Ebere Nwoji
Stakeholders in the pension sector at the weekend reviewed the performance of the sector 17 years after its reform as well as since the introduction of the Contributory Pension Scheme (CPS).
The operators noted that though there have been remarkable growth and achievements in the industry, Nigeria still lags behind many other countries in pension penetration with the current penetration rate of 11 per cent.
The stakeholders spoke at the third annual PenOp-National Assembly retreat organised by the Pension Operators Association of Nigeria (PenOp) in Lagos.
The stake holders also highlighted issues that should be addressed to keep the sector continually on growth track and ensure deeper penetration of Pension scheme among Nigerians
According to them, there is need for strong political will, especially among state governments, determination for self-regulation among the sector operators, capacity building, technological advancement and assurance of better future to Nigerian workers who contribute to the pension fund as well as predictable policies on the side of government in place of policy somersault.
PenOp President, Mr Wale Odutola who is also the Managing Director ARM Pension Managers, noted that in the past 17 years, Nigeria’s pension industry has certainly come a long way from when the Pension Reform Act was initially passed in 2004.
According to him, the industry has moved from a largely unfunded pension system to one that is fully funded, professionally managed by mainly private sector, adding that the CPS practiced in Nigeria, has adopted international best practices, is technologically driven and has grown steadily over the period.
“There is also a marked progress with respect to the level of professionalism within the industry.
“The pension industry has raised the bar for professionals locally. The investment, risk and compliance professionals within the industry can favourably compare to their counterparts anywhere in the world.
“Indeed, the industry has bred a new class of pension professionals across board over the years,” he observed.
He, however, said despite these, there are many areas where the sector fall behind its counterparts in other countries.
“One area is the level of pension penetration. Nigeria currently has a pension penetration rate of approximately 11 per cent of its labour force.
“This pales in comparison to 19 per cent in South Africa; 20 per cent in Kenya, and 77 per cent in the United Kingdom.
“Consequently, it goes without saying that the industry needs to deepen its level of penetration, especially in the informal sector.
“Another area of improvement is the level of pension assets to GDP. Nigeria’s level of pension assets to GDP is only a little over seven per cent while in developed markets, it’s typically above 100 per cent,” he added.
“So, whilst the level of our pension assets are relatively large in absolute terms, when you look at it in relation to GDP, it is actually low.
“This further speaks to the fact that we need to increase the level of penetration of the pension scheme in general,” Odutola stated.
Also speaking, former Director General, National Pension Commission (PenCom), Alhaji Muhammad Ahmad, said the micro pension segment market of the sector needs to be tapped in order to bring every Nigerian in both formal and informal sector into pension coverage.
He also said various state governments need to determine to fully key into the scheme which gives their workforce a more guaranteed future.
According to him, pension operators have a lot of work in this regard, insisting that large chunk of their work is in the area of conviction and building trust.
He said operators’ starting point in tapping the opportunities in the informal sector should be in analysing the market.
He further urged operators to channel their financial inclusion efforts to the informal sector operators in order to saturate the market.
In his goodwill message at the retreat, the Chairman, House of Representative Committee on Pension, Hon. Kabiru Alhassan Rurum, said the objective of the retreat was to further ensure that pensioners are given the right attention in the society as well as to strengthen the relationship between the National Assembly and Pension Funds Operators in Nigeria in the interest of the senior citizens.
