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Police Exit Threatens N6.4tn Pension Funds

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  • Police Exit Threatens N6.4tn Pension Funds

A bill to amend the Pension Reform Act 2014 that will lead to the exclusion of members of the Nigeria Police Force, the Nigerian Security and Civil Defence Corps, Nigeria Customs Service, Nigerian Prison Service, Nigeria Immigration Service and the Economic and Financial Crimes Commission from the Contributory Pension Scheme and other related matters has been of concern to stakeholders in the pension industry.

The bill, sponsored by Hon. Oluwole Oke, has passed the second reading and referred to the relevant committee of the House of Representatives for further action.

If passed into law, the Nigeria Police Force Pension Limited, which has accumulated total assets of N283.9bn, and paramilitary personnel, would withdraw their money from the N6.4tn pension funds under the CPS.

The exit move embarked upon by the paramilitary organisations was triggered by the way the military, Department of State Security and the National Intelligence Agency pulled out of the CPS and withdrew all their funds from the scheme some years back.

There are fears that this may embolden workers in the public sector and other sectors to renew their interest to pull out of the pension scheme.

Already, due to some implementation challenges, there has been a clamour among some Federal Government agencies for exemption from the CPS.

Their complaint is essentially the quantum of retirement benefits, which they believe should be enhanced.

While many investors have been eyeing the growing pension funds and lobbying the administrators of the assets on how to get access to the money, the operators have continued to explain that the funds are not idle, but have been invested in various assets.

According to the pension fund operators, N4.75tn of the N6.4tn funds has been invested in Federal Government securities.

They are of the view that exempting some government agencies will lead to divestment from the FGN securities before maturity.

This, they noted, would have a ripple effect on not only the finances of the government, but the entire financial system.

They also gave another negative impact as the erosion of the pool of long-term investible funds accumulated under the CPS, which would further undermine development initiatives in infrastructure, housing and real sectors of the economy, expected to be funded with the pension funds.

Experts noted that pension operators had actively participated in the establishment of the Nigeria Mortgage Refinancing Company with the investment of N83.36bn in its securities and other mortgage refinancing initiatives of the Federal Government.

According to data obtained from the National Pension Commission, the total number of registered contributors rose to 7.4 million as of March, which represents about 7.45 per cent of the total labour force and 3.95 of the country’s population.

The pension funds presently contribute six per cent of the Gross Domestic Product, with an average monthly contribution of N30bn.

As of March, over 184,979 workers had retired under the CPS and are currently receiving pensions with an average monthly pension payment of N6.7bn, while monthly pensions have averaged N1.7bn.

However, the Pension Fund Operators of Nigeria has argued that exempting the police and members of paramilitary organisations will put additional financial burden on the Federal Government.

According to them, while the CPS ensures that both workers and their employers contribute to the Retirement Savings Accounts during the workers’ active years, this financial responsibility will now be shouldered by the government, which may not be sustainable.

According to PenCom, the Federal Government is already overburdened with payment of pensions, as illustrated in the 2016 Appropriation Act, which made a provision of N200.17bn as the total pension and gratuities allocation, which is insufficient to fund the pension liabilities of the government.

The 2016 Pension Transitional Arrangement Directorate’s budget proposal indicated a total annual pension liability of N388.32bn, and out of that sum, N255.89bn constituted unfunded liability, which was inherited by PTAD, mostly due to an outstanding payment of 33 per cent pension arrears to pensioners under the Defined Benefits Scheme. This is much higher than PTAD’s proposal in view of the provision of about N74.53bn for the Military Pension Board; N7.64bn for the State Security Service; and N3.71bn for the National Intelligence Agency.

According to the pension operators, the DBS is not sustainable as exempting the military, DSS and the NIA has resulted in very high allocation of resources to fund their retirement benefits.

Experts have however said that if more financial liabilities are transferred to the Federal Government, and the funding is not forthcoming, retirees can be dragged back to the era when there were long queues of pensioners for verification and haphazard payment of pensions.

The Head, Research, and Strategy Management, PenCom, Dr. Aminu Farouk, said the bill for the exemption of the police and other paramilitary organisations provided no clear justification for the affordability and sustainability of the proposal.

According to him, the bill is only seeking to increase the liabilities of the already overstretched and overburdened Federal Government.

The Chairman, PenOp, Mr. Eguarekhide Longe, said it was clear that the bill was not well thought out, and showed limited understanding of the innate long-term benefits of pensions for retirees, adding that if passed, it would significantly defeat the purpose of pension reforms in Nigeria.

