Assets under the contributory pension scheme increased by 842.73 billion naira in the first half of 2022 to reach 14.27 billion naira at the end of June.
Figures obtained from the National Pensions Commission on its “Unaudited report on the portfolio of the pension fund industry for the period ended 30 June 2022”; Approved existing schemes, closed pension fund administrators and RSA funds (including unpaid @CBN contributions and legacy funds) have been displayed.
The data showed that N9tn of total funds were invested in federal government securities, comprising bonds and treasury bills.
Other investment portfolios in which funds have been invested include domestic and foreign common stocks; corporate debt securities including corporate bonds, corporate infrastructure bonds, green corporate bonds and supranational bonds.
According to PenCom, the total number of RSA holders was 9,795,957 during the period under review.
The Pension Reform Act, which led to the CPS, was inaugurated in 2004.
It provides for a contributory system in which the employer and the employee contribute to the RSA for employees.
Funds held by pension fund custodians are managed by pension fund administrators.
Director of the Center for Pension Right Advocacy, Ivor Takor, said: “Funds are invested by pension fund trustees on behalf of workers, based on guidelines issued by the regulator.
“Investment is made with two main objectives, which are adequate return on investment and security of the fund.”
According to the Pension Funds Operators Association of Nigeria, the CPS has helped promote the culture of savings in Nigeria.
PenOp Managing Director Oguche Agudah said that before the enactment of the law, Nigeria did not have large domestic savings reserves.
He said: “Many Nigerians have no other form of savings except through this contributory pension scheme. What we should be doing as a nation is to encourage these economies more rather than seek to dismantle the system. This is probably the only form of savings that most Nigerian workers are able to set aside for their retirement years.
“In fact, what we need to promote, and the pension industry is leading, is to encourage more workers to add to their legal deductions while working, as this would allow them to consolidate their balances over time. time.
“What we need to advocate more for is consistency and discipline in contributions that will even eliminate the need for any large lump sum payments in retirement.”
Explaining how savings works for contributors, he said, “If a worker were to save 20,000 naira each month for 15 years with an interest rate of 10% per annum compounded for the 15 years, at the end of the period, he is said to have amassed more than 16 million naira. It is the power of coherence and composition that the current system offers, and which should be encouraged.
He added: “If you were rich working, healthy savings, like a pension, will make you richer. Thus, the pension will put you at ease in retirement.
The PenOp boss said that under CPS, it’s what the worker saves in their RSA plus the returns on investment they get.
The Chief Executive Officer of Achor Actuarial Services Limited, Dr. Pius Apere, said stakeholders in the Nigerian pensions industry have high expectations for the recently concluded recapitalization in the sector to ensure rapid, effective and efficient transformation of the sector to to achieve the main objective of the CPS.
The goal, he noted, is to ensure that every retiree receives their retirement benefits when they come due.
“Furthermore, they expect to have an adequate retirement income that would provide them with a sustainable standard of living (not poverty) in retirement,” he said.
Apere said the N5 billion regulatory recapitalization should lead to stronger PFAs with improved capacity for more efficient service delivery.
He said: “In other words, it is likely to create a level playing field in the pension industry where all PFAs would have the funds to deploy the right technology and embark on the development of the human capital needed to ensuring efficiency in service delivery, such as improving the transfer window.
“In the future, competition within the industry would be based primarily on efficient service delivery rather than capital. However, operators will always have different levels of capital and sizes of assets under management, which will remain a key competitive tool despite the regulatory requirement for recapitalisation.
According to him, there is a need to review the structure of investment returns and the allocation of expenses between holders of PFA and RSA in order to ensure that the expectations of retirees are met.
“In other words, a much higher percentage of the investment return on pension assets must be allocated to RSA holders to cushion the effect of inflation eroding their pension benefits,” he said. -he declares.
