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Police exit agitations, other issues that shaped pension sector in 2023

The pension sector in the year 2023 recorded its fair share of controversies, despite maintaining steady growth in the year under review. Daily Trust reports…

The pension sector in the year 2023 recorded its fair share of controversies, despite maintaining steady growth in the year under review.

Daily Trust reports that one of the major controversies that rocked the sector is the agitations to exit the Police Force from the Contributory Pension Scheme.

However, other positives from the year under review is the steady growth of pension fund assets, as well as an increase in RSA holders who switched Pension Fund Administrators in search of better services and Return on Investments (RoI).

Police exit agitations

One of the controversies that rocked the pension sector in 2023 is the agitations to exist the Contributory Pension Scheme by Police officers, especially those of the rank and file as well as the retired ones.

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Police exit agitations, other issues that shaped pension sector in 2023

There have been several bills, which were introduced by both chambers of the National Assembly, the last was the bill to set up the Police Pension Board to administer pensions for the Force, which will see the police exit the Contributory scheme.

The bill tagged “A Bill for an Act to establish a Police Pension Board to handle pension matters for personnel of the Force and for Connected purposes, 2022 (SB,1009),” sponsored by Senator Elisha Abbo was first read on the floor of the Senate on June 14 2022.

The bill excludes the Nigeria Police Force (NPF) from the Contributory Pension Scheme (CPS) and returns the force to the old Defined Benefit Scheme (DBS), which the pension board will now oversee just like what is obtainable with the military.

Leading the debate on the bill, Abbo noted that the current pension arrangement of the Nigeria Police Force, NPF, was under the Pension Commission by virtue of Section 5(1) of the Pension Reform Act 2014.

According to him, the Nigeria Police, though the premier law enforcement and security agency, is left on the Contributory Pension Scheme, CPS, unlike the Army, Navy, Air Force and other security agencies that had their Pension Boards.

Before the bill introduced by Senator Abbo, the House of Representatives had introduced a similar bill seeking to exit the Force as well.

Consequently, the Senate in June this year passed the bill for the Establishment of a Police Pension Board, even though experts had warned that the government’s pension liabilities would increase by N2 trillion if the bill gets presidential assent.

However, the bill did not see the light of the day as former President Muhammadu Buhari declined assent to it, although Daily Trust understands that many retired and serving officers, especially those of the rank and file are still calling for its reintroduction in the 10th Senate.

In addition, the Police IGP Kayode Egbetokun finally put an end to the controversy, saying that the Force won’t exit the CPS as it is not in their best interest.

Pension assets growth

Another point of note in the pension sector as the year 2023 rounds off is the fact that pension assets have maintained steady growth despite galloping inflation.

Nigeria’s inflation has maintained steady growth up to over 28 per cent in November according to statistics by the National Bureau of Statistics.

On the other side, the total assets under the Contributory Pension Scheme rose by over N2 trillion in 2023, according to figures obtained from the National Pension Commission.

Report on the pension industry portfolio for the period ended 31 December 2022 showed that pension funds stood at N14.99tn by the end of December 2022.

However, fast track to the last quarter of 2023, the total assets under the Contributory Pension Scheme rose to N17.66tn as at the end of October 2023.

Figures obtained from the National Pension Commission on ‘Unaudited report on pension funds industry portfolio for the period ended October 31, 2023; showed that N11.42tn of the assets were invested in federal government securities.

The assets were also invested in state government securities, corporate debt securities, money market instruments and mutual funds, among others.

Contributions made by the workers from both private and public sectors stood at N9.37tn in the period under review.

Subsequently, workers’ contributions accounted for 54 per cent, while the return on investment accounted for 46 per cent of the entire pension funds as of the end of June 2023 from the beginning of the CPS in 2004.

222,141 workers dump PFAs, in search of better services

Also, no fewer than 222,141 workers changed their Pension Fund Administrators in search of better and efficient service delivery as well as return on investments.

In the process RSA holders moved N908.363bn from their Retirement Savings Accounts since the National Pension Commission opened the window of transfer.

The figures were disclosed by PenCom in its transfers report on ‘Quarterly summary of Retirement Savings Accounts transferred by Pension Fund Administrators’ from the fourth quarter of 2020 to the third quarter of 2023.

The transfer window allows a contributor under the CPS to move all his RSAs from his current PFA to another of his choice once in a year.

Contributors move their RSAs for various reasons including the desire for improved services and rate of return on investments paid on their savings by the PFAs.

In the third quarter of 2023, 19,014 RSA holders dumped their PFAs for new ones and moved N85.99bn, which was their savings balance, to new PFAs.

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