According to him, a complete pullout of the paramilitary organisations is not the answer to the problems in the CPS, given the current state of public finances in the country.

“Permitting this bill to gain root as the Armed Forces amendment bill did will spell doom for the public sector segment in the CPS in Nigeria and for the entire industry ultimately as other groups within the system will follow suit,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Transcorp Hotels Expand into Marketplace, Launches Aura to Connect People, Hoteliers, Others

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Transcorp Hotels Plc, on Thursday, announced it has launched a new digital platform, Aura, through which people can book accommodation, restaurants and experiences.

Aura, Transcorp’s first in the alternative accommodation segment, is part of the company’s asset-light model, leveraging technology to deliver true hospitality, exciting experiences, and drive shareholder value.

It’s a new dawn in the hospitality industry! I am thrilled to introduce you to Aura by Transcorp, the digital platform we are using to connect people to quality accommodation, great food, and awesome experiences,” Managing Director and Chief Executive Officer of Transcorp Hotels Plc. Dupe Olusola said.

For more than 30 years, Transcorp Hotels Plc has been at the forefront of creating a superior guest experience at our locations. Today, our commitment to innovation has offered us an opportunity to extend this beyond the hotel premises,” Olusola added.

The launch of Aura by Transcorp is one of the most significant developments in the company’s history as it seeks to transform the travel and tourism industry in Africa by focusing on three important components of travel, whether for leisure or business — where you stay, what you eat and how you spend your time. With its people-driven hospitality model, Aura is set to revolutionise travel and help remind Africans of our deep history of hospitality.

Speaking on the launch of Aura, Obong Idiong, Chief Executive Officer at Africa Prudential Plc, Aura’s technology partners, expressed his excitement. “Finding the right accommodation when you travel can be incredibly complex. Options available for the right prices are often limited, and travellers sometimes end up with accommodation that taints the travel experience. Transcorp Hotels Plc has been able to fix that with Aura and we are proud to be associated with them.”

To ensure topnotch user experience, we built a solution to drive digital transformation through the adoption of shared living spaces for the Aura business. With an advanced search algorithm powered by artificial intelligence, Aura determines the relevance of locations taking into consideration, the customers’ preferences and requirements to meet them at the point of their needs,” Idiong added.

Priscilla Adeboye, a travel enthusiast and early adopter of Aura, said the global pandemic has pushed international travel down her list. “But I still want to be able to take some time off work or spend a weekend away from home with the family. I have found incredible homes on Aura that meet my need for space and privacy.

 

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Siemens Energy Nigeria Appoints Seun Suleiman as Managing Director

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Seun Suleiman is the New Managing Director of Siemens Energy Nigeria

Mr. Seun Suleiman is the new managing director of Siemens Energy Nigeria, the company announced on Wednesday.

According to the statement released by the energy company, Suleiman will be responsible for the entire management of operations and decisions on business policies and corporate strategy.

Commenting on his appointment, Suleiman said, “It is an absolute honor to lead the business for Siemens Energy Nigeria and I look forward to delivering on the brand’s promise of excellence.

Suleiman joined Siemens Energy in 2014, bringing over 15 years’ experience and deep expertise in the private sector across Europe and West Africa.

The statement said, “He is an accomplished business strategist and success-driven leader with strong business acumen. Suleiman has also been a core member of the executive management team at Siemens Energy serving in roles as Sales Director West Africa – Service Distributed Generation Oil & Gas and Vice President Service & Digital.

“Prior to this, he also held various functional and managerial positions with ABB Ltd UK, ABBNG Nigeria, Schneider Electric Nigeria and Dresser-Rand Nigeria Ltd.

It added that Suleiman was experienced in establishing operational excellence with specific competence in the power, oil and gas sectors.

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FG Reopens Osubi Airport Warri for Daylight Operations

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FG Reopens Osubi Airport Warri for Daylight Operations

The Federal Government on Monday said the Osubi Airport in Warri has been reopened for daylight operations.

The Minister of Aviation, Hadi Siriki, disclosed this in a tweet.

The airport was closed in February 2020 over mismanagement and debt allegation involving aviation service providers and airport management.

However, Oberuakpefe Afe, a lawmaker representing Okpe/Sapeie/vaie federal constituency, recently moved a motion for the Federal Government through the ministry of aviation and relevant authorities to reopen the airport for flight operations.

On Monday, Hadi Siriki said “I have just approved the reopening of Osubi Airport Warri, for daylight operations in VFR conditions, subject to all procedures, practices and protocols, including COVID-19, strictly being observed. There will not be need for local approvals henceforth.

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