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Using Pension Fund For COVID-19 Palliatives

Published

7 months ago

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Some media outfits on Saturday 25th April 2020, carried the response of the President of the Nigeria Labour Congress (NLC), Comrade Ayuba Wabba, mni to a question as to wether the Contributory Pension Fund could be used as palliatives as the lockdown entered the fourth week. The said question was asked during the Joint National Briefing of the Presidential Task Force on COVID-19 in Abuja on Friday 24th April 2020. The NLC President as expected, opposed using Contributory Pension Funds for palliatives. He was quoted to have said that “pension fund is not free money; it is the money that belongs to pensioners, which is in pensioners retirement savings accounts. It is structured in such a way that a pensioner continues to draw this money throughout his life. He talked about the need to protect the fund and ensure that pensioners or the workers contributing the monies would have something to rely on”. He was further quoted as haven concluded by saying that the money should not be used for COVID-19 palliatives. For taking this position and saying it out and clear, we at the Centre for Pension Rights Advocacy (CPRA) are proud of him.

The Secretary to the Government of the Federation and Chairman of the Presentational Task Force (PTF) on COVID-19, Boss Mustapha, was quoted to have assured that the federal government will not borrow from Contributory Pension Fund to provide palliatives to cushion the effect of COVID-19 lockdown in the country. He was quoted to have said: “We had looked at the issue of pension funds. As a matter of fact we even got the Minister of State of Education to do us a position paper and our conclusion is that the time is not even right for us to go there because the entire world order in terms of our economy and in terms of our health system has been disrupted by COVID-19 and the consequences nobody can imagine until the dust is settled.”

We at the Centre applaud the conclusion reached by the Presidential Task Force on the matter. This conclusion and the response of the NLC President would have been sufficient to put to rest, any further comment of the matter. However, some issues in the SGF’s response need to be addressed and that is what we intend to do here.

The SGF was quoted to have said: “As a matter of fact we even got the Minister of State of Education to do us a position paper and our conclusion is that the time is not even right for the us to go there …”. The federal government has been eyeing the Contributory Pension Funds for a long time now. First it was for infrastructural development and now for COVID-19 palliatives. The Centre along with other critical stakeholders of the fund including the NLC had made it known that they are not opposed to using pension funds for infrastructural development because pension funds are long term investable funds that are also opened for investment in infrastructure, provided that is done within a legal framework acceptable to all. Therefore we will rest the case with regard to infrastructural investment of pension fund.

What is worrisome at the moment to us at the Centre is the idea that government had even eyed the Contributory Pension Fund for COVID-19 palliatives. Unfortunately, whenever there is a slide confusion in the economy, government without first taking into consideration the principal objectives for which the fund was established; which is ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory, States and Local Governments or the Private Sector receives his retirement benefits as and when due; and assist improvident individuals by ensuring that they save in order to cater for their lively hood during old age.

That the PTF even remotely considered the use of the Contributory Pension Funds for COVID-19 palliatives to the point of getting a Minister to do a position paper for government on the matter, is a matter of great concern to some of us stakeholders of the fund. This discussion will limit itself and will therefore not go into discussing the federal government compliance with the provisions of the Pension Reform Act 2014. The Act established the Fund, and laid down rules and guidelines on how the fund should be manage, invested and pensions paid.

It is impossible for the government, to take pension fund for any purposes outside the law establishing the Fund. In the first place, almost 70% of the funds had been invested in government treasury bonds. The money is not cash. Assuming without conceding that it can be used for COVID-19 palliatives, then the government will have to first provide the cash to buy back the bonds.

In the total funds in the kitty, Federal and States Governments workers account for less than 50% of the value of the over 10 trillion Naira Contributory Pension Fund. The balance is owned by private sector workers. The composition of the Fund is the contributions of public sector workers, private sector workers and the return on investments. The fund is being used for the payment of current pensioners under the Contributory Pension Scheme (CPS) and future pension for current workers (contributors) in both the public and private sectors. The fund is in the respective Retirement Savings Accounts (RSA) of the pensioners and workers. Moreover part of the fund, has been used to purchase annuity with Life Insurance providers, for retirees who opted for Annuity as against Programme Withdrawals housed by Pension Funds Custodians and managed by PensionFunds Administrators.

The question, which the person who asked the question during Friday’s Joint National Briefing of The Presidential Task Force on COVID-19 and the Presidential Task Force that commissioned the Minister to State of Education to do a position paper on the matter have to answer is: how can money that already belongs to the pensioners and workers become a palliative?

We conclude by siding with the NLC President’s position that the Contributory Pension Fund can not be used for COVID-19 palliatives now or in the future. Rather the fund should be protected for the achievement of objectives for which it was established. We also want to remind all that the Federal Government lacks jurisdiction over the management of the Fund; the mandate of the government is to provide the enabling law and the regulation of the Fund.

Ivor Takor, Director, Centre for Pension Right Advocacy

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Pension

RSA Transfer: PenOp Charges Pension Operators To Maintain High Ethical Standards

Published

5 days ago

on

November 25, 2020

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By Sola Alabadan

Pension Fund Operators Association of Nigeria (PenOp) has charged its members to maintain high standards of ethics in the conduct of their business, especially as it is possible for holders of Retirement Savings Account (RSA) to transfer their RSA from one PFA to another.

