• Friday, February 23, 2024
businessday logo


PENCOM recovers N12 billion in unpaid pensions for former bank employees

CrusaderSterling Pensions targets informal sector employees to boost financial inclusion

The National Pension Commission (PenCom) said it had recovered N12 billion in pension contributions from failed bank employees, yet to be credited to their respective Retirement Savings Accounts (RSAs).

Ehimeme Ohioma, head of the Surveillance Department at PenCom, who disclosed this at a One-Day Media parley organised by the Pension Fund Operators Association of Nigeria (PenOp) held Friday in Lagos, said the funds belong to employees of the collapsed or acquired banks, including Diamond, Intercontinental, Oceanic, Main Street, former Afribank, Citizens among others.

Ohioma said those in the bank between 2004 and 2007 before they collapsed or acquired should go to PenCom’s website and search for their names and the respective PFAs where their funds have been allocated for reconciliation into their RSA pins.

According to him, of the N12 billion recovered, only about N158 million has been reconciled with their rightful owners.

According to Ohioma, PenCom, between September and October 2023, embarked on reconciliation and resolution of long outstanding uncredited contributions that resulted from incomplete and inaccurate schedules sent by employers for their employees’ contributions.

He said that about N22 billion of those issues have been resolved and credited to the RSA pins of their beneficiaries.

He said that the Commission, working with operators and employers through the support of service provider institutions, is putting in place measures to resolve all of these issues.

Read also PenCom, OPS to strengthen collaboration on pension

On the bank’s employees’ funds, Ehimeme said, “Most of the employees do not know that they have those funds with PFAs.

What PenCom did in September was to put up a list of the beneficiaries and their respective PFAs where those funds are located on the Commission’s website, and what we expect is that the affected people go to the website, look through the list to reconcile their identities with the funds.

“Those people have worked in various institutions that have either collapsed or were acquired by other institutions, and they do not know that they have contributions from their former employers from 2004 to date, and the Commission’s Recovery Agents have recovered these funds, and they are with the PFAs.

“People should go search their names and get those monies transferred to their RSA. They are not going to be paid cash, but to be transferred into the RSA PINs.”

“The fund is closed to N12 billion, and only 158 million has been reconciled into their RSAs.”

Read also PenCom wants PFAs to open branches in states with 10,000 clients

Ehimeme Ohioma, who applauded the success of the pension industry, which will be twenty years next year since the Pension Reform Act 2004, said it is a long but interesting journey.

According to him, two things are critical for the continued growth of the industry: adequacy and sustainability.

The pension industry has accumulated N17.5 trillion in assets as of the end of October 2023, with over 10 million registered contributors; 64 per cent of the assets are held in Federal Government Securities, 11 percent in corporate debts, 8 percent in listed equities and less than 1 percent in private equities and infrastructure fund, Ehimeme disclosed.

He said, “When people retire, their pension must be adequate to care for their needs; it must be sustainable, not lasting for just six or seven years and stopping.

On challenges facing the industry, he said effort must be made to ensure that returns on investment is above inflation, stating that this must be a priority for operators.

“I talked earlier about how pension funds can earn real returns on investment. Where can we get those returns or assets? They are from alternative assets, private equities and infrastructure funds. The market has to create those products for pension funds to be invested.”

“So, going forward, we would be looking to see how pension funds can be invested in alternative assets to earn real returns on investment.”

The second major challenge, he said, is service delivery. “There must always be complaints; there must always be problems. The question is, how do we respond to these problems, which is critical to the industry’s success.”

“It therefore beholds us as operators, as regulators to ensure that they are promptly and consciously treated.”

Another success story he pointed out is promptness in the payment of benefits. “By 25th of every month, every retiree under the contributory pension scheme has received his or her monthly pensions, and there is no one complaint about this. This is a success story and needs to be commended and sustained.

“Since inception, 1, 268, 440 people have been paid one form of benefit or the other, and in total N2.73 trillion has been paid as benefit from.”

“For mortgage, in less than 6 months of the commencement of this scheme, 1,183 contributors have successfully accessed funding valued at N13 trillion, and these people are qualified for home ownership in Nigeria.

He said to ensure efficient service delivery, the Commission in 2022 increased the minimum regulatory capital of the pension fund operators to ensure that they have the needed capacity to acquire the right infrastructure, technology, and human capital to deliver efficient service delivery.