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Trustfund laments growing unfunded pension accounts

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Trustfund Pensions Limited has bemoaned the growing number of unfunded retirement savings accounts in the country.

Speaking at the Trustfund Pensions 2019 edition of the Pre-retirement and Retiree Forum, in Abuja, Head, Customer Relationship Management, Trustfund, Rachael Obi, said the slow growth of the economy is affecting the pension industry adversely.

She explained: “We all know that unemployment is a huge challenge in the country. Therefore, we cannot record rapid growth in the number of people in the scheme when unemployment is high especially youth unemployment.

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Apart from the unemployment challenge, remittance in the private sector is also not encouraging. We have a lot of unfunded accounts in the system because the private sector is under a lot of pressure to pay salaries, and keeping those that are working in employment is also a daunting challenge. So, when asked to fund accounts, employers tell us a lot of tales that are unfortunately understandable.”

Amid calls for enhancement of retirement benefits, Obi disclosed that the National Pension Commission (Pencom), has defined ways of enhancing benefits. 

She added: “Pencom categorises retirees by the growth in their retirement savings account over the years and apply certain percentages to enhance their pension. It is the growth in the account that influences the quantum of the enhancement.”

Obi also hinted that efforts are on-going to take the scheme to more states of the federation, adding that the pension industry is collaborating with state governments towards ensuring contributory pension scheme is embraced at the state level.

She therefore lauded Lagos, Delta, Edo, Ondo, Niger, Bauchi, and Gombe that are currently executing the contributory pension scheme, while hinting that discussions are on with the Rivers State Government to come on board.

She said: “For the pre-retirees, we are using this occasion to inform them of what they ought to do in preparation for retirement. They should be conscious about their account balance, they should be conscious about whether their employer is remitting deducted funds and sort all the legacy issues out before they retire.”

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On her part, Regional Manager, North Central, Trustfund, Emuesiri Oshodi, said the call for retirement enhancement is legitimate, and that Pencom is already working on the package, adding, “Pencom is looking into it. The first time pension was enhanced was in December 2017, and the regulator is presently looking at enhancing it again.”

The Managing Director, Access Pension Fund Custodian Limited, Tonie Nwume, said there is a need for stakeholders to be patient with the contributory pension scheme, which is just about 15 years old.

He said: “There is a lot of misunderstanding between the old defined benefit pension scheme and the contributory pension scheme. Some people still don’t realise that pensioners earn as they contribute. In order words, what a pensioner earns is determined by what he or she contributed when working. A lot of people still feel that there is an amount that is defined.”

He also bemoaned the state of the economy and the impacts on the pension industry, saying: “The economy is not growing as expected. The investments that are supposed to make returns on contributions are not coming at the rate people expect.”

Nwume explained that while the 25% that pensioner’s access at the point of exit may seem small, the figure is meant to guarantee sustainability of the scheme going forward. 


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