PENSION Fund Managers have invested a total of N96.94 billion of the micro pension funds in government securities in the first half of 2022.
This was made known at the just concluded 2022 journalists workshop with the theme ‘Increasing Informal Sector Participation in the CPS: The Case for Micro Pension Plan,’ in Ikeja, Lagos.
In a paper presented by the Head, Investment Supervision Department, Pencom, Ibrahim S. Kangiwa, the commission said it has invested N23.78 billion in FGN Bonds, N70.05 billion in Treasury bills and N3.11 billion in Sukuk.
A micro pension scheme is a voluntary, defined contribution, individual account plan for the informal sector (or low income earners). It has no plan sponsor and allows for voluntary savings to be accumulated over a long period of time.
According to the Pension Reform Act (PRA) 2014, coverage of the Contributory Pension Scheme (CPS) has been expanded to the self-employed and persons working in organisations with less than three employees.
As this category of workers constitute the larger percentage of the working population in the country, the commission believes that to achieve the pension industry’s strategic objective of covering 30 per cent of the working population in Nigeria under the CPS by the end of 2024, all efforts should be on deck to extend coverage to this important segment of the Nigerian economy.
In addition, due to their widely dispersed nature and generally low and irregular incomes, there is need to provide a pension plan that would meet their special characteristics
According to Kangiwa, pension funds managers are ramping up their investments in government securities as their portfolio went up 6.2 per cent to N9.008 trillion in the first half of 2022, (H1’22), from N8.475 trillion in the corresponding period of 2021, (HI’21).
Pension fund assets mainly invested in the Federal Government of Nigeria (FGN) securities which accounted for 63 per cent of total assets include: FG Bonds, Treasury Bills, Agency Bonds and Green Bonds.
Meanwhile, the National Pension Commission said retirees who are entitled to less than N10,000 monthly pension at retirement can take the total money in their Retirement Savings Accounts.
The Head, Benefits and Insurance Department, PenCom, Obiora Ibeziako, said this while delivering a presentation entitled, ‘The administration of retirement benefits under the Micro Pension Plan.’
He said the commission reviewed its regulation on en bloc payment to retirees which allowed retirees with less than N550,000 at retirement to withdraw all the balance in the retirement instead of being on monthly payment.
Ibeziako said, “There is a new regulation that says if your RSA balance cannot provide one-third of the minimum wage, you are allowed to go with the balance in your account.
“If your monthly pension is not up to N10,000, which is a third of the N30,000 minimum wage, you can take all your savings.”
He explained that due to the reduction in the value of the money, it decided to review the en bloc amount which would amount to about N1.6m.
During a workshop, the Director-General, PenCom, Aisha Dahir-Umar, said the theme aligned with the commission’s objective of expanding coverage of the CPS.
The Director-General, who was represented by the Head of Corporate Communications, PenCom, Mr Abdulqadir Dahir, said the objective was to bring in to the CPS, Nigerians working in the informal sector and those who are self employed through the Micro Pension Plan.
She said, “Strategic efforts to drive the Micro Pension Plan remain one of the significant areas of focus of the commission. The MPP was conceptualised to expand pension coverage to the informal sector, including small-scale businesses, entertainers, professionals, petty traders, artisans and entrepreneurs.
“The MPP was implemented to curb old-age poverty by assisting the workers, as mentioned above, to contribute while working and build long-term savings to fall back on when they become old. To create awareness of the Micro Pension Plan, the Commission, in collaboration with the Pension Fund Operators Association of Nigeria, is currently championing an industry media campaign in major cities in the country’s six geopolitical zones.”
She noted that PenCom increased the minimum regulatory capital (shareholders’ fund) requirements of Pension Fund Administrators from N1bn to N5bn last year.
The recapitalisation, she explained, had a 12-month transition from April 27, 2021, to April 27, 2022.
“As of the deadline, all Pension Fund Administrators have complied with the commission’s directive to increase the minimum regulatory capital (shareholders’ fund) from N1bn to N5bn. The reason for the recapitalisation exercise was to ramp up the capacity of the Pension Fund Administrators to manage the increasing number of registered contributors, and the value of pension fund assets under which I am pleased to inform you stood at 9,795,957 million and N14.27 trillion, respectively, as at June 30, 2022.
“It is expected that the exercise will bring about increased effectiveness and efficiency as well as improved service delivery in the industry.”
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