Operators in the pension industry paid out total of N271.15 billion as lump sum to retirees in 2014 under the new Contributory Pension Scheme (CPS) and an average monthly pension of N3.84 billion. In addition, another sum of N62.20 billion was paid as premium to insurance companies to provide life annuity for 14, 784 retirees.
Mrs. Chinelo Anohu-Amazu, Director-General, National Pension Commission (PenCom) told Business Journal in an Executive Chat that a total of 115,529 workers had retired as at 31 December, 2014 with 87.20 percent (100,745) of the retirees on Programmed Withdrawal, while the remaining 12.80 percent (14,784 retirees) were on Life Annuity.
She said during the period, a total sum of N124.60 million and N12.41 million were paid as lump sum and average monthly pension respectively for 246 retirees on health grounds while a total sum of N67.31 billion death benefits were also paid to beneficiaries of 25,232 deceased workers in both the public and private sectors.
“The pension industry had accumulated a total of N2.54 trillion pension contributions as at the reporting period. The pension contributions contributed by the public sector stood at N1.45 trillion, representing 57.19 percent of the total, while the private sector contributed N1.09 trillion (42.81 percent),” she said.
“The total value of pension industry assets under the CPS as at 31st December, 2014, grew to N4.61 trillion from N4.06 trillion in the preceding year, with an average annual growth rate of 30 percent. This pool of pension funds is a potential platform for attaining the transformation agenda of Government in the provision of infrastructure, energy, employment and the development of the real sector of the economy.”
The PenCom DG also reported that membership of the CPS witnessed significant growth during the year under review, with total number of registered participants rising by 8.05 percent from 5.92 million as at 31 December, 2013 to 6.40 million as at the end of 2014.
“Memberships from the public and private sectors were 48.37 and 51.63 percent respectively. Likewise, four (4) States of the
Federation enacted laws on the CPS, making the total number of states that enacted the law on the CPS to 26.”
She said the remaining 10 States are currently at the Bill Stage for the scheme implementation; just as all the 36 States of Federation are at various stages of implementation, hoping that with Enactment of the PRA 2014, the Commission will be liaising with the States to ensure their full implementation as required by law.
She expressed concern over the reduction in government revenue, which suggests a risk in government liquidity and hence its ability to meet its financial obligations of pension contributions, as funding of the retirement bond redemption fund accounts for onward payment of accrued portion of retirement benefits, death claims, etc.
Looking at the challenges of the new pension scheme so far, the PenCom DG said: “The greatest challenge facing the industry and which might continue to rear its head into the future is the dearth of investable instruments. The availability of such instruments will help to diversify pension funds investment and hence help to reduce risk of concentration.
Another challenge rests with the lack of adequate understanding by the general public between the old pension scheme and the CPS.”