Introduction
THE Act establishing the National Pension Commission (PenCom) stipulates on Section 18 that “The principal objects of the Commission shall be to (a) enforce and administer the provisions of the the Act; (b) Co-ordinate and enforce all other laws on pension and retirement benefits; and (c) regulate, supervise and ensure the effective administration of pension matters and retirement benefits in Nigeria”.
Section 36(1) of the PRA 2014 mandates the Commission to submit annual reports to the President and the Public Accounts Committees of the National Assembly. Apart from the mandatory annual report, the Commission also publishes quarterly and monthly reports of its activities and other relevant information on the pension industry on its website.
In January 2021, we highlighted some activities of the Commission during the 3rd quarter of 2020 as obtained from information provided by the Commission in its 3rd quarter report posted on its website. Today we will be highlighting some of the Commission’s activities, during the fourth quarter of 2020. This is also based on information provided in the Commission’s 2020 4th quarter report.
Surveillance of the Pension Industry
The Commission could not conduct On-Site Examination of Pension Fund Operators in the fourth quarter due to the Covid-19 pandemic. However, the enhanced Off-Site Surveillance of Pension Operators continued through review of the monthly reports submitted by the Operators. The review indicated that Pension Fund Operators substantially complied with extant laws and regulations issued by the Commission.
Update on off-site examination of States Pension Bureau/Boards
In the fourth quarter of 2020, the Commission conducted off-site review of the implementation of the CPS in seven (7) states, namely; Ekiti, Delta, Osun, Lagos, Ondo, Edo, and Kebbi. Emphasis were on the remittance of pension contributions, payment of pensions under the Defined Benefit Scheme, payment of accrued rights as well as the receipt and utilization of administrative fees.
The review noted the gaps in the monthly pension remittance to RSAs of employees of various states as well as the delay in the payment of accrued rights to retiree. There were also issues of inaccurate data on schedules accompanying pension remittances and other reconciliation issues. According to the report, the affected PFAs are currently reconciling their records with the State Bureau.
Update on Compliance by the Public and Private Sectors
A. Issuance of Pension Clearance Certificates
The Commission received a total of 1,900 applications from private sector organisations for the issuance of Pension Clearance Certificates (PCCs). Out of this number, PCCs were issued to 1,877 organisations while 23 applications were declined due to inability of the organisations to meet the requirements for issuance of certificates. The records show that a total sum of N9,878,025,459.10 was remitted into the Retirement Savings Accounts of 41,923 employees of the 1,877 organisations.
B. Update on the recovery of outstanding contributions and penalty from defaulting employers
Following the issuance of demand notices to defaulting employers whose pension liabilities had been established by the Recovery Agents (RAs), the sum of N553,033,652,.01, representing principal contributions of N382,462,161.65 and penalties of N170,571,490.36, was recovered from 19 defaulting employers during the quarter under review.
Update on refund to military personnel and State Security Service Agencies
During the quarter under review, the Commission granted approval for the refund of the sum of N2,789,553.79 to 50 personnel of Military and other Security Agencies’ personnel who were exempted from the Contributory Pension Scheme.
C. Supervision of Pension Transitional Arrangement Directorate (PTAD)
The Commission conducted off-site examination of PTAD during the quarter under review. In the same vein, the Commission continued to monitor the payment of pensions to Public Service Retirees under Defined Benefits Scheme (DBS) through monthly statutory returns rendered by PTAD.
D. Update on the Nigerian Social Insurance Trust Fund (NSITF)
Transfer of NSITF contributions to members’ Retirement Savings Account – The Commission received transfer applications on behalf of 190 NSITF contributors and granted approval for transfer of the sum of N188,971,243.55 to their Retirement Savings Accounts during the quarter under review.
Payment of Monthly pension to qualified NSITF contributors – during the quarter under review, the Commission granted approval for payment of monthly pension in the sum of N62,292,272.25 to 3,628 NSITF pensioners.
Compliance by state governments
A. Enactment of State Pension Laws
During the quarter under review, the Commission reviewed and communicated its observations on the Lagos State Pension Reform Law 2015 (as amended). Similarly, Plateau State began the process of adopting the Contributory Pension Scheme by submitting its draft Pension Bill to the Commission for review and advice.
B. States that commenced remittance of contributions
The Benue State Government commenced remittance of 10% (employer) and 8% (employee) pension contributions for employees of 21 out of 23 local government councils in the State from November 2030.
