The Pension Fund Operators Association of Nigeria (PenOp) revealed that, as of the second quarter, 442,000 retirees had received lump sum payments totalling N1.63 trillion within the pension Industry.
It was stated that their remuneration was facilitated through program withdrawals and annuity products.
A lump sum is a single payment of money, as opposed to a series of payments made over time.
PenOp acts as the umbrella organisation for Pension Fund Administrators (PFAs) in Nigeria, playing a key role in ensuring the effective functioning of the pension system across the nation.
Mr Oguche Agudah, Chief Executive Officer (CEO), of PenOp, said this at a media parley with the title, “At the Dawn of 20 Years of Pension Reform, What are the Gains?”, held in Lagos.
In the same time frame, N665.13 billion was paid out in lump sum payments for life annuities to 111,708 applicants, and N964.24 billion was disbursed to 330,201 retirees.
According to the CEO, under the reformed pension scheme, a total of N208.86 billion has been distributed to 475,000 Nigerians who lost their jobs, constituting 25% of their Retirement Savings Accounts (RSAs).
Pension Payment to the Beneficiaries of the Deceased
Agudah also highlighted the pension industry’s commitment to the welfare of deceased employees’ beneficiaries.
During the recent review period, a substantial N356.32 billion was allocated for death benefits, benefiting 91,214 individuals.
This marks a significant increase from the N6.31 billion distributed to 2,896 beneficiaries during the corresponding period in 2011.
Housing Pension
He added that the pension industry actively addressed the housing requirements of retirees by reviewing 649 applications and authorising payment of N7.89 billion for equity contributions in residential mortgages.
As of the mentioned period, the Asset Under Management (AUM) for the pension industry stood at N17.35 trillion.
Agudah said the figure reflected a Compound Annual Growth Rate (CAGR) of 20.32% since 2007 when the AUM stood at N815.18 billion.
Agudah reported a Compound Annual Growth Rate (CAGR) of 20.32% since 2007, when the Assets Under Management (AUM) was N815.18 billion.
Public and Private Sector Contribution
In addition, he pointed out that in the second quarter of 2023, contributions from the public and private sectors surged to a total of N9.37 trillion.
He stated a 54% increase, highlighting that the PFAs had committed N7.98 trillion, yielding a 46% return on investment.
He noted that the pension fund was doing a lot in infrastructure, equity market and corporate debt securities.
The PenOp boss said since its establishment in 2004, the pension industry had been subject to robust regulation and protection, ensuring transparency and accountability within the scheme.
These measures, he maintained, had contributed to the industry’s success in safeguarding pension funds and providing retirees with reliable income streams.
“The pension industry in Nigeria has recorded enormous transformation and progress in the last twenty years,” he said.
More Insights
On his part, Dr Ehimeme Ohioma, Head of the Surveillance Department at the National Pension Commission (PenCom), noted that adequacy and sustainability are pivotal for the pension industry’s success.
“Monthly pension must be adequate to sustain the pensioners after retirement for a long period.
“We must also ensure that the pension fund earns good Return on Investment (ROI) and the RoI is above the inflation rate,” he said.
Ohioma noted that the pension scheme had come to stay and could not be reversed because the industry players had maintained a high standard over time to sustain the successes achieved.
What you should know
The Pension Reform Act (PRA) of 2004 emerged as a corrective measure to tackle the inefficiencies in the Nigerian pension system, notably under the Defunct Benefits Scheme (DBS), during the tenure of former President Olusegun Obasanjo.
This Act was introduced to guarantee the application of uniform regulations and standards in overseeing retirement benefits across both private and public sectors.
Additionally, it aims to promote personal savings to meet the financial needs of individuals in their later years.
