PenCom's boss says contributory pension scheme sucessful despite odds
THE asset base of Pension Commission (PenCom) has hit N4 trillion after clearing unpaid pensions, according to the Acting Director General of the PenCom, Mrs. Chinelo Anouh-Amazu.
Anouh-Amazu told the Confab committee on Labour, Civil Society and sports, that 10 years after the contributory pension's scheme began, the system has recorded a huge success in its own rights despite some administrative hitches.
According to the director general, the confidence of Nigerians is further reinforced by the fact that the commission has improved remarkably from N2 trillion unpaid pension liability of the Head of Service to an asset base of N4 trillion.
She explained to the Confab delegates that the contributory pension scheme of 15 per cent is contributed on the basis of seven and half percent of the monthly earning by the employee and another seven and half by the employer.
She said that though the savings go into the retirement savings of the employee, he will not be able to access it by him until he retires in accordance with the terms of the employment.
Amazu explained that the job of PENCOM is to regulate the operators who were private business people who put their expertise together to manage the funds, explaining that while the Pension Fund Administrators (PFA) manage the money, the Pension Fund Custodians (PFC) keep custody of the funds.
She further explained that the PFA provide daily reports to PENCOM while PENCOM has investment limits, which they have set for them but are also allowed to make their investment decisions saying that the dissatisfaction of the new system was that money was leaving the contributors account.
The PenCom boss noted that another source of worry for the contributors is the desire for the retiring contributors to empty their account on retirement, which she said does not conform to the purpose of the system, pointing out that the aim is to cater for the retirees at old age when they are unable to work.
According to her, the new system ensures that 50 per cent of their last pay is left into the account to fund their livelihood also pointing out that the 15 per cent contribution was only the minimum adding that people can increase their contributions.
She stated that the problem still lied with the old pension system administered by the Head of Service now to be handled by the Ministry of Finance and noted that her commission had turned their oversight functions on how to ensure that those under the old system come into the new system.
She said the pension reform act stipulated the establishment of Pension Transitional Arrangement Department (PITAD) which collates all the various heads of pensions with a view to streamlining the processes so that people are paid as and when due.
Amazu stated that the problem with the system is not that pension funds are not released by government but were paid to ghost workers who were not supposed to be part of it saying that part of the function of PITAD is to allow people to get paid their entitlement through the compilation of accurate database of the pensioners.
She cautioned that the people should not continue to rely on the supposed sanctity of the officers at the Head of Service who are handing the funds saying that the only way to make it impossible for the diversions to continue to occur.
Almost repeating what she told the Committee on Public Service the previous day, She suggested that money meant for the payment of pension should be released directly to the pensioners instead of lodgement in an account, which is prone to abuse.
The next focus of investment apart from bonds, according to her, is the Real Estate and infrastructure; and appealed to the committee to beam its searchlight on non-remittance of contributions of workers by their employers.