilled, experienced and competent manpower for their institutions.
Code of Conduct, according to him, are established rules of honesty, integrity and character which are necessary for a Director to hold self as reasonable, dependable and trustworthy.
As trustees, directors are public officers and where there is a conflict between self interest and public interest, the public interest must prevail, he noted.
The PenCom boss added that the operators are primarily responsible to pension plan members/beneficiaries, regulators and then shareholders.
He tasked the operators to compete on the basis of quality of service and returns, adding that they are required to understand and be conversant with laws, rules, regulations and guidelines on pension matters.
With regards to the implementation challenges being witnessed by the commission, he said it has been difficult to widen coverage especially in the informal sector due to lack of incentives, irregular income, paucity of data, and absence of payment/collection platform, among others.
Another problem encountered was in the area of funding and transferring of legacy funds and assets hitherto managed by employers, insurance companies and fund managers.