With the granting of operational license Monday to the Nigerian University Pension Management Company (NUPEMCO), as a Pension Fund Administrator (PFA), pressure will now be on existing PFAs that had been managing the institution’s employee contributions to transfer them to the new owner managers.
PFAs had in the past been given time frame within which to transfer managed funds on their coffers to new PFAs that was granted license, following pressure for independence.
Such pressure had come from NSITF legacy funds, military pension funds, police pension fund, now NUPEMCO among others.
Though transferring the funds is not going to deplete the total pension funds assets under management by the industry, it is going to affect the size of affected PFAs, while also resulting to extra management cost.
The National Pension Commission (PenCom) on Monday announced the issuance of a licence to Nigerian University Pension Management Company Limited (NUPEMCO) to carry out the business of a Pension Fund Administrator (PFA).
According to the commission, the approval is consequent upon a detailed evaluation of NUPEMCO’s compliance with the requirements, terms and conditions stipulated by the Commission.
BusinessDay had on November 7th 2018 published exclusive an story, that PenCom was on the verge of granting a PFA license to ASSU for independence.
The story also stated that beyond transition challenges that go with establishing a new pension fund administer (PFA) and moving existing managed funds to the new PFA, as well as consequent administrative bottlenecks, there is the problem of confidence erosion.
According to the report then, the decision for licensing was an agreement reached with the Federal Government during one of the strike actions embarked by ASUU few years ago.
Longe Eguarekhide, managing director/CEO, AIICO Pensions Limited had commented on the development saying “I think that, as a licensed operator, we have to simply focus on doing our job the best and most efficient way we can.”
“There will always be competitive pressures. These pressures should only help us deepen our capacity and spread our reach to better sustain our businesses, Eguarekhide said.
A pension investment expert in one of the top PFAs in Abuja said “The pension industry faces a long term threat over quest to pull out, stating that it is not in the best interest of the growing industry.
The military it will also be recalled had pull out of the CPS, while some other paramilitary agencies have also pushed to operate outside the CPS before it was resisted by government and other stakeholders.
As at the end of November 2018, total pension fund assets under management by the PFAs stood N8.499 trillion, while the total number of registered contributors stood at 8.381 million. Out of the registered contributors males are 5.918 million while females are 2.463 million.
The key objectives of the Contributory Pension Scheme (CPS) are to ensure that every person who has worked in either the public or private sector receives his retirement benefits as and when due; assist improvident individuals by ensuring that they save to cater for their livelihood during old age; establish a uniform set of rules and regulations for the administration and payment of retirement benefits in both the public and private sectors; and stem the growth of outstanding pension liabilities.
CPS is contributory, fully funded, based on individual accounts that are privately managed by Pension Fund Administrators with the pension funds assets held by Pension Fund Custodians.
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