Distinguished participants, ladies and gentlemen. It
is my honor and privilege to welcome you to, and say a few words at this 2nd
forum being organized in Nigeria by Africonomie for African Pensions. As with
the previous year, I am confident that this meeting will be stimulating and
informative to all present as we discuss key issues surrounding pensions on the
African continent and Nigeria in particular.
I
am indeed delighted that many of you have found the time to attend. This is evidence
of your commitment to discuss ways we can improve and strengthen the Nigerian
Pensions system over the long haul. Nigeria has drawn a lot of international
attention in recent years due to the success of its Contributory Pension
Scheme. The Scheme has been in existence for only 10 years and is therefore
relatively young when compared to some of its counterparts in Africa. The
common vision shared by all the players in the Nigerian Pensions industry is to
see this Contributory Pension System grow to its full potential. This is by no
means an easy task especially when we consider the size of our economy, our population
and a lack of proper understanding and often mistrust at all things pensions.
Nevertheless, a lot has been done since then by the National Pension Commission
(PenCom) and pension Operators to develop and improve the new pensions system.
The Commission has ensured strict supervision and regulations. Together with
Operators, it has continued to build contributors confidence and provides assurances
on the viability, sustainability, and safety of the CPS.
As at May 31, 2015Nigeria’s Contributory
Pension Scheme had approximately 6.6m contributors and assets in excess of USD25Billion.
As impressive as this may sound, we have only just started. Much more remains
to be done. We have covered less than one tenth of the working population; the
assets are less than 5% of GDP and the effect on economic development is still
at embryonic stage. To effect significant changes, it is imperative that the
Regulator, Pension Operators and other key stakeholders work together to build
a strong and sustainable pension system that works for our environment.
I will briefly mention a few
key things that can facilitate the attainment of this long-term objective:
a. Regulation – the secret behind any solid
structure is its foundation. For the pension system in Nigeria, the foundation
is the law and by extension the Regulator that is custodian of this law. The
National Pension Commission (PenCom). In order for the system to succeed and be
sustainable, the Regulator must remain focused and continue to be innovative inits
guidelines, regulations codes and various other rules of operations. While
being consultative it must continue to be firm in monitoring and supervising
the management and administration of the Funds. It must also enforce compliance
by employers in accordance with the law and sanction those who contravene any
section of the Act. Fortunately the PRA 2014 has conferred more powers on
PenCom in this regard. In addition PenCom must continue to engage Regulators in
other industries that have a bearing on pension funds management.
b. Enlightenment
of the General public
– There is a strong need to re-orientate the general public on the need for
pensions and assure them of the effectiveness of the Contributory Pension
Scheme. The States and Local Governments and indeed the informal sector should
also be encouraged to join the scheme as required by Law. The mistrust from the
past experiences still lingers and this must be dealt with by assurances of the
safety of the current CPS structure if we want to move forward in building a
strong and sustainable pension system.
c. Collaboration
of key stakeholders
– This is extremely important in achieving sustainability. The Pensions
industry is only a part of the financial services industry and many of the
activities are inter-related with other important stakeholders namely SEC, CBN,
FIRS, FMDQ, NASD, Private Equity and Infrastructure Funds etc. This inter
relation is the ecosystem that must be nurtured through collaborative efforts
based on mutual interests and a shared desire to see the Nigerian economy grow.
d. Investment
of Pension Funds
– An enabling environment that facilitates the creation of quality investible
products and alternative asset classes through which the pension assets can be
invested safely but with relatively high returns for the contributors must be
encouraged. Included in these areas of consideration are private equity,
infrastructure bonds and funds, and real estate backed instruments. It is
important to mention here that financial intermediaries have done some work in
this regard. However a lot more needs to be done with regards to enlightenment,
capacity building to give pension funds comfort in terms of risk and
safety. In addition, to make matters
more challenging for the alternative asset class, plain vanilla asset classes
have remained very attractive in terms of risk return profile.
I therefore call on us all to
engage one another, to explore and share ideas towards three main areas of
focus: how to increase coverage; how to increase the assets under management
and how to design a safe and workable system to ultimately channel pension
funds for real economic development.
Conclusion
Certainly after 10 years of
Pension administration, the Nigerian pensions industry has made significant strides,
but as with all things there is always room for improvement and advancement. A
lot more needs to be done. This forum is an opportunity to exchange ideas. Interaction
and collaboration with the international community can also aid in enhancing
the learning experience and drive our pensions industry to have much more
impact on our economy.
Beyond all these however, we
must strive to walk the talk. Very often we have seminars; workshops, retreats
and conferences but implementation and execution remain a challenge. Let us try and change that.
Once again, I warmly welcome
you to the Forum and look forward to fruitful deliberations.
Thank you and God bless
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