Premium Pension Limited, one of the leading Pension Fund Administrators (PFAs) in the country has commended the Federal Government on the signing into law of the Pension Reform Bill, 2014, saying it would push up savings habit among Nigerians and lead to another phase of growth in the country’s pension industry.
The new pension law repeals the Pension Reform Act, No.2, 2004 which has been in operation for the past ten years.
“The new pension law further concretizes the statutory foundation of the pension industry and positions it for the attainment of even greater heights” said Wilson Ideva, managing director, Premium Pension Limited. “The industry is now set to witness unimaginable growth; such that has never been seen in any sector of the Nigerian economy.”
Nigeria’s contributory pension scheme has recorded tremendous success in its first decade of operation enlisting 6.4 million Nigerian workers and raking in N4.3 trillion as funds under management. It is widely believed that the growth in the industry would have even been more expansive if the previous law allowed the application of very stringent measures on non-compliant institutions and individuals. Moral suasion yielded little results. “It is expected that when the new pension law is fully applied, majority of the country’s working population, be they in the public or private sector or even artisans would be covered by the scheme” said Ideva.
The Pension Reform Act among other things enhances the enforcement responsibilities of the regulatory institution, National Pension Commission (PenCom), ensures further airtight protection of pension funds and unpacks guidelines and possibilities of creatively and professionally applying pension funds for national development. The law makes provisions that will enable the creation of additional permissible investment instruments to accommodate initiatives for national development such as investment in the real sector and infrastructure. The law also seeks to expand the dragnet of the scheme to include the informal sector. It will also establish Pension Transition Arrangement Departments (PTADs) charged with the responsibility of ensuring the seamless remittance of benefits under the Defined Benefits Scheme. The law also raises the employer and employee contributions in the scheme from a total of 15 percent to 18 percent of monthly emolument.
“With the provisions of the Pension Reform Act, 2014, the pension industry in Nigeria is the subsector to watch in the course of national development in the coming years” concluded Ideva. “The industry is already well-positioned to assert its centrality to social and economic development.”
Modestus Anaesoronye
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