In this article, MARK ITSIBOR points to the indicators that would make it impossible for PenCom to achieve its aim of producing a pension industry with up to 20 million contributors to deliver measurable impact on the economy.
When the National Pension Commission (PenCom) released its first quarter report for 2018 recently, it became crystal clear that the 20 million contributors target set for the industry to achieve by 2019 is not feasible. In the eyes of industry watchers, that target of enrolling 20 million contributors across public and private sector may just be a mere wish that would not match reality.
The report has it that the industry recorded 1.93 per cent growth in the scheme membership during the first quarter of 2018, moving from 7.89 million contributors at the end of the preceding quarter to 8.04 million in the first quarter of this year. That growth was driven by the Retirement Savings Account (RSA) Scheme, which had an increase of 152,065 contributors representing 1.94 per cent, the report said.
The cheers of that achievement was however put off by the fact that membership of the Closed Pension Fund Administration Scheme (CPFA) declined by 41 members (23,656), while the Approved Existing Scheme (AES) membership remained unchanged (either positive or negative) at 40,951. A breakdown of the RSA registrations indicates a 1.09 per cent (38,006) increase in RSA membership from the public sector during the first quarter of 2018 to stand at 3,516,873.
The growth from 7.89 million contributors to 8.04 million represents 0.15 per cent increase, which industry experts said was too little to drive the desired growth rate. Report for the just ended second quarter is yet to be released. PenCom and other players in the industry need to achieve 1.72 per cent membership enrolment every quarter from the second quarter of 2018 to the last quarter of 2019 to capture the balance of 11.96 million contributors to meet the 20 million enrolment deadline. Experts said that would be extremely difficult.
As the pension regulator shows commitment to maximise the potentials of the industry in Nigeria by engaging the underserved formal sector market, rolling out specific products and services targeting the unreached informal sector to cater to its unique needs, there are indications that the lackadaisical attitude of stakeholders in the industry, particularly State governments and a host of corporate organisations remains a major challenge.
For instance, as at the first quarter of 2018, only 27 states have enacted laws on the Compulsory Pension Scheme (CPS), while eight states were at the Bill stage. The report said one State was yet to commence the process of enacting a law on the CPS. A breakdown of the level of implementation of the CPS showed that 11 states: Lagos, Ogun, Kaduna, Niger, Delta, Zamfara, Osun, Rivers, Kebbi, Ondo and Anambra had commenced contribution into the CPS. Out of the 11 states, Zamfara, Kebbi and Ondo states are even yet to fund their Accrued Rights, while the other nine states are the only ones funding their Accrued Rights in the entire country. On the other hand, Rivers, Osun, Niger and Lagos States are the only states to have implemented Group Life Insurance in Nigeria as it stands.
More worrisome is the fact that while Jigawa State has only had its assets transferred to 6 PFAs for management, Kano State is yet to transfer its assets talk less of commencing funding of its share of the CPS.
Some concerned Nigerians told LEADERSHIP that there was truly a semblance of a deliberate attempt to rape the future of Nigerian workers by most state governments. For instance, 23 states have neither commenced remittance of pension contributions, fund Accrued Rights or implement Group Life Insurance in their various states. The states are: Imo, Sokoto, Ekiti, Kogi, Bayelsa, Nasarawa, Oyo, Katsina, Akwa-Ibom and Edo. Others are Benue, Kwara, Plateau, Cross River, Enugu, Abia, Ebonyi and Taraba. From Bauchi, Bornu and Gombe to Yobe and Adamawa, remittance of pension contributions, funding Accrued Rights or implementing Group Life Insurance is not a priority. But Imo State University is currently implementing the CPS under the auspices of the PRA 2014.
According to a pension expert, James Odidi, PenCom would need to get other states to take a cue from Lagos in its quest for 20 million membership enrolment ahead of 2019.
The report further revealed that twelve (12) out of the 36 states had commenced remittance of contributions into the RSAs of their employees. Similarly, eight states have commenced the funding of their Retirement Benefit Bond Redemption Fund Accounts (RBBRFAs).
According to the PenCom report, private sector did better in the period under review as membership rate increased by 2.63 per cent (114,059) in the quarter under review, which brought total registrations from this important sector to 55.91 percent (4,459,103) of the total RSA registration as at the reporting period, moving from 4,345,044 in the fourth quarter of 2018. This can be attributed to the increased level of compliance by the private sector as a result of the various steps taken by the Commission to improve compliance and coverage, as well as marketing strategies of the PFAs.
Membership from the private sector increased by 2.63 per cent (114,059) in the quarter under review, which brought total registrations from this important sector to 55.91 per cent (4,459,103) of the total RSA registration as at the reporting period, moving from 4,345,044 in the fourth quarter of 2018. The growth was attributed to “the increased level of compliance by the private sector as a result of the various steps taken by the Commission to improve compliance and coverage, as well as marketing strategies of the PFAs.”
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