The Governing Council of PenOp also hailed the National Pension Commission (PenCom) for eventually opening the RSA transfer window, saying it is a welcome development.

PenOp’s Media, Communications & Branding Officer, Ukemeobong Akanam, stated that the council believes this development will accelerate the journey towards greater self-regulation in Nigeria’s pension industry. The council also commended President Buhari for the constitution of the PenCom board.

The Governing Council meeting which was held virtually for the first time, had in attendance all the Trustees and Executives of the association. The meeting was directed by the Chairman of the council of PenOp – Professor Fabian Ajogwu.

The other attendees were Ms. Daisy Ekineh, the former acting Director-General of the Security Exchange Commissionand CEO of DSE advisory Limited, Muhammad Ahmad; Pioneer Director-General of the National Pension Commission and current chairman of Polaris Bank, Alhaji Bello Maccido; Chairman of FBN Quest Merchant Bank Limited and six Executive Council members comprising of Wale Odutola; President, Akeeb Akinola, Vice President, Oguche Agudah, CEO PenOP, Amaka Andy-Azike, Head of Branding & Communications Committee, Glory Etaduovie, Head, Legal And Regulatory, Eric Fajemisin, Head, Technical Committee and Bayo Yusuf, Treasurer.

The Governing Council of PenOp provides advice and guidance to the Executive Committee in the running of the affairs of the association.

PenOp is an independent, non-governmental, non-political and non-profit making body established to promote the operations of the pension industry, provide for self-regulation and ensure that international best practices relating to the industry are observed by the operators registered in Nigeria.

It is the umbrella association for all the Licensed Pension Fund Custodians, Pension Fund Administrators and Closed Pension Fund Administrators (PFCs, PFAs and CPFAs) operating in Nigeria.

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E-News

Kwara Set To Stop Ex-Governors’ Pensions

Published

2 weeks ago

on

November 13, 2020

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Kwara State Governor, Abdulrahman Abdulrazaq, has said he will initiate measure to repeal the law that awards pension to all former governors and their deputies that have served in the state.
Abdulrazaq disclosed this in a statement signed by his Chief Press Secretary, Rafiu Ajakaye, on Friday.
The governor said he would Initiate a bill to the State House of Assembly that passed the law that former governors and their deputies be paid pension to repeal the law.
The Kwara State House of Assembly in 2011 passed a bill to pay pensions to governors and their deputies who have completed their tenure in the state.
Among the past governors of the state are the late Mohammed Lawal, Bukola Saraki, and Abdulfatah Ahmed.
The statement read in part, “Kwara State Governor AbdulRahman AbdulRazaq will next week send a bill to the State House of Assembly requesting the lawmakers to immediately repeal the law awarding pension packages to former governors and former deputy governors.
“The Governor has listened to voices of the majority of the citizens opposing the pension law for former governours and deputy governors. In line with his campaign mantra and as a product of democracy himself, he will be sending a bill to the House of Assembly next week requesting them to repeal the law.
“As representatives of the people, the lawmakers would exercise their discretion to call a public hearing on the topic to further harvest wider opinions on the topic.
“However, the Governor feels it is time for the law as it is to give way. He would rather commit scarce public funds to tackle the question of poverty and youth unemployment.”

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Pension

APC Denies Lagos Being Forced To Repeal Pension Law

Published

3 weeks ago

on

November 12, 2020

By

 

The All Progressives Congress (APC) has refuted allegations by the opposition party in the State concerning the move by Governor Babajide Sanwo-Olu to repeal the pension law of the State in respect of former governors and their deputies.

Seye Oladejo, spokesman of the party in Lagos State, stated that while the opposition would be encouraged as part of the development of democratic culture, deliberate falsehood and outright lies do not represent the quality of minds that the people deserve and shouldn’t be the kind of culture that Nigerian children should imbibe.

Refuting the claim by the opposition that the government had planned to borrow and was asked to repeal the pension law as a condition, Oladejo said, “The claim that Lagos State intends to borrow additional huge sums of money from the Capital Market again, but it must cancel the illegal payments to Governors and Deputies by revoking Ex Governors Pension Law in order for PENCOM to qualify its new borrowing for PFAs’ investments is completely false.”

Oladejo maintained that it was expedient to state that the circular issued by Nigeria Pension Commission in Jan 2020 to Lagos State was basically on queries relating to operational differences between the Pension Reform Act of 2004 and the Lagos State Pension Reform Law 2007 and had nothing to do with pensions to governor’s or their deputies.

He said that Lagosians appreciated the steps taken by the Governor to signal selflessness and personal sacrifice in governance and public service. He stressed that only someone who doesn’t wish Lagos well would disparage the move using falsehood.

While commending the exemplary courage of Sanwo-Olu, the spokesman said that the governor made it clear that it was a move to cut the cost of governance and had shown the sincere political will to re-order the priorities of the government in the face of current realities.

“Since its inception, the Sanwo-Olu administration has focused on cost-saving measures to make funds available for important projects. The deliberate refusal of the governor to acquire official vehicles and the low-priced brands allocated to high ranking state officials are moves in the right direction.” He said.

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