PENCOM explains N51.3b decline in pension fund assets in February

Pension regulator, National Pension Commission (PENCOM), has attributed the N51.3 billion decline, equal to 0.42 percent in pension assets in February 2021 to the depreciation in the prices of Fixed Income Securities (FISs).

According to the commission, this is from the trading portfolios of the Approved Existing Schemes (AES), Retirement Savings Account (RSA) Funds II & IV and Closed Pension Fund Administrators (CPFA), thereby creating unrealised losses on marked to market FISs.

“The values of the bonds in the trading portfolios fluctuate based on the supply and demand of the underlying securities as well as the outlook of the financial market, PENCOM said in the February 2021 Monthly report published on its website.

The industry’s total Pension Fund Assets declined by N51.3 billion from N12.299 trillion in January to N12.248 trillion at the end of February 2021, according to February monthly report.

This trend though did not replicate in the number of registered contributors, as it moved from 9.237 million in January to 9.265 contributors at the end of February.

Review of monthly report of PFA as at the end of fourth quarter 2020, revealed that a total of 3.5 million RSA holders remained unfunded, and the majority of these unfunded accounts belong to employees of state governments and private sector organisations, the commission revealed.

Another notable outcome of the review of the monthly reports was the un-credited pension contributions domiciled in the Contribution Reconciliation Accounts (CRAs) and the Transitional Contributory Funds (TCFs) of the Pension Operators.

The commission, however, mandated the pension operators to ensure resolution of all outstanding un-credited contributions and file progress report at regular intervals.

It was also discovered that 5.1 million RSAs had incomplete documentation as of Q4 2020 which, according to the commission, the engagement of agents to conduct data recapture on behalf of all the PFAs is expected to address this issue and validate all relevant documents under the profile of individual RSA holders.

The objectives of the Contributory Pension Scheme (CPS) is to ensure that every person who worked in either the public service of the federation, federal capital territory (FCT), states and local government or the private sector receives his retirement benefits as and when due, to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

The provisions of the Pension Reform Act shall apply to any employment in the public service of the federation, FCT, states, local governments and the private sector.

In the case of the private sector, the scheme shall apply to employees who are in the employment of an organisation in which there are three or more employees.