Informed sources who bemoaned the current leakages in Nigeria’s administration of pension funds, have disclosed Naija247news that over 30% of the nation’s pension funds goes to unauthorised faceless individuals otherwise known as ‘ghost monies’ and that the woes may deepens further if urgent steps are not taking to invest the funds in expanded investment outlets.
The said money constitute sometimes, pay of dead retirees whose retirement’s benefits corrupt pension administrators channel to undisclosed bank accounts for personal advantage.
Such users usually enter fictitious identities to defraud the system out of benefits they were never entitled to.
Such users usually enter fictitious identities to defraud the system out of benefits they were never entitled to.
Investigation revealed that for ghost monies to be successfully mopped from one location to another, spectrum of officials, banks, agencies, human resource departments and other top officials in related departments are usually involved in the chain of transaction.
The growth of Nigeria’s pension funds
A further Naija247news investigation shows that Nigeria’s retirement funds experienced phenomenal growth since government introduced reform, beginning in 2006, which transformed a largely unfunded defined benefit scheme into a defined contribution system that mandated participation from all employees covered by pension plan, and the industry nearly tripled in size between 2009 and 2013.
According to the National Pension Commission (PENCOM), the total pension assets as at the 1st quarter of 2013 was about N3.38 trillion, about 8% of Gross Domestic Product (GDP) of that year, which was a result of the reforms in the industry, with a monthly inflow at the time of about N25 billion pension assets with an average annual growth rate of 30 percent.
The total value of pension assets increased from N4, 419.12 billion as at the end of the 2nd quarter of 2014 to N4, 591.93 billion at the end of the 3rd quarter, representing an increase of N172.81billion (3.19 percent). During the same quarter, the PENCOM received 779 applications for issuance of compliance certificates, out of which 674 employers were issued the certificates while the remaining applications were rejected on the ground that they did not meet the requirements. The employers that were issued certificates remitted the sum of N82.16 billion into 43,321 employees’ Retire¬ment Savings Accounts (RSAs).
The total value of pension assets increased from N4, 419.12 billion as at the end of the 2nd quarter of 2014 to N4, 591.93 billion at the end of the 3rd quarter, representing an increase of N172.81billion (3.19 percent). During the same quarter, the PENCOM received 779 applications for issuance of compliance certificates, out of which 674 employers were issued the certificates while the remaining applications were rejected on the ground that they did not meet the requirements. The employers that were issued certificates remitted the sum of N82.16 billion into 43,321 employees’ Retire¬ment Savings Accounts (RSAs).
Available information also revealed that the Commission received 2,260 applications for the transfer of contributions amounting to N185.82 million from the defunct National Provident Funds (NPF)/National Social Insurance Trust Fund (NSITF) pension scheme to the respective RSAs of contributors.
Upon a review of the applications, the Commission conveyed concurrence for the transfer of N125.07 million into the RSAs of 1,740 applicants, while 141 applications were rejected due to factors like incomplete documentation, zero balances and duplicated applications. The remaining 539 applications were being processed for eventual transfer into RSAs of contributors.
Concern over administration of pension funds
Industry watchers are raising fresh alarm that the ‘silent’ boom in the country’s pension funds also means an escalation of corrupt practices by officials who knows how to manipulate pension funds administration to engorge personal bank accounts like the country witnessed during the tussle between the Senate Pension Probe Committee and Abdulrasheed Maina, elsewhere chairman, Pension Reform Task Team (PRTT).
Despite the claims by Maina, who was a deputy director in the Office of the Head of Service that he was trying to sanitise the Nigerian pension process, which according to him, led to the recovery of over N151 billion, he was accused by the Committee of helping himself with money from the Police pension’s accounts, an allegation many said was only possible because of the huge pension funds available.
According to the Committee which was headed by Aloysius Etuk, and his deputy, Kabir Gaya, with pension funds, Maina allegedly opened accounts in different banks, one of such accounts opened in his younger brother’s name; with the alleged illegal transactions yielding an interest of about N100 million monthly.
The committee observed that it was the mopping of funds from designated banks across the country by Maina that had made it impossible to pay thousands of pensioners across the country for months. Maina was also accused of spending up to N1billion to carry out biometric verification for retirees, both in Nigeria and abroad. On the whole, Maina allegedly misappropriated about N195 billion.
However, Maina denied the allegations and rather, alleged that he was being persecuted for refusing to succumb to the senators’ demand for bribe, and consequently went to court to challenge the warrant issued for his arrest by the Senate. He later instituted a N1.5 billion case against the Senate and the then Inspector General of Police, Mohammed Abubakar who had declared him wanted following a warrant of arrest issued by David Mark, the 7th National Assembly’s Senate President.
“The Pension Fund Administrators have invested N228.3billion in real estate. This amount is about 5.2 per cent of the N4.3 trillion total pension assets as of May, 2014. N190.8 billion and N78.8 billion had been invested in state government securities and corporate debt securities, representing 4.1 per cent and 1.8 per cent of the pension asset, respectively. It stated that N813 million and N7.5 billion had been invested in foreign money market securities and private equity funds in that order.
