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PenCom: Over N4 Billion Remitted to RSAs in Q4 2021

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The National Pension Commission has disclosed that 1,526 organisations had remitted a total of N4,047,499,080.64 into the Retirement Savings Accounts (RSAs) of their employees in the fourth quarter (Q4) of 2021, data obtained from PenCom’s latest quarterly report showed.

According to the data, the total number of employee savings accounts that were credited stands at 15,603

The report also reveals that at the end of Q4 2021, twenty-five (25) States of the Federation had passed pension laws based on the Contributory Pension Scheme (CPS), with seven (7) states in the process of doing so.

Also, Four (4) of the five (5) states operating other pension plans have adopted the Contributory Defined Benefits Scheme (CDBS), while one (Yobe State) has implemented the Defined Benefits Scheme (DBS).

A Glance at the report

According to the report, 84.7% of applications were issued Pension Clearance Certificates (PCCs). The report read in part: “The Commission received 1,800 applications from private sector organizations for the issuance of Pension Clearance Certificates (PCCs). Out of this number, PCCs were issued to 1,526 organizations, while 274 applications were in the approval process as at end of Q4,2021. The records showed that the 1,526 organizations had remitted a total sum of N4,047,499,080.64 into the Retirement Savings Accounts of their employees totalling 15,603.”

PenCom also revealed that it carried out various workshops on the developments in the CPS for a number of organisations across the six geopolitical zones of Nigeria: “The commission participated at the 2021 Lagos International Trade Fair organised by the Lagos Chamber of Commerce and Industry in collaboration with the Lagos State Government. The fair provided the opportunity to sensitise members of the public on the workings of the Micro Pension Plan as well as respond to other inquiries on the CPS.”

Some Major Highlights

  • The sum of N984,295,614.20 was recovered from 36 defaulting employers during Q4 2021. This is following the issuance of demand notices to defaulting employers whose pension liabilities were established by the Recovery Agents (RAs).Of the total amount,  N406,421,486.65 represented the principal contribution and N577,874,127.55 represented the penalty. Also, legal action against 18 defaulting employers was advised.
  • The commission also approved the reimbursement of N1,178,670.15 to 8 military and other security personnel who were exempted from the Contributory Pension Scheme during the quarter under review.
  • The report also claims that the commission received applications for the transfer of NSITF contributions on behalf of 208 NSITF participants during the quarter under review. And approval for the transfer of N10,767,194.61 to 180 members’ Retirement Savings Accounts was granted.
  • The commission, in the report, denied the request for the transfer of N2,389,145.53 to 28 NSITF donors due to discrepancies between the amount given by PFA and the balances in the NSITF database. In the same light, the commission approved N54,594,952.61 in monthly benefits for 2,305 NSITF retirees.

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Pension

You Can Now Use Your Pension for Mortgage; PenCom Tells Nigerian Workers

Nigerian workers can now use 25 percent of their Retirement Savings Account (RSA) as equity contribution for mortgages. 

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Nigerian workers can now use 25 percent of their Retirement Savings Account (RSA) as equity contribution for mortgages. 

The National Pension Commission (PenCom) made the announcement in a statement made available to the press.

According to the commission, Nigerian workers can use 25 percent of their Retirement Savings Account as equity contribution toward their mortgage. The commission explained that the approval is in line with Section 89 Sub Section 2 of the Pension Reform Act, 2014. 

Both salaried employees and self-employed persons can take advantage of the new service albeit after they have met certain conditions. 

Part of the conditions require the applicant (RSA Holder) to be in active employment and must have an offer letter for the property which must be duly signed by the property owner and verified by the mortgage lender.  

The Retirement Savings Account (RSA) of the applicant must also be active for at least five years with both the employer and employee making the mandatory contributions. 

While any RSA holders with less than three years to retirement are not eligible, couples who are both RSA holders can submit a joint application subject that both individuals satisfy all the requirements. 

Meanwhile, Investors King learnt that the news generated mixed feelings among the concerned workers. A number of people commended the new development while some pick hole in it.

Abiodun Bamiduro who commented on the official twitter handle of PenCom (@PenComNig)  said ”  This is long overdue. Better late than never though. Can you also look into the need of RSA holders who are over 50 years of age to access part of their balance for investment in Agriculture before they retire. Starting after retirement makes it more complicated”. Abiodun concluded.

Another commentator, David Ezennia said “Long awaited good news for developers in the real estate sector”. An elated commentator who goes by the name Proudly Nigeria said ” From Monday, I will storm my PFA to inform them and also meet with my mortgage banker to fashion out how to access the fund”. 

