N3trn Pension Money in Wrong Hands

Some N2.94 trillion pension funds are at the disposal of few individuals who are not properly supervised, who have no training in the management, and who dip their hands into it as and when they feel like, according to the Senate.

The national budget is N4.9 trillion and there are pension funds up to N2.9 trillion; suggesting that there are lots of idle funds in wrong hands.

David Mark, president of the Senate, said the money accruing to the pension fund was not yielding any direct benefit to the nation’s economy due to poor management.

“I think the problem we have is that we have all sorts of rookies, people who have no idea about managing funds, not to talk of very huge pensions fund going to manage our pension fund; and I think it is a very specialised area where you cannot just wake up tomorrow morning and be appointed to manage the pension fund, you will mismanage it” Mark said.

The Senate has therefore begun the reform of the Contributory Pensions Scheme (CPS) to repeal the Pensions Reform Act, 2004 and enact the Pension Reform Act, 2013.

The Senate is also considering a proposal to increase the contribution to the CPS from the current 15 per cent of the worker’s salary to 20 per cent, but with the employer making 12 per cent contribution.

Presently, the employer and employee contribute 7.5 per cent each to the worker’s Retirement Savings Account.

Under the new law, employees’ contribution will be reviewed upwards, while the federal government and the federal capital territory’s contribution will be charged on the Consolidated Revenue Fund of the Federation and that of the FCT, respectively.

Mark said that: “I think the essence of this reform is to make sure that people who are properly trained are put in charge of the pension fund and are properly managed. There is hardly any pensioner in this country that is not going through hell”

At the consideration of the bill, Senators said the fund, which had accrued since September last year, could be channeled into more beneficial ventures like financing infrastructural projects and creating employment opportunities.

“As at September 2012, the estimated accumulated pension funds stood at about N2.94 trillion,” Senator Victor Ndoma-Egba, Senate leader, revealed in his lead debate on the Pension Reform Bill 2013, which passed second reading.

Ndoma-Egba explained that the bill was necessitated because of the inadequacies of the extant laws, which resulted in non- remittance of pension contributions to the pension fund administrators by ministries, departments and agencies, delayed payment and sometimes nonpayment of gratuities and pensions to retirees.

In their contributions, the senators said if such funds were properly channeled in the economy, the impact would be better imagined.

The current Pension Funds Act is also marred by under payment of retirement benefits, withdrawal of some security agencies from the scheme, corruption, mismanagement and outright embezzlement of pension funds.

The thrust of the new bill, according to the Senate leader, is to overhaul the entire structure and scheme of pension administration in the country and to establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the public service in all tiers of government and the private sector.

The bill prohibits the chairman and members of the board of National Pensions Commission from owning or controlling any financial equity or interest in any PFA or Pension Fund Custodian during their tenure of office, and forbids them from being directors or shareholders in any PFA and PFC within three years after ceasing to be members of the board.

Ndoma-Egba further said the bill prescribed stiffer penalties for offences under the bill, adding, “Offenders will not only be sentenced or fined, but shall be made to refund money misappropriated, and forfeiture of any asset obtained from the proceeds of any unlawful activity under the bill.”

He said the trial of offences under the bill would be conducted in a court of competent jurisdiction and not restricted to the Federal High Court as provided for in the extant law.