PenCom yet to mandate PFAs’ 3% contribution to pension protection fund

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By Dotun Akintomide

Contrary to the circulating report that the National Pension Commission (PenCom) has ordered the Pension Fund Administrators (PFAs) to pay 3% of their management fees into the Pension Protection Fund (PPF), Nigerian NewsDirect has found out that PenCom is yet to issue a directive to make it mandatory on PFAs this year.

“Though the Pensions Reforms Act, 2014 says certain amount of money should be contributed by PenCom and PFAs to the national pensions protection fund in a bid to implement minimum pensions guaranteed but this issue of paying 3% as a directive is something I’m not aware of” A top PenCom official who  confided in Nigerian NewsDirect and sought to remain anonymous.

“Saying that it’s a directive that has to be complied with and if you are not complying with it you are running foul of the law is something I’m not aware of in terms of 3% PPF’s contribution to be paid by the PFAs. Even if there’s going to be something like that it’s has not been made a compulsion.” He said.

He noted that PPF is meant to help those who have issues with spread contribution, eroded investment and exhaustion of pensions funds which is expected to take care of pensioners in case there is shortfall.

It was learnt that, this would aid the implementation of minimum pension for retirees under the Contributory Pension Scheme.

Meanwhile, some of the operators had said that the 3% levy was however based on their 2015 financial records since most of them were yet to submit their 2016 accounts. According to them, the commission has ordered them to begin the payment of the levy this year in order to accumulate funds to start the payment of the minimum pension to qualified retirees.

The operators, however, complained that the 3% levy was on the high side during a meeting with the commission and pleaded with the regulator to reduce it.

While speaking recently on the funding of the Pension Protection Fund, the Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, said Section 82(1) of the Pension Reform Act 2014 provided for the establishment of the fund.

She added that this would be utilised for the funding of the minimum pension guarantee for all Retirement Savings Account holders that had contributed for a number of years to a licensed PFA.

She also said the law stipulated that it should be used for the payment of compensation to eligible pensioners for any shortfall or financial loss arising from investment activities.

“The sources of funding of the PPF include an annual subvention of one per cent of the total monthly wage bill payable to employees in the public service of the federation, which shall be utilised strictly for the funding of the minimum pension guarantee,” she said.

The Pension Reform Act 2014 provided that PenCom should establish and maintain a fund to be known as the pension protection fund in respect of the guarantee minimum pension.

According to the Act, funding of the minimum guaranteed pension will be partly obtained from an annual subvention of one per cent of the total monthly wage bill payable to employees in the public service of the federation and returns from pension fund investments.

It will also be funded from the annual pension protection levy paid by PenCom and all licensed pension operators at a rate to be determined by the commission from time to time.