“The Pension Fund Administrators have invested a total of N1.9 trillion in the Federal Government of Nigeria bonds. This is the best way to go”, Mohammed Shuaibu, former managing director, Amana Pension Managers Limited told NAIJA247NEWS.
Nigeria urge to emulate South Africa and Namibia
A senior official of AIICO Pension Manager Limited who did not want her name on print because of her tie with the current leadership of PENCOM, told Naija247news that a recent report by PENCOM also showed that the PFAs had invested N737.2 billion and N548.7 billion in the FGN treasury bills and domestic ordinary shares, which are 17.5 per cent and 13.04 per cent of the total funds, respectively.
She gave the amount invested in the local money market securities as N355.2 billion; real estate properties, N228.4 billion; state government securities, N195.2 billion and corporate debt securities, N79 billion, and that PENCOM report also showed that N53.16 billion was invested in foreign ordinary shares; N46.2 billion, cash and other assets; N22 billion, open/close-end funds and N9.3 billion, private equity funds.
“Nigeria’s ARM Infrastructure was reported to be close to raising $250 million in the country’s first infrastructure fund, to invest in transport, energy and utility sectors across West Africa, with much of the money coming from pension funds. The fund was expected to close by mid-August and was at the documentation stage with various investors including some Nigerian pension funds and other institutional investors such as the African Development Bank, Opuiyo Oforiokuma, ARM managing director said recent. We are indeed witnessing a departure from the past as far as pension funds administration is concern”, she said.
She noted that Nigeria’s pension assets have grown to $25 billion in 2014, from under $4 billion seven years ago, as the government targets schemes to try to encourage domestic savings. But the funds have traditionally invested in debt and equity portfolios.
Though, she said PENCOM under the current leadership has done credibly well in repositioning pension funds administration, but emphasised that more still need to be done in order for the country to catch up with the likes of South Africa and Namibia who are already ahead in pension funds administration.
“The last regime was also reported to have begun a process of liberalizing regulations on the industry to allow pension funds to put money into certain alternative investments, including private equity, and to invest outside Nigeria’, she said.
“The Pension Fund Administrators have invested a total of N1.9 trillion in the Federal Government of Nigeria bonds. This is the best way to go”, Mohammed Shuaibu, former managing director, Amana Pension Managers Limited told NAIJA247NEWS.
Nigeria urge to emulate South Africa and Namibia
A senior official of AIICO Pension Manager Limited who did not want her name on print because of her tie with the current leadership of PENCOM, told Naija247news that a recent report by PENCOM also showed that the PFAs had invested N737.2 billion and N548.7 billion in the FGN treasury bills and domestic ordinary shares, which are 17.5 per cent and 13.04 per cent of the total funds, respectively.
She gave the amount invested in the local money market securities as N355.2 billion; real estate properties, N228.4 billion; state government securities, N195.2 billion and corporate debt securities, N79 billion, and that PENCOM report also showed that N53.16 billion was invested in foreign ordinary shares; N46.2 billion, cash and other assets; N22 billion, open/close-end funds and N9.3 billion, private equity funds.
“Nigeria’s ARM Infrastructure was reported to be close to raising $250 million in the country’s first infrastructure fund, to invest in transport, energy and utility sectors across West Africa, with much of the money coming from pension funds. The fund was expected to close by mid-August and was at the documentation stage with various investors including some Nigerian pension funds and other institutional investors such as the African Development Bank, Opuiyo Oforiokuma, ARM managing director said recent. We are indeed witnessing a departure from the past as far as pension funds administration is concern”, she said.
She noted that Nigeria’s pension assets have grown to $25 billion in 2014, from under $4 billion seven years ago, as the government targets schemes to try to encourage domestic savings. But the funds have traditionally invested in debt and equity portfolios.
Though, she said PENCOM under the current leadership has done credibly well in repositioning pension funds administration, but emphasised that more still need to be done in order for the country to catch up with the likes of South Africa and Namibia who are already ahead in pension funds administration.
“The last regime was also reported to have begun a process of liberalizing regulations on the industry to allow pension funds to put money into certain alternative investments, including private equity, and to invest outside Nigeria’, she said.
In 2001, Botswana switched from a defined benefit system to a defined contribution plan, extended coverage to more of the working population and opened the market to private competition. At the moment, Botswana has about 100 pension funds jostling for business in a country with 2 million populations. Those funds had combined assets of some $6 billion in 2012, or 42 percent of GDP, according to the Bank of Botswana. Only South Africa and Namibia boast a higher percentage among sub-Sahara African countries.
Efforts to reach PENCOM for official comments did not yield any result as several phone calls to its line were not answered. As at the time of filling this report officials had yet to respond to email bordering on the subject
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