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Nigeria: Pension Scheme Records 4.5 Million Contributors
All Africa
July 27, 2010
Nigeria
The licensed Pension Fund Administrators (PFAs) managing the new contributory pension scheme in Nigeria have registered 4,540,352 employees as at the end of second quarter of the current year, the National Pension Commission (PenCom) has announced. PenCom is the supervisory authority in nation's pension industry.
According to the commission, the contributory pension scheme established by the Pension Reform Act 2004 for employees in the country recorded 4,132,217 contributors as at the end of first quarter of the year. This means that more than 400, 000 contributors joined the scheme between the month of March and June 2010. The figure was 4.01 million as at the end of December 2009.
PenCom said that the PFAs have registered 3.88 million contributors as at the third quarter of 2009 and 3,706,467 contributors as at the end of second quarter of 2009. The figure was 3.54 million contributors on March 31, 2009.
The pension scheme established for both employees in the public and private sectors of the economy has recorded 1.96 million contributors as at March 16, 2007 and 2.12 million contributors as at April 20, 2007.
The Director General, PenCom, Muhammad Ahmad had during an interview with the Daily Independent in Lagos, disclosed that the current number of contributors still fell short of expectation given the population of the country and the number of people engaged in active service at present.
PenCom pointed out that the number of contributors is still a far cry from the estimated working population of 42 million people. This may probably be due to poor compliance from the private and informal sectors, as well as non implementation of the scheme in some states of the federation.
According to the information posted on the PenCom's website, the number of employees who have registered under the new scheme was 839,254 on June 19, 2006.
The figure rose to 1,003,947 on June 13, 2006, before increasing to 1,206,081 on August 24, 2006, 1,300,255 on September 19, 2006, 1,702,277 on January 8, 2007 and 1,832,751 on February 20, 2007. The figure was already 1,961,814 as at March 16, 2006.
The Pension Act establishes a contributory pension scheme for payment of retirement benefits of employees in the Public Service of the Federation, Federal Capital Territory and in the Private Sector where there are five or more employees in employment in an organisation. The act became effective from June 25, 2004.
The objectives of the scheme are to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due.
It is also designed to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age, while also establishing a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the Public Service of the Federation, Federal Capital Territory and the private sector.
The major operators under the new pension dispensation in the country are the PFAs and Pension Fund Custodians (PFCs). The PFA manages pension funds and assets, while the PFC holds pension funds and assets.
Every employee is required to maintain an account referred to as retirement savings account in his name with any pension fund administrator of his choice.
The employee may, however, not more than once in a year, transfer his retirement savings account from one pension fund administrator to another without adducing any reason for such transfer.
The employee is required to notify his employer of the pension fund administrator chosen and the identity of the retirement savings account opened but the employee does not have access to his retirement savings account nor have any dealing with the custodian with respect to the retirement savings account except through the pension fund administrator.
The employer is empowered by the Act to deduct at source the monthly contribution of the employee in his employment and not later than seven working days from the day the employee is paid his salary, remit an amount comprising the employee's contribution and the employer's contribution to the custodian specified by the pension fund administrator of the employee to the exclusive order of such pension fund administrator.
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