Pension fund operators pledge sustenance of industry gains

In the face of the many successes of the Contributory Pension Scheme (CPS) as a panacea to resolving the woes of retirees in the country, pension Fund Administrators (PFA) have been challenged to strive towards sustaining the gains of the pension industry in the last 18 years.

It would be recalled that the CPS was introduced in Nigeria in 2004 consequent upon the introduction of the pension reform act  which set the tone for a more hybrid retiree benefit scheme where upon pensioners in the country are now guaranteed of the steady payment of their pension with the institutionalization of Retirement Saving Account (RSA)

Already, there are 9.9 million Nigerians enrolled in the contributory pension scheme with the industry projecting aggregate asset base of N14.8 trillion by 2022 year end. But the commitment of the operators have culminated in the industry mobilizing N14.6 trillion by end of October this year, an indication that the industry will surpass its target before the end of the year.

Major stakeholders in the pension industry are now insisting that operators especially the PFAs must find ways of not only sustaining the gains recorded so far but to work towards ensuring for more benefits to contributors.

This, they say would be achieved through enhanced earnings on investments considering the need to ensure that the system remains liquid as to guarantee the continuous payment of the gratuities and pension for retirees.

President of President Pension Operators Association of Nigeria (PenOp) Mr Olumide Oyetan who made the observations at a recent retreat organized for media practitioners in Lagos recently stated that the pension industry can only get better.

He therefore challenge media practitioners to strive towards greater awareness on the activities of the industry especially as it relates the micro-pension and the resort to pension as mortgage in securing affordable houses for more Nigerians.

Mr Oyetan who double as the Managing Director and Chief Executive Officer of Stanbic IBTC Pension said that it will take the acceptance of the micro-pension for Nigerians in the informal sector to plan for their retirements as well as owning their own houses since holders of Retirement Saving Accounts can now approach lending institutions for mortgage loans which will help them finance the building of residential houses at less discomfort.

Explaining modalities for the engagement of the RSA in securing mortgage for financing housing project by contributors, Head of Investment Department, PenCom, Ibrahim Kangiwa, said for contributors under the Contributory Pension Scheme to be eligible to use their RSA balance for acquisition of residential mortgages, he must have contributed for five years (60 months) cumulative of employer and employee’s mandatory contributions.

He said the same thing was applicable to the contributors under the Micro Pension Plan (MPP), adding that married couples, who individually met the eligibility criteria, were also eligible.

On authorised limit for equity contribution that qualifies a contributor, Kangiwa put the maximum allowed at 25 per cent of the RSA balance, noting that “where 25 per cent of RSA balance is more than equity contribution, the RSA holder can only access the amount equivalent to equity contribution required.

“Where 25 per cent is not sufficient for equity contribution, RSA holder may utilise Voluntary Contribution (VC) in line with the Voluntary Contribution guidelines.

“Where 25 per cent is not sufficient for equity contribution, Micro Pension (MP) contributor may utilise contingency portion in line with MP guidelines.

“Where 25 per cent is insufficient as equity contribution, RSA holder shall deposit the difference with the mortgage lender,” Kangiwa explained.

Those exempted from this initiative, according to Kangiwa, include RSA holders that have less than three years to retirement; existing retirees on CPS; exempted persons under the PRA 2014 and RSA holders who do not have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months.

He said that equity contribution was not for refinancing existing mortgage, outright purchase of property and purchase of land, noting that the property shall be for residential purpose only.

Kangiwa said the objective of the initiative was to provide housing for first time home owners and improve the standard of living of RSA holders under the CPS by facilitating their ownership of residential homes during their working life.

For a better society

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