Lagos State is amending its pension laws to align with the provisions of the Pension Reform Act (PRA) 2014.
Despite its initiative of adopting the Contributory Pension Security (CPS) early and leading other states in pension matters, the state said it is deepening its collaboration to have a feel of the innovations coming from the National Pension Commission (PenCom) and exchange ideas with the regulator.
The scheme regulator is working with the state to implement new guidelines that have been introduced since the amendment of the PRA in 2014.
Some of the drafts and guidelines released by PenCom in recent years are the multi-fund structure; pension enhancement for retirees on programmed withdrawal; harmonization of pension entitlements; access to RSA; the mortgage option and minimum pension guarantee.
Lagos State Pension Commission (LASPEC) Director-General, Mrs. Folashade Onanuga, said it was cogent to update the state government officials in charge of pension matters on innovations in the PRA 2014.
She noted that PenCom is the national regulator of the CPS while LASPEC is Lagos State regulator. “We need to have a feel of the innovations coming from PenCom to exchange ideas as state regulators. We understand that everything the state tries to do is to benefit the workers and we need to do this within the confines of the CPS.
“The state is also sensitizing the parastatals and agents of government on the need to comply with the Group Life Insurance Policy.”
PenCom Southwest Zonal Manager, Mr. Babatunde Philips, while speaking on one of the guidelines, said the Commission released the amended regulation on investment of pension fund assets in 2017.
He said the new investment guidelines introduce a multi-fund structure, which replaced the former structure that put all active contributors into one Retirement Savings Account (RSA) fund without consideration for age or risk profiles of such contributors.
“Under the new structure, all PFAs offer the multi-fund structure for the RSA, which comprises four funds and differs based on overall exposure to variable income instruments. The different funds are made to fit the ages and risk profiles of contributors.
“The fund types include Fund I, which is for young contributors based on choice; Fund II for young and middle-aged contributors (49 years and below); Fund III: for pre-retirees (50 years and above) and Fund IV for retirees”.
Speaking on pension enhancement, he said there has been clamour for enhancement of pensions under the CPS, and PenCom addressed this after looking at the appreciable growth in the RSAs of retirees.
“The commission developed a framework to set out the modalities for enhancement of the pension of retirees on PW under the CPS based on surpluses generated from return on
Investment on retirees’ fund,” he added.