Private sector contributes 60% of N3.4trn pension assets

The private sector has overtaken the public sector in pension contribution, generating about 60 percent of the N3.4 trillion pension assets under management of the Pension Fund Administrators (PFAs).

Figures released by the National Pension Commission (PenCom) show that as at March 2013, the private sector contributed N1.8 trillion while the public sector involving ministries, departments and agencies (MDAs) at the federal and some state governments accounted for the balance N1.2 trillion, indicating that the trend is changing from what it was at the beginning.

Chinelo Anohu-Amazu, Ag. director-general, PenCom, made the disclosure on Tuesday during a presentation at the Pension and Insurance Committee Session of the Business Law Arm of the Nigerian Bar Association Conference in Lagos.

Anohu-Amazu said the country’s contributory pension which started eight years ago with the enactment of the Pension Reform Act (PRA) 2004 has achieved a lot of progress in bringing stability to the pension system, disclosing that number of registered contributors has grown to 5.52 million with an average monthly contribution of N30 billion.

Though this is still a far cry from an estimated 80 million workforce, the industry has a lot of potential to impact significantly on the national economy, even as 67,709 retires are currently receiving their pensions as and when due under the current scheme.

Speaking on the theme, ‘The Role of Pensions in an Emerging Economy’, Anohu-Amazu stated that the commission is working hard to create the necessary environment for investment in infrastructure and housing, stating that the PRA 2004 is currently being amended to accommodate emerging developments.

Other efforts of the commission to unlock opportunities in the pension sector, she noted, include engaging the services of skilled and experienced financial advisers for deal structuring; sustained support for initiatives to provide affordable housing and infrastructure development.

“We are also deploying strategies for increased compliance by employers, as well participation of the informal sector and adoption of the contributory pension scheme by states and local governments”.

Demola Shogunle, chief executive officer, Stanbic IBTC Pension Mangers Limited, who was a discussant at the forum highlighted that because of the sensitivity of pensions which is targeted at making sure retirees have their money as and when due, PFAs are guided by three things: security of the funds, liquidity and inflation adjusted returns.

According to him, these are factors considered in making investment by the PFAs, stating that the continuous call for investment of pension funds on infrastructure are not out of place, but that there are no investment instruments yet.