It is the dream of every worker to retire when due, get necessary pension refunds, have a comfortable life and also have a decent shelter to which to return after years of service. For this reason and more, it is of utmost importance that workers’ pensions are not only kept safe and protected, but are also judiciously invested and managed by authorities in charge.
The National Pension Commission PENCOM, is the agency responsible for managing pensions in Nigeria. Recent data from PENCOM reveals that a total of 7,823,911 workers make pension contributions in Nigeria every month and as at 2006, the Commission had about 932, 435 contributors.
Speaking on some of the activities of the commission in recent times, Dr. Umaru Farouk, Head Research & Strategy Management Department, PENCOM, explained that the Commission is committed to ensuring the safety of pension assets and also facilitating and fast tracking payments to retirees when due.
Dr. Farouk spoke as a guest panellist during a webinar recently hosted by the Housing Development Advocacy Network, HDAN with theme “Housing Finance Ecosystem: Matching the Demand and Supply and the Intervention.
He stated that “We have two basic responsibilities in the National Pension Commission as regulators of the pension industry. The first one which is key and Primary is to ensure the safety of our pension assets and ensure that people when they retire, they receive their pensions as and when due.
“This is our primary responsibility. The secondary responsibility is to ensure that we create more value for people who contributed this money is into the pension funds. So that means we invest the money to generate more money for the contributors. But while we do this we must ensure that the primary responsibility is guarded strictly and religiously.”
While commenting on how much has changed in the Commission’s operation, Dr. Farouk explained that the commission had undergone a lot of transitions, built capacity and also added more value to its services.
“If you look at the portfolio of the pension funds, there was this evolution, from 2006 when the first contributions were received in May to where we are today largely because to the pension operators and the pension regulator have undergone a lot of transition and we built capacity and we can add more value. So if you look at our website you could see all the Investment regulations that we issued which shows to you the level of evolution and how fast we have been able to go” he said.
On the issue of how the monies received by the commission are invested, he noted that contrary to assumptions that PENCOM grants funds directly, the commission only grants funds when there are supporting instruments, either as a fund or a bond as contained in the Commission’s existing regulations.
“In terms of the existing regulation, we could actually invest 20% in some situations and in some other cases we could actually invest up to 24% in infrastructural development, this includes the housing infrastructure, 15% in infrastructure bonds and 5% in infrastructure funds. In some situations people go more than just 5% in the infrastructure funds or more than just 15% in the infrastructure bonds. The issue is how do we invest the monies?
“We don’t go directly cash. We don’t just give cash and say go and build a road build or build some housing units. We don’t do that. How do I refund on a bond, however you need to come with the supporting instruments either a fund or a bond then PFAs can buy into the bond or into the fund” he explained.
Speaking further Dr. Farouk hinted that PENCOM is working with the Nigeria Mortgage Refinance Company on implementation of a section of the Pension Reform Act which would allow contributors use part of their pension savings to pay their personal equity towards having a primary home.
“There is one important issue that we have been working with NMRC on. In terms of the implementation of the provisions of section 89 subsection 2 of the PRA, that section provides that contributors could actually use part of their pension savings to pay their personal equity towards having a primary home. That has not been implemented today and so many things we are waiting for the mortgage guarantee by the Central Bank.
“We haven’t really gone so far in terms of implementing section 89 (2), I know we are waiting for some feedback from NMRC to be able to review the regulation make some additions or at least come up with a working framework. So that, we are working with and I believe we are working with the right agencies in this aspect” he added.