C. Status of implementation of CPS and other schemes.
As at fourth quarter 2020, twenty five (25) States of the Federation had enacted pension laws on the CPS while seven (7) States were at bill stage. Out of the five (5) states operating other pension schemes, four (4) States have adopted the Contributory Defined Benefits Scheme (CDBS).
Update on the Micro Pension Plan
A. Micro pension registration and contributions.
During the quarter under review, twenty (20) PFAs registered 3,663 contributors under the Micro Pension Plan (MPP). In the same vein, a total N25,024,528.08 was remitted to the RSA of Contributors within the review period.
B. Contingent withdrawals
In terms of withdrawals from the contingent portion of the contributions, six (6) PFAs processed and approved requests amounting to N880,521.29 from eleven (11) MPP participants during the period under review.
RSA membership registrations
The PFAs registered a total of 68,827 RSAs during the quarter under review. This brought the cumulative RSA registration from inception to 31 December 2020 to 9,215,788.
Employer code generation
The Commission generated a total of 2,896 Employer Codes during the quarter under review. The private sector accounted for a total of 2,894 employer codes, representing 93.93%, while the Public Sector accounted for only7%.
Update on the RSA Transfer System (RTS)
Following the launch of the RSA Transfer System on 16 November 2020, a total of 2,799 RSA holders initiated the transfer of their RSAs from their existing Pension PFAs to other PFAs during the fourth RSA Transfer Quarter of 2020 (i.e. the maiden RSA Transfer Quarter). The total value of the RSA balances transferred stood at N18,898,848,438.79. All the 22 PFAs were involved in the transfer, as transferring and/or receiving PFAs.
Schemes memberships
The pension industry recorded a net marginal growth of 0.72% (66,704) in schemes membership during the quarter under review, rising from 9.20 million contributors as at the end of the preceding quarter to 9.27 million at the end of the fourth quarter of 2020. The growth in the industry membership was driven by the RSA Scheme, which had an increase of 68,749 registered contributors. However, membership of the Closed Pension Fund Administrator (CPFA) Schemes declined by 2,045 members to 14,926 while the Approved Existing Scheme (AES) membership remained unchanged at 40,951 as at the end of the fourth quarter of 2020.
Pension contributions
The total pension contributions remitted to the RSAs in the fourth quarter of 2020 stood at N167.74 billion. Out of this total, the public sector accounted for N86.93 billion or 51.81% while the private sector contributed N80.81 billion or 48.18%. The cumulative pension contributions received from both the public and private sectors from inception to the end of the fourth quarter of 2020 thereof, amounted to N6.70 trillion, up from the 6.54 trillion as at the end of the third quarter of 2020, representing a growth of 2.45%.
Retirees on programmed withdrawal (PW)
The Commission granted approval for 11,374 requests, comprising 5,681 public (FGN & States) and 5,693 private sector retirees to draw pension through the Programmed Withdrawal mode during the quarter under review. These retirees received a total lump sum of N32,631,748,404.55 while their total monthly pension amounted to N455,487,074.25.
Retirement by annuity
The Commission granted approval to 1,596 retirees under the Retiree Life Annuity during the quarter under review. A total lump sum of N6,284,179,444.33 was approved for payment to the retirees, while the sum of N10,115,855,000.10 was approved for payment to 14 Retiree Life Providers as premium in return for total monthly/quarterly annuities of N111,677,547.01.
Approval of death benefits
During the quarter under review, the approvals were granted for payment of death benefits amounting to N10,786,191,914.01 to the legal named beneficiaries/Administrators of 2,278 deceased employees and retirees, (comprising 1,582 public (FGN & States) and 696 private sector).
Enbloc payment of retirement benefits
During the quarter under review, the Commission granted approval for Enbloc payment of retirement benefits to 3,499 retirees whose RSA balances were N550,000.00 or below and considered insufficient to procure Programmed Withdrawal or Retiree Life Annuity of a reasonable amount for an expected life span. In this regard, a total sum of N848,920,264.47 was paid to the 3,499 retirees comprising 200 public (FGN & State) and 3,299 private sector retirees.
Withdrawal of 25 Percent of RSA Balances
The Commission granted approval for the payment of N5,329,821,662.44 to 11,796 RSA holders under the age of 50 years, who were disengaged from work and unable to secure jobs within four months.
Voluntary Contributions
During the quarter under review, the Commission granted approval for 924 contributors for the withdrawal of voluntary contributions amounting to N1,011,283,273.66.
Conclusion
This 2020 4th quarter report of the Commission on the pension industry is highlighted here as part of the continuous enlightenment of workers, employers, pension desk officers, trade union leaders and the general public.
