PenCom plans investments diversification post-COVID-19

• To focus on stocks, infrastructure, housing assets
As the Coronavirus (COVID-19) pandemic continues to ravage economies globally and impacting businesses negatively, the National Pension Commission (PenCom), said it is making plans with industry stakeholders to diversify the investment portfolio of pension assets, and deepen investment channels.

As the regulator responsible for establishing rules, guidelines, and standards for pension fund investment by licensed Pension Fund Administrators (PFAs), the Commission said it is also reviewing its policies with a view to boosting pension fund investments post-Covid-19.

The Commission said it was making wide range stakeholder engagements with focus on development of Capital Market products, which includes hedging tools that would serve as buffer to safeguard pension assets especially during volatile periods such as the current Covid-19 pandemic.

Speaking exclusively to The Guardian, the Acting Director-General, PenCom, Aisha Dahir-Umar, said the Commission is accelerating ongoing efforts with respect to engaging government agencies, private sector participants, and multilateral development financial organisations in developing infrastructure and housing assets that meet requirements for pension fund investment.

She said PenCom is eager to encourage pension fund investments in infrastructure and housing without compromising the major objectives of pension fund investments, which are safety of the assets and maintenance of fair returns on investments.

According to her, the COVID-19 pandemic has affected Nigeria’s economy and has resulted in its slowdown, and a decrease in asset prices, noting that it presents an opportunity for pension funds, which have long-term investment objectives, and to take advantage of the low prices in the stock market to achieve long-term objective of fair returns to contributions.

She said: “There are some opportunities for pension funds, given the long-term investment outlook. One of the likely fallouts of the COVID-19 pandemic is that prices of stocks may drop over the short to medium term.  This would provide an opportunity for long-term investments by pension funds.

“Fortunately, the multi-fund investment structure which the Commission introduced in 2019 provides further impetus towards long-term investments. This may be one of the likely fallouts of the COVID-19 pandemic. However, the expected rebound in the years ahead will provide adequate compensation.”

Speaking on the measures put in place to ensure employers of labour do not use the pandemic as an excuse to evade contributing their quota to their employees’ Retirement Savings Accounts (RSA’s), Dahir-Umar said the Commission would continue to use existing strategies to ensure compliance with the provisions of the Pension Reform Act (PRA) 2014.

President, Pension Fund Operators Association of Nigeria (PenOp), Wale Odutola

Her words: “It is imperative to point out that Section 4(1) of the Pension Reform Act (PRA) 2014, prescribed the minimum rates of pension contributions as 10 per cent and eight per cent of monthly emolument for the employer and employees, respectively.

“Section 11(3) of the PRA 2014 also requires that monthly pension contributions are deducted at source, and remitted to the Pension Fund Custodians not later than seven working days from the date of salary payment.

“The Commission will continue to use all its existing strategies to ensure that employers comply with the PRA 2014 by remitting pension contributions to their employees Retirement Savings Account (RSA) as and when due.

“The Commission has a fully functional Complaints Monitoring and Resolution team, which attends to complaints on non/late/under-remittance of pension contributions into employees RSAs, and the Team uses a regime of sanctions, which guides the administrative steps taken when complaints are received.”

Meanwhile, she said the Commission’s appointed agents would continue to review the pension records of employers with a view to recovering all unremitted pension contributions for the benefit of the employees, noting that penalties for late remittance of pension contributions would continue to be charged in line with Section 11(7) of the PRA 2014.

She maintained that the penalties would be remitted to the employees RSAs, and serve as compensation for loss of income that would have accrued on the contributions if they were remitted as and when due.

She charged contributors to regularly review their RSA statements from their PFAs and report immediately, instances of non–remittance of pension contributions and appealed to all stakeholders, including the media and employees to forward the names and addresses of the employers that are not in compliance with the provisions of the PRA 2014 for necessary action.

She said PenCom would continue to work to ensure required authorisations are given to the PFAs, to ensure that payment of benefits to retirees are promptly made, noting that the PFAs on their part have put structures in place to ensure seamless payments of monthly pension to retirees.