The Managing Director of Legacy Pension Managers, Mr Misbahu Yola, said the 2014 Pension
Reform Act would usher in more subscribers into the contributory pension scheme in the country.
Yola, who spoke to the newsmen in Abuja on Friday, also identified three major innovations in the new pension reform act.
He said the aspect of the act that mandates any employer with a minimum of three employees to enroll into scheme was commendable.
Yola noted that the reduction in the number workers an employer could have from five to three before qualifying to participate in the scheme would give opportunity for more people to participate.
He said the increase in the joint contributions of the employer and employee would also ensure accumulation of more savings for subscribers on retirement.
“The other innovation is the increase in the rate of contribution from 15 per cent to 18 per cent.
“Now, the employer pays 8 per cent and employee pays 10 per cent, which saves more for the contributor and the value of the pension that the employer will get when he or she retires will be enhanced, so, it is a positive thing for the contributor.”
According to him, although the new act makes provision for the inclusion of the informal sector, however certain modalities must be put in place to ensure its workability.
He said that the National Pension Commission and stakeholders in the industry were devising a workable mechanism for practical incorporation of the informal sector.
“The informal sector, the operators and PenCom are in discussion, draft guidelines have been approved and we have made comments,” he said.
He also said that efforts were being made to mitigate the envisaged challenges that might arise in the inclusion of the informal sector.
Yola noted that some of the envisaged issues identified include mode of collection of contributions and payment.
He, however, expressed believe that effective measures were being worked out to ensure its success; “but between us the operators and the PenCom, we are working on how to do that effectively.”
Yola, who is also the Chairman of the Association of Pension Operators in Nigeria (PENOP) noted that the new act encourages more states to participate in the scheme.
He said that in spite of the revenue challenges currently being experience by some states, the importance of participating in the scheme cannot be down played.
On the issue of administrative charges on the account of Retirement Saving Account Holders (RSA), he said that PenCom had pegged the maximum charge to N100 per month.
He, however, said that PFAs were at liberty to charge less but were not authorised to go beyond the prescribed fee by the regulator.
Yola said it was the responsibility of PenCom to issue investment guidelines on everything to pension Fund Administrators (PFA’s).
He stressed that pension assets were not for the general public but for the contributors in the scheme.
“We can invest in infrastructure, but it has to be liquid, that is whenever you want the money you can get it back.
“What we are not allowed to do is to go directly and build a road, we can’t do that, but we can do it through bond, but individual PFA will have to look at it and see if they can bear the risk and determine if that is an investment they can do.”
He noted that legacy pension had consistently grown and remained true to its values of integrity, trust and professionalism.