In a significant stride towards elevating service standards and regulatory supervision in Nigeria’s pension sector, the National Pension Commission (PenCom) has unveiled a comprehensive initiative aimed at bolstering service delivery within the Contributory Pension Scheme (CPS). With the primary objective of ensuring retirees receive their pension benefits in a timely manner and assisting workers in securing their financial future post-retirement, the CPS also endeavors to establish uniform regulations and a robust supervisory framework.
Mr. Abdulqadir Dahiru, Head, Corporate Communications Department, PenCom in a paper titled “Strengthening Regulatory Oversight for Improved Service Delivery in the Pension Industry,” which explored the significance of regulatory measures in maintaining transparency, fairness, and efficiency within the pension sector saying various stakeholders in Pension industry play integral roles in this endeavour where PenCom stands as the central authority, wielding regulatory and supervisory power over all pension-related matters in the nation, including pension operators. He further added that the tasked with maintaining an exhaustive pension database, enforcing compliance, and imposing sanctions when necessary, PenCom plays a pivotal role in upholding industry integrity.
Dahiru continues, Pension Fund Administrators (PFA) and Contributory Pension Fund Administrators (CPFA) also hold significant responsibilities. Their roles encompass everything from registering contributors, administering Retirement Savings Accounts (RSAs), and facilitating investment decisions to handling retirement benefits and reporting to both PenCom and contributors, he added.
Moreover, he said employers are charged with the responsibility of ensuring their employees open and contribute to RSAs, while individual Employees or Participants are required to register with their chosen PFA. The symbiotic cooperation of all stakeholders underscores the success of the CPS, he noted.
“Statistics reveal the burgeoning growth of Nigeria’s pension assets, reaching an impressive N15.58 trillion by March 2023. This amounts to 7.60% of the nation’s GDP as of December 2022. With N225.49 billion remitted in the first quarter of 2023 for individual RSAs, the pension contributions are divided between the public and private sectors at 55.30% and 44.70%, respectively. This remarkable growth extends to the number of registered contributors, which climbed to 9.94 million, equivalent to 7.37% of the working population.
“PenCom, armed with Section 24 of the PRA 2014, wields significant powers to formulate, direct, and oversee pension policies. These encompass setting standards, rules, and regulations for pension fund management, investigating involved parties, and imposing sanctions for non-compliance. The regulatory philosophy emphasizes prudency, transparency, consultation, and a risk-based approach.
Mr Dahiru disclosed that to reinforce these ideals and address challenges, the Commission implements stringent supervisory frameworks. According to him, this involves approving, licensing, and regulating pension fund administrators and custodians. On-site and off-site supervision ensures compliance and good governance practices, coupled with public awareness campaigns. Moreover, PenCom is actively involved in capacity-building initiatives and offers technical assistance for the contributory pension scheme at state and local government levels, he stated.
In his words: Despite remarkable strides, challenges persist. Non-functional call centers, inadequate branch spread, incomplete customer records, high staff turnover, and external dependencies present hurdles. To surmount these obstacles, PenCom has raised the minimum regulatory capital for PFAs, introduced RSA transfer options, established a Consumer Protection Department, and strictly enforces service delivery guidelines. Collaborative stakeholder engagements and the creation of a Pension Academy further solidify the commitment to continuous improvement.
Mr Dahiru said prioritizing enhanced service delivery stands as a pivotal factor in ensuring the sustainability of the Contributory Pension Scheme. Achieving excellence is a collective endeavour involving all stakeholders, and PenCom is poised to facilitate continuous collaboration and engagement to usher in a new era of service excellence in Nigeria’s pension industry, he concluded.