DG, PenCom, Mr. Muhammad Ahmad

By Nnamdi Duru

Two days after the curtain was drawn on the recapitalisation programme of Pension Fund Administrators (PFAs) as mandated by the National Pension Commission (PenCom), the regulator is yet to make public the outcome of the exercise.

The time allowed for the exercise has ended without any statement from the commission as to the number of recapitalised PFAs, their respective capital bases, the number of operators that could not make it and their fate and the future of the funds under management by those companies that could not make.

Eighteen months ago, the pension regulator raised the statutory capital for PFAs in the country from N150 million to N1 billion.  The commission said the affected operators had 18 months ended June 30, 2012 to fully comply with the new capitalisation directive.

Director-General of the commission, Mr. Muhammad Ahmad communicated this to the affected operators in a circular titled, “Minimum Share Capital Requirement for Licensed PFAs” said, “over the years, we have realised that they needed sufficient resources to invest heavily in ICT infrastructure, skills upgrade as well as branch expansion.”

“The increase in the minimum capital requirement would also encourage healthy mergers or acquisitions and promote stability in the industry.  Furthermore, it is expected that the improved financial condition of the PFAs after the implementation of the reviewed capital requirement would lead to improved service delivery and product development resulting from automation (timely payments),” he added

The commission warned that it would enforce the above directive to the letter with a view to strengthening the capacity of operators or reducing their number by way of merger and acquisition with little or no impact on the pension savings of workers.  It also threatened that it would not extend the deadline by one day.

“The bottom line is that we do not intend to extend the deadline by one day.  Any one that does not meet the requirements, the company does not have capital and capital is a primary requirement for licensing and that license would be withdrawn,” the director-general threatened.

A few days to go, the umbrella body of operators in the Nigerian pension industry, Association of Pension Fund Operators (PenOp) assured Nigerians that there would be no need to fear over the safety of pension assets.

The association said all the major operators in the system may have scaled the N1 billion recapitalisation hurdle while the smaller operators may have concluded their merger talks leaving room for only a few who may want to return their operational licenses to the regulator.

This clarification, according to the association, became necessary in view of the fact that many Retirement Savings Account holders were worried over the safety of their retirement savings should their chosen Pension Funds Administrators (PFA) fail to scale the recapitalisation hurdle.

The Chairman of PenOp, Mr. Dave Uduanu, made the pledge during a chat with THISDAY at the Pre-retirement Conference hosted by Pension Alliance Limited (PAL) in Lagos Wednesday.

He said all the necessary safeguards were in place to ensure that no retirement savings account holder loses any money in the process.

According to him, there was nothing to worry about since the funds are safe in the hands of Pension Fund Custodians who are not being mandated to recapitalise even as the pension regulator, PenCom, has the facilities and capacity to ensure that the funds being managed by firms that could not make it be smoothly transferred those that scaled the hurdle.

“There is no need to fear about the safety of their retirement savings.  The funds are not under the custody of PFAs and if one PFA could not make it, the funds would be transferred to other PFAs.

“Also, PenCom has necessary things in place to ensure smooth transfer of pension assets from one operator to another as the case may be,” Uduanu said.
The PenOp chairman also reported that there may not be many casualties saying the major operators have all recapitalised successfully while the smaller ones have merged here and there.