PENCOM Says Economic Meltdown, Greatest Challenge in Past One Year

Alhaji Mohammad Ahmad, director –general of the National Pension Commission (PENCOM), has identified the effects of the global economic meltdown as the greatest challenge that has confronted the pension industry in the last one year. He stated in a media forum that the challenges of the meltdown affected the investment climate in both the capital and money markets.  Notwithstanding these challenges, he explained, the pension industry in Nigeria was able to successfully weather the storm as a result of the robust regulatory and supervisory philosophy of the commission.  In spite of the prevailing harsh global financial meltdown that confronted the economy, the commission ensured the safety, sound management and growth of pension assets. The commission has also continued to keep tab on the macro-economic fundamentals such as the Nigerian capital, money and annuity markets and the reforms in the banking sector. According to the DG, “the industry has continued to consolidate on its achievements, as about 4.3 million Nigerians have registered with the Contributory Pension Scheme as at the end of July this year. There are currently about 23,000 retirees from the public and private sector under the scheme. We have collected over N65 billion as lump sum and about N800 million as monthly pension. In addition, assets worth N1.77 trillion had been accumulated as at the end of July 2010.” The DG added that one of the hallmarks of the commission’s consolidation phase was encouraging operators to merge on their own terms, adding that some of them are at various stages of the exercise. He stated that t is good to note that the commission, as the apex authority saddled with the responsibility of regulating and supervising the pension industry, has been making efforts with a view to ensuring prompt payment of retirement benefits, as well as promoting a vibrant and sustainable pension industry that would positively impact on the economic development of the country. The PENCOM boss explained that the regulatory and supervisory philosophy of the commission is risk-based and consultative and covers all activities of the commission with particular emphasis on issuance of guidelines and regulations, surveillance of licensed operators, compliance and enforcement, supervision of investment of pension funds and maintenance of a databank on pension matters. The commission, he said had in the last 12 months, continued to issue additional guidelines and regulations to further guide operations within the pension industry, so as to entrench sound corporate governance in the activities of pension operators. He stressed that some of the guidelines and regulations issued include; risk management framework for licensed pension operators, guidelines for the operation of pension transitional arrangement departments, regulations for auditing of pension funds, framework for supervision of state and local governments regulation for compliance officers. Another great poser which he admitted was that the commission also had to contend with reassuring the public of its capacity to protect the pension industry.  “In a nutshell, the commission in an effort to ensure compliance with the provisions of PRA 2004, embarked on innovative strategies such as on-site inspection of employers, collaboration with regulatory and professional bodies, public enlightenment campaigns and application of sanctions were necessary.”
As part of strategies to move the industry forward, Alhaji Mohammad reiterated the commission’s continuous collaboration efforts both with government and other agencies. He cited the support of the Bureau of Public Procurement (BPP) as a case in point, adding that it was obtained to ensure that any supplier, contractor or consultant bidding or soliciting contract or business from any federal government ministries, departments and agencies (MDAs) must fulfill its obligations with respect to pensions and must comply with the provisions of the PRA 2004 as required under Section 16(6) (d) of the Public Procurement Act 2007.   The DG added that in implementing these provisions of Section 4(1) (b) of the PRA 2004, the commission in collaboration with the National Insurance Commission (NAICOM) jointly issued the Regulation on Annuity as one of the means of expanding the number of retirement products available to retirees. This is because, while it is the mandate of  NAICOM to regulate the annuity market, it is the responsibility of the commission to ensure that the modalities for the administration of retirement benefits in respect of life  annuity is strictly followed to guarantee payments of retirement benefits as and when due. And NAICOM in this respect, in collaboration with PENCOM, has endorsed 26 life insurance companies to carry out annuity business in Nigeria. Other regulatory and government agencies such as the Central Bank of Nigeria (CBN), the Security and Exchange Commission (SEC), Nigerian Deposit Insurance Commission (NDIC), Federal Revenue Service (FIRS) and Bureau of Public Procurement (BPP) have consistent support and cooperation with the National Pension Commission in actualizing the ideals of pension reform in the country.