The National Pension Commission otherwise known as PenCom was established by the Pension Reform Act 2004, to regulate, supervise and ensure the effective administration of pension matters in Nigeria. PenCom gives licence to Pension Fund Administrators (PFAs) and also oversees pension policy guidelines to protect the interest of the Nigerian workers. 

 

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Pension Schemes Brace for Dramatic Inflation Increases

Almost six in ten (57%) pension fund managers are predicting further dramatic increases in inflation over the next 12 months

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New research from Ortec Finance, the leading global provider of risk and return management solutions for pension funds and other institutions, reveals almost six in ten (57%) pension fund managers are predicting further dramatic increases in inflation over the next 12 months. A further quarter (26%) predict a slight increase over the next 12 months.

The international study with pension fund managers responsible for a collective $1.946 trillion assets under management reveals that they have already taken steps to protect their schemes against inflation by increasing allocations to specific asset classes. Over half (56%) have switched investments to commodities, inflation linked bonds (56%) and infrastructure (51%).

The action taken means almost all (98%) pension fund managers interviewed in the US, UK, Australia, Canada, the Netherlands, Switzerland and the Nordics believe their scheme is already well hedged against inflation with over half (54%) saying they are ‘very well hedged’ against this risk.

Pension fund managers say schemes are set to further change allocations in the year ahead to continue to help hedge against inflation. Over half (53%) plan to increase allocations to inflation linked bonds while nearly half (49%) will switch to commodities and 49% to real estate investment trusts (REITs) over the next 12 months.

The table below shows action taken by pension fund managers on asset allocation to hedge against inflation over the past 12 months and plans for the next 12 months.

ASSET CLASS PERCENTAGE THAT HAS ALREADY INCREASED ALLOCATION TO HEDGE AGAINST INFLATION PERCENTAGE THAT PLAN TO INCREASE ALLOCATION IN THE NEXT 12 MONTHS TO HEDGE AGAINST INFLATION
Gold 29% 24%
Commodities 56% 49%
Equities 40% 43%
Inflation linked bonds 56% 53%
Infrastructure 51% 44%
Real Estate Investment Trusts (REITs) 45% 49%
Direct investment into real estate 20% 28%

Marnix Engels, Managing Director, Pension Strategy, Ortec Finance said “It’s impressive to see how confident pension fund managers are about the impact of inflation on pension schemes over the next year, particularly as so many predict that inflation will continue its dramatic rise.

“Many schemes have already reallocated to certain asset classes in order to help inflation-proof their portfolio, and more are looking to do so in the next 12 months, as they predict future turbulence and inflation rises in the next 12 months. By modelling and mapping ahead, schemes are able to weather the storm, and overcome any short-term risks while still achieving their long-term objectives.”

Ortec Finance models and maps the relevant uncertainties in order to help pension funds monitor their goals and decisions. It designs, builds, and delivers high-quality software models for asset-liability management, risk management, climate scenario modelling, portfolio construction, performance measurement and attribution, and financial planning.

 

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PTAD Begins Revalidation, Adjustment of Pensioners’ Excess Funds

The Pension Transitional Arrangement Directorate (PTAD) has officially begun the planned placement of pensioners who have enjoyed excess payment of monthly pension to their accurate pension.

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As part of its efforts to sanitize and ensure a corrupt free administration and management of pensions in Nigeria, the Pension Transitional Arrangement Directorate (PTAD) has officially begun the planned placement of pensioners who have enjoyed excess payment of monthly pension to their accurate pension.

This was disclosed in a statement signed by the Head, Corporate Communications of PTAD, Olubenga Ajayi.

According to the statement, the decision was made in response to the results of the expanded computation project and the re-validation of pensioner’s career documents, both of which were started by the Directorate in 2020 for the Civil Service Pension Department.

The statement read: “Based on the payroll inherited by PTAD, a total of 14,836 retirees were receiving monthly pensions in excess.

“According to the meeting that was held in June 2022, by the Executive Secretary of PTAD, Dr. Chioma Ejikeme, and the management team of PTAD held a meeting with the Executive members of the Nigeria Union of Pensioners(NUP) and the Federal Civil Service Pensioners Branch (FCSPB) to inform the Unions of the Directorate’s plan to properly place pensioners in the Civil Service Pension Department (CSPD) who were being overpaid on their accurate monthly pension.

At the conclusion of the meeting, the parties agreed that the affected pensioners would be contacted and informed of the Directorate’s plan to properly place them on the correct monthly pension beginning in the month of July 2022, while the modalities to recover the over payment would be worked out in due course. Since then, letters have been delivered to the impacted pensioners”.

Meanwhile, so far, 14,825 pensioners’ monthly payments have been changed to reflect their correct computed monthly pensions.

 

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