Private Sector drives industry growth, as PenCom remits N7.4bn into RSA

The National Pension Commission (PenCom) remitted the sum of N7.42 billion into the Retirement Savings Accounts (RSA) in the fourth quarter of 2018.

The latest PenCOm report shows that RSA funds were remitted into 966,155 employees’ accounts, out of 2,044 organisations. The private sector controls the larger proportion of RSA.

According to the report, PenCom received a total of 3,046 applications for the issuance of Pension Compliance Certificates, out of which 2,044 were approved and issued. 1,002 applications were rejected for failing to meet appropriate requirements.

Meanwhile, the report shows that the cumulative number of applications received during the year was 16,536 out, of which 16,100 were approved and issued certificates while 436 were rejected. PenCom reiterated that it continued to apply various strategies to ensure compliance with the provisions of the Pension Reform Act of 2014.

Transfer of NSITF Contributions to RSA – During the quarter under review, the commission received 1,282 applications for transfer of Nigeria Social Insurance Trust Fund (NSITF) applications totalling N56.78m.

NSITF is one of the foremost social insurance organisations in Africa, founded in 1961 as the National Provident Fund with the mandate to protect employees in the Nigerian private sector who were mostly in non-pensionable employment.

PenCom stated that stated that all applications received were processed and transferred to the RSAs of the NSITF members. From inception to December 2018, N19.64 billion had been transferred to the RSAs of 272,463 NSITF contributors.

Payment of Lump sum benefits to NSITF Members – Similarly, the Commission granted approval to Trustfund for the payment of ₦14.34 million to 377 NSITF members. Thus, from November 2006 to 31 December 2018, ₦2.90 billion had been paid as Lump Sum to 35,562 NSITF Members.

Meanwhile, PenCom further reported that during the period under review, 65 batches of applications were received from Trustfund Pensions on behalf of 378 NSITF members for payment of Lump-Sum Grants.

Significant outstanding pension contributions recovered – In the last quarter of 2018, PenCom maintained that the services of Recovery Agents (RAs) for the recovery of outstanding pension contributions and penalty from defaulting employers.

Specifically, the RAs were mandated to review the pension records of the employers assigned by the Commission with a view to recovering outstanding pension contributions with the penalty.

Therefore, for the period under review, the sum of N365.56 million was recovered by the RAs. This brings the total recoveries made by the Agents from the inception of the exercise in 2012 to date to N15.36 billion, representing the principal contribution of N7.87 billion and penalty of N7.49 billion.

“These amounts have since been credited to the respective RSAs of the employee.”

Pension Contribution Refund to Agencies – According to the report, PenCom processed 240 applications for the refund of pension contributions of Military personnel and Other Security Agencies during the year. Hence, the sum of N157.86 million was refunded to the contributors.

Note that a Tripartite Committee for the Winding Down of the Military Refund was set up in October 2018 to review the entire refund process with a view to ensuring the immediate payment of all outstanding requests.

State Governments continue to make progress in Pension Scheme – The commission indicated that State Governments continued to make progress in the level of implementation of the Contributory Pension Scheme (CPS). As at the fourth quarter of 2018, the number of States that have enacted laws on the CPS stood at 27, while eight (8) States were at the bill stage of implementation.

Private Sector is driving growth in Pension industry – Basically, the pension industry recorded a 1.63 percent growth in the scheme membership during the fourth quarter of 2018, moving from 8.34 million contributors at the end of the preceding quarter to 8.47 million.

According to the PenCom report, the growth recorded in the industry membership was driven by the RSA Scheme, which had an increase of 138,236 contributors representing 1.64 percent.

Further breakdown of the RSA registrations indicated a 0.82 percent (29,455) increase in RSA membership from the public sector during the Q4 of 2018 to stand at 3.6m which represented 42.92 percent of the total RSA registrations.

However, the private sector membership increased by 2.32 percent (108,781) in the quarter under review, which brought total registrations from this sector to 4.8 representing 57.08 percent of total RSA membership. This growth can be attributed to the increased level of compliance by the private sector.

[Also Read: Pension contributions from Nigerians under 30 dwindling at an alarming rate]

Worrying trends – Nairametrics had earlier reported that one of the reasons for the nearly 326 fold increase in contributions is due to the increase in employees who now contribute to the scheme. Despite the rise, trends in younger contributors are on the decline.

Basically, the way pensions are designed, the younger your contributors the better the pension funds. In the meantime, with the pressure now on those aged 40 years and above to sustain Nigeria’s pension fund industry, the growth in the pension industry remains lopsided.