By Asishana John
Pension operators in Nigeria constrained economy are beginning a 12-month hunt for additional N4 billion in new capital after a review by regulators raised minimum regulatory capital to N5 billion from the current N1 billion level.
The National Pension Commission (PenCom), the country’s foremost pension regulator, appears to be joining other financial industry regulators to strengthen the capital of operators following the new directive that raised the minimum capital requirement for pension funds administrators (PFAs) by a whopping 400 percent from N1 billion to N5 billion.
In a circular on revised minimum share capital requirement for licensed PFAs addressed to managing directors and CEOs of all licensed pension fund operators and signed by Ehimeme Ohioma, head, surveillance department, PenCom stated that the move was necessary to consolidate the PFA’s capacity and deliverables to pension holders whilst also informing that PFAs have a period of 12-month to meet the new minimum capital requirement.
The circular read in part: “The board of the commission, at its 48th meeting on the 27th April 2021, approved the increase of thebminimum regulatory capital (Shareholders’ fund) requirement for PFAs from the current N1 billion to N5 billion, unimpaired by losses.
“The increase in the minimum regulatory capital is necessitated by the need to improve the capacity of PFAs, in terms of operational efficiency and effectiveness as well as service delivery.
“The board also approved a 12-month transition period, effective 27th April 2021, within which PFAs are to meet the new minimum capital requirement.
“ PenCom had in recent times canvassed for the amendment of Pension Reform Act 2014 to allow prompt and sufficient payment of retiree’s fund.”
Speaking during a visit of the senate committee on establishment and public services to the commission in Abuja, Aisha Umar, director-general, PenCom, expressed discontent on the poor pattern of retirees’ pensions payment which, according to her, was birthed alongside the 2014 pension act.
“The fundamental objective of the pension reform is to ensure that every worker receives their retirement benefts as at when due. However, it is sad to report that today, there are a large number of federal government employees who retired from March 2020 to March 2021 under the Contributory Pension Scheme (CPS) that are yet to receive their pensions due to non-payment of their accrued pension rights.
“This challenge, which started in 2014, was essentially triggered by the appropriation of insuffcient amounts for payment of accrued pension rights of retirees and further aggravated by late or non-release of full appropriated amounts,” she said.
Meanwhile, stakeholders have expressed concern on the possibility of recapitalization exercise, especially considering how that of the insurance industry was postponed on several occasions.