Facts emerged on Thursday that the contributory pension has hit N14.5 trillion being regulated by National Pension Commission (PENCOM).
The PENCOM Director General, Aisha Dahiru-Umar, who gave the details during an interactive session on the 2021/2022 budget defence and presentation of the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the House Committee on Finance.
She said: “By the provisions of the Establishment Act, all income earned from investment earned from the Retirement Savings Account are credited back to the RSA of the contributors. Nobody takes a single kobo from it. However, the Commission and the Pension operators are allowed to charge fees on the fund under management and that is what we survive on.
“For example, the total asset under management is now N14.5 trillion made up of three funds. One is the Retirement Savings Account Fund, the other is the Closed Pension Fund Asset and the Assets in Existing Scheme.
“Out of the N14.5 trillion, the RSA fund is about N11 trillion, the CPFA has N1.5 trillion and the AES has about N1.4 trillion. These monies are on the account of contributors. It is not been kept by PENCOM, it is not been kept by the PFAs. It is not anywhere but the account of the contributors, just like the commercial banks.
“We charge fees as follows. PENCOM charges on the RSA fund 0.2 per cent, while the PFAs charge 1.2 per cent and the PSCs charge 0.25 per cent. Those percentages are charged on a daily basis and then divided by 365 days because if you wait to do that the end of the year, it is going to be higher and the RSA account holders will be cheated.
“The commission is mandated by the pension reforms act to charge these fees to enable it generate enough revenue to meet its personnel and operational cost. It is also to rid the government of the burden of funding the commission.
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“We also charge fines which we collect from the operators when they break certain rules. We use what we called a sanction regime to guide us on what they should pay when they break the rules. There are also one-off charges like licensing fees which N500,000. All these monies are paid into the CBN account.”
However, the lawmakers who spoke during the scrutiny of the Commission’s accounts, demanded for details of total sum of N14.594 billion spent on personnel cost for 500 staff as well as N2.3 billion end of year benefits, out of which the sum of N12.02 billion is for staff salary and N2.5 billion for other staff costs.
According to the document seen by Nigerian Tribune, the Commission’s personnel cost rose from N12 billion in 2021 to N17 billion in 2022 and projected N21.5 billion in the 2023 budget proposal submitted to the Budget Office.
The lawmakers who demanded the Commission’s audited accounts also queried the N1.715 billion on administrative expenses.
The lawmakers also expressed displeasure over the sum of N1.1 billion remitted out of the N4 billion operating surplus declared by the Commission, while the sum of N20.8 billion was generated in 2021.
The lawmakers who accused PENCOM of breaching extant financial regulations and the provisions of the 1999 Constitution (as amended), argued that as a fully funded agency, the Commission is under obligation to render its accounts to the Accountant General of the Federation, Auditor General of the Federation as well as Fiscal Responsibility Commission in line with extant laws.
Speaking earlier, Dahiru-Umar disclosed that the Commission incurred expenditure worth N16.31 billion in 2021 and recorded N4.45 million as operating surplus.
To this end, the Committee which issued a seven-day ultimatum to the Commission to submit relevant documents for further legislative scrutiny also directed Fiscal Responsibility to submit the report on the reconciliation with various ministries, Departments and Agencies within one week.
Trouble started when, Chairman, House Committee on Tertiary Education, Hon. Aminu Suleiman (APC, Kano) alleged that each staff earns an average N2.4 million per annum.
In a swift response to his submission, Dahiru-Umar who disagreed with the calculation of the lawmaker stated that the item highlighted encompasses all allowances, including training.
“Personnel cost is not restricted to salaries, we have about 14 items here. The salaries, the allowances—both the training, allowances and others come under this. Nobody earns a million in PENCOM from the DG downward. Maybe we are doing it wrongly. However, we categorize everything as personnel cost,” she said.
However, the 2021 Appropriation record showed that from the total sum of N16.310 billion earmarked for personnel cost, the sum of N10.151 billion was for staff salaries, N1.980 billion was for other staff costs.
In the same vein, out of total sum of N5.481 billion earmarked for overhead cost, the sum of N235 million was spent on capacity building, N244.445 million spent on premises expenses, N501.175 million was for miscellaneous expenses, N1.678 billion was spent on Admin expenses, while the sum of N1.105 billion was spent on operational, monitoring and supervisory expenses.
For the 2022 half year, the Commission has so far spent the sums of N507.157 million on capacity building, N189.070 million spent on premises expenses, N498.171 million out of N1.715 billion proposed as for Admin expenses; spent N240.926 million out of N499.143 million as miscellaneous expenses, while the sum of N1.961 billion spent so far on operational, monitoring and supervisory expenses, out of N2.157 billion captured in this year’s Appropriation Act.
Unsatisfied with her explanation, Hon Suleiman said: “Everyone knows what constitutes personnel cost. This is a personal emolument to personnel. You cannot bring other components of your expenses here. I will ask that she supply the details of the per head of all the staff.”
Speaking further Hon. Saidu Abdullahi who presided over the session warned the Commission not to reflect some of the subheads captured in the 2022 Appropriation Act such as procurement of computers, furniture and software, among others.
While expressing grave concern over the inability of the country to generate adequate revenue to fund its budget over the years, Hon. Abdullahi observed that South Africa has been able to generate N40 trillion against Nigeria’s N6 trillion revenue, hence stressed the need to block leakages and reduce costs.
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