Matthew Otoijagha
With Assets under Management (AUM) in excess of N2.53 trillion and over 1.6 million retirement savings account holders nationwide, Stanbic IBTC Pension Managers Limited, said it is adequately prepared to maximize opportunities accruable from new initiatives to be implemented by the National Pension Commission (PenCom).
Speaking during a media interactive session in Lagos today, the Chief Executive, Stanbic IBTC Pension Managers Limited, Eric Fajemisin, described the measures taken by PenCom to sustain growth of the Nigerian pension industry as apt, stressing that the micro pension scheme, multi-fund investment structure and Pension account transfer window, to mention but a few, are among initiatives capable of putting the sector in stronger footing going forward.
He said such reforms and innovations are necessary to maintain the strength and depth of Nigeria’s Contributory Pension Scheme (CPS). The session was one in the series of strategic approaches by the PFA to engage industry stakeholders on ways to strengthen the Nigerian pension industry and boost wider participation by Nigerians.
Fajemisin noted that the Retirement Savings Account (RSA) Multi-Fund Investment structure, billed to become operational from July 1, 2018, which replaces the “one-size-fits-all” arrangement that puts all active contributors into one RSA Fund, would resolve the challenge of asset-liability risk management faced by the operators.
By aligning the age and risk profile of RSA holders to match the four funds, contributors would have a better chance to earn improved returns on their investments in proportion to their risk appetites
The different categories of the multi-funds structure are Fund 1, Fund 2, Fund 3 and Fund 4. Fund I is targeted at people of 49 years and below who in the quest for higher returns are willing to take more risks. Fund 2 is aimed at people who are aged 49 years and below and still working but are satisfied with moderate returns and levels of risks.
Fund 3 targets people 50 years and above but still working and have very low risk appetite. In Fund 4 are retirees who have the lowest risk profileof all categories. Among its other benefits include improved standard of living for the elderly, safety of funds and access to other incentives, such as mortgage facilities and health insurance.
Speaking on the micro-pension scheme, Fajemisin said it would help in deepening asset accumulation in the country, and provide the crucial capital required for investment in critical sectors of the economy. As an initiative designed to cover an estimated 70 percent of Nigeria’s working population in the informal sector, the scheme offers enormous benefits to the society and ensure improved standard of living for the elderly, guarantee the safety of funds and may provide access to other incentives, such as mortgage facilities and health insurance, regardless of challenges associated with its seamless implementation.
On the proposed pension transfer window, which allows a RSA holder to switch PFA once a year, the Stanbic IBTC Pension helmsman said it would deepen the democratic space in the pension industry as well as encourage healthy competition, resulting in further transparency and accountability, which would in turn enhance efficiency, innovation and service delivery.
Fajemisin also reviewed the 2014 Pension Reform Act and the impact on the CPS. On the enabling law, he said the introduction of more stringent penalties for erring operators and directors, especially as it relates to mismanagement of funds, has engendered greater corporate governance, making it almost impossible to misapply pension funds by anyone.
By increasing the contributions of the employer and employee to10 and 8 percent respectively, Fajemisin said the Act has ensured the availability of more benefits to contributors at retirement. In addition, the Act makes the non-remittance of employees’ contribution by the employer an offence which the regulator can prosecute in court.
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