The National Pension Commission (NPC) has said the asset in the Contributory Pension Scheme, which started in 2004, has grown to over N5trillion, Footprint to Africa reports.
Director-General, NPC, Mrs. Chinelo Anohu-Amazu, made this disclosure while speaking at the second edition of the World Pension Summit Africa Special with the theme ‘Building Sustainable Pension Systems in Africa’ being consecutively hosted the second time by Nigeria.
She stated that the Summit was designed to stir up practical and enduring strategies for pension fund regulation on the continent, adding that the need to ensure adequate security of the fund was a major reason why the commission had yet to approve the investment of the fund in infrastructure.
The PenCom boss said the commission had begun the implementation of some of the recommendations that were made during last year’s summit, which according to her includes the introduction of the Micro Pension Plan, which would be inaugurated before the end of the year, and the guidelines that allow Retirement Savings Account holders to use a portion of their RSA for home acquisition.
“The Nigerian Pension Reform narrative can be situated within the context of Africa’s economic resurgence.
“Indeed, from operating the old Defined Benefits System that had well over N2trillion in deficit at the dusk of the last century, the new Contributory Pension Scheme that was kick started in 2004 now has over N5trillion in just over ten years of operation.
“The first World Pension Summit Africa special 2014 was done in conjunction with our tenth anniversary and part of the take out of that was what informed the theme of this session.
“So we have harnessed all the thoughts and all the discussions and we have started putting them into practice which is what informed our micro pension plan which would be launched before the end of the year as well as our guideline for the access for mortgages allowing Retirement Savings Account contributors to use a portion of their RSA for acquisition of their primary homes,” she said.
Commenting on why the commission had not approved the investment of the fund in infrastructure, she said the commission was exercising a lot of caution while also thinking of how to channel the fund for social needs.
She added, “This fund belongs to pensioners and every single kobo of that N5trn can be traced to an individual. We are trying to see how we can leverage domestic financing for a sustainable infrastructure growth. So, placing that side by side with this fund, it is mandatory to exercise a lot of caution while also thinking of how to channel this for social needs.”
Anohu-Amazu explained that while the commission was looking for infrastructure instrument to invest the fund, there was need for government to provide some form of guarantee for owners of the fund.
In PenCom DG words: “We need to find a way so that a significant portion of this fund is channeled towards development of infrastructure, real estate and other social needs.
“However, this channeling must not be done without the highest form of security and this is where the government comes in because they can do that by way of guarantees.
“We can also be certain that this fund would not be frittered away by way of making sure that the investible instruments are secured.
“That is why a lot of it now is not in infrastructure because we are looking for the instruments to put them in; and that is another key take away from this summit.”