Huge pension liabilities by some state governments  and negligence of some private sector employers to remit pension contributions of their workers have slowed the growth of pension fund assets by no less than N2.6 trillion, LEADERSHIP can report.
Although, the pension assets have risen from a deficit of N2 trillion in 2004 when it was created, to about N12.4 trillion as at the end of April, 2021, market observers believe the assets could have risen to N15 trillion or more by now, if all states of the federation subscribed to the Contributory Pension Scheme (CPS) and the private sector employers who have subscribed remitted their employees’ contributions as at when due.
Investigation showed that by the end of December, 2020, 25 states of the federation have actually enacted laws on CPS, while 12 states are either at the bill stage or operating a different pension schemes.
Of the 25 states that have adopted the scheme, LEADERSHIP learnt that only 10 states were remitting both the employees’ and the employers’ contributions to the Retirement Savings Accounts (RSAs) of their workers. Of the 10 remitting states,  only five of them are actually remitting pension contributions as at when due, while others remitted occasionally, a development that is responsible for the rise in huge pension liabilities of states.
Similarly, the federal government’s pension liability is about N100 billion, although, the federal government has improved overtime in the area of budgetary provisions and allocation to cater for its accrued rights, which are gradually coming down in recent times.
Moreover, investment income, a critical component of the pension assets, according to investigation, has equally receded in recent times, hence, leading to a drop in the assets for the month of February, 2021.
All these factors conspired to slow the rate of growth of the pension funds, a development that experts said, must be addressed now rather than later to allow contributors get the desired value on their money.
Meanwhile, the National Pension Commission(PenCom) has taken defaulting employers in the private sector to court with some convicted, other defaulting employers have been made to pay about N9 billion unremitted funds as well as N9 billion monetary sanctions, making it a cumulative N18 billion paid by these erring firms.
This has somehow increased compliance in the private sector but the commission seems to be handicapped when it comes to state compliance, as the law had to first of all be domesticated by the houses of Assembly in the state, hence, diminishing the power of PenCom to prosecute at the state level.
Speaking in an exclusive interview with LEADERSHIP yesterday, the Head, Corporate Communications Department, PenCom, Mr. Peter Aghahowa, corroborated that if there was effective compliance from states and the private sector players, the fund could have grown at a more rapid speed. He said his commission was not relenting in a bid to fully enforce compliance.
Aghahowa also said the commission had taken lots of defaulting employers to court and they have been prosecuted, while some have been forced to cough out their debts and paid monetary penalty for such default, promising that the commission will always provide the best direction for the pension industry to increase its participation in economic growth and development of the country.
Moreover, he said PenCom is engaging state governments on the best possible ways to adopt the new pension scheme as well as persuading them to remit promptly to secure the future of their workers.
He disclosed that the commission went to Nasarawa, Plateau and Edo states recently to discuss with them on adoption and compliance, even as PenCom had paid such visit to other states in the past, a development, he said, is gradually raising compliance level in states.
PenCom has also taken it upon itself to publish quarterly the status of each state as regards compliance to pension scheme, adding that, “this has made some state governments to sit up and do the needful.”
Similarly in a chat with LEADERSHIP, the director, Centre for Pension Rights Advocacy(CPRA), Mr. Ivor Takor, urged labour unions to compel the defaulting state governments  and firms to pay up ther outstanding pension as this is critical to the future of workers in the country.
He said that while the unions are fighting for salary increase and other emoluments, they should not forget to mount pressure on state governors to secure workers’ future by adopting the contributory scheme and remit promptly.
According to him, ” the Contributory Pension Scheme, unlike the old Defined Benefit Scheme that it replaced, has inbuilt safeguards meant to protect the fund from mismanagement and fraudulent practices. The scheme is fully funded through monthly contributions, which are put into RSAs owned by employees. Employers cannot access the funds. The funds are warehoused by Pension Fund Custodians(PFCs)  and managed by Pension Fund Administrators(PFAs). The law established PenCom, among other objectives, to regulate, supervise and ensure the effective administration of pension matters and retirement benefits in Nigeria.”
“The adage that ‘rest is sweet after labour’ may after all not hold for employees of most states and local governments in the country. The adage holds sway only for employees who have gotten their rest planned for them by their employers during the period of their labour. Unfortunately for employees of most states and local governments, this type of planning is alien to the managers of their  affairs,” he added.
Speaking on behalf of pension fund operators, the chief executive officer (CEO) of the Pension Fund Operators Association of Nigeria(PenOp),  Oguche Agudah, explained  that pension operators work assiduously to grow the pension fund assets contributed by RSA holders, while trying to balance between safety and returns on investments.
He noted that as part of efforts to grow the pension fund assets, operators are eyeing other alternative investment options aside from the government bonds and treasury bills.
Agudah said the pension fund assets declined by N51.30 billion in February, 2021. This was attributed to the depreciation in the prices of Fixed Income Securities (FISs) in the trading portfolios of the Approved Existing Schemes (AES), RSA Funds II and IV and Closed Pension Fund Administrators (CPFA), explaining that, the loss in percentage is minimal when subtracted from the N12.29 trillion pension asset.
The managing director/chief executive officer, Fidelity Pension Managers, Amaka Andy-Azike, explained that the decline in the pension funds in February, 2021, was because of unrealised losses according to the terms of the equity market, adding that pension funds operators are sourcing for other means to increase the yields.
As operators, we focus more on the safety of funds when investing even as we try to also give fair returns on your investments. The decline in pension funds was because of the market volatility; the money market, bonds and treasury bills have been fluctuating due to the nature of what the economy experienced last year and is still going through,” she stressed.
In the same vein, the director-general, Lagos Chambers of Commerce and Industry (LCCI), Muda Yusuf,  said low yield on fixed-income securities and escalating inflation rate are threats to the growth of pension fund assets in the short and medium-term.
He noted that the growth trend of the pension assets has been on the upward trajectory in the last three years with assets under management rising by 42.9 per cent in less than three years, from N7.94 trillion as of March 2018 to over N12 trillion.
Meanwhile, the director general, PenCom, Mrs. Aisha Dahir-Umar, assured that the commission will not relent in its efforts to deepen pension coverage in the country, thereby, mobilising enough savings that could be effectively deployed for economic growth and development.
According to her, the pension fund is not only giving good returns on investment to contributors, but PenCom will continue to roll out policies to further secure and protect   pension assets, urging contributors to calm their nerves as their savings are in good hands.