Since the release of the gazetted copy of the Pension Reform Act 2014, there have been reactions from stakeholders and analysts on certain sections of the law. But here, Misbahu Yola, chairman, Pension Fund Operators Association of Nigeria (PenOp), in this interview with MODESTUS ANAESORONYE briefly explains the controversial areas, implications and way forward for the industry. Excerpts:
The Pension Reform Act 2014 says in the case of private sector, the scheme shall apply to employees in organisations having more than 15 employees or more, so repealing the initial provision on 5 employees under the Pension Reform Act 2004. What does this mean and does it help the effort to deepen penetration in the informal sector?
I imagine there are some errors, as Subsections 2 and 3 of section 2 are not in sync. I believe it was meant to be 3 employees minimum, not fifteen because the only way to deepen penetration is to decrease the mandatory number, not increase it. I am sure we will get some clarification from concerned authorities soon.
The Act also says employees of organisations having three employees or less or self employed people could participate in the scheme through a regulation issued by PenCom. What does this mean and how soon is the implementation guideline going to come?
It simply means that while mandatory for employers with 3 (15?) employees, those with less are free to join, just like in PRA 2004- those with less than 5 employees were free to participate.
Now that the Act has rates of contribution put at 18 percent or more, when is this going to take effect and what effort is being made by the industry to sensitise the private sector employers for compliance?
PRA 2014 is effective July 1, 2014 as stated on page A33 of the Act. 18 percent (10 percent employer; 8 percent employee) contribution rate is now law. Although this was openly discussed during the public hearings, we as an industry should enlighten the public on the benefits.
I am hopeful that improvements in power, will give some respite to businesses overheads. Nonetheless, I believe that in the long run it will be beneficial for employers if employees feel even better about their futures.
Recently, PenCom issued a circular to stop use of casual staff in the pension industry, which it described as a dangerous trend that should not be allowed to continue? Firstly, what gave rise to engaging casual staff in the industry? How will this affect operational cost of operators?
PenCom allows employment of sales agents for marketing RSA accounts. Given the size of the country and retail nature of the business, large sales force is necessary for effective reach and the agents’ route is effective. Note however, that operators have other main company marketers leading and supervising the agents.
Access the Pension Industry in the last eight months, what is the growth position?
The industry has continued to record improved growth. Total assets grew from N3.39trn in December 2013 to N4.45trn at the end of July 2014.