BUSINESS Beyond the gains of World Pension Summit Africa Special
The World Pension Summit Africa Special was held between 7th and 8th July, 2014 in Abuja, Nigeria, was indeed the biggest gathering of pension stakeholders and investors globally. Nigeria had the rare privilege of hosting this critical gathering.
Beyond the direct tourism benefit - hotel bills, shopping, airfare, taxi bills, etc - this global event would impact on the Nigerian economy with far more reaching benefits if the Nigerian pension industry implements some of the solutions advanced at the conference.
This sort of worldwide professional gathering would indeed deepen Nigeria’s Contributory Pension Scheme (CPS) which turned 10 this years and indeed the entire pension landscape.
Though relatively new, the CPS has redefined pension administration in Nigeria and has proven it is a worthy solution to the intractable pension crisis that characterised the Defined Benefit Scheme (DPS). Or how would you explain the situation where the DBS threw Nigeria in some N2.6 trillion pension liabilities. The CPS, however, in just 10 years has accumulated a record N4.3 trillion in pension assets and several billions paid out seamlessly every month by the various Pension Fund Administrators (PFAs) to retirees. And with an average annual growth rate of N500 billion, the pension assets are projected to peak at about N10 trillion by end 2020.
Already, some African countries like Malawi, Tanzania and Ghana have visited Nigeria to understudy the nation’s pension reform with the aim of adopting relevant aspects in their own countries. This is because every pension regulator takes a cue from other jurisdictions to consolidate on the existing scheme in their different countries, for the benefit of contributors, and their respective economies. The shared experiences, was one of the significant benefits of the WPS hosted in Abuja.
However, this huge growth is also throwing challenges on how the economy can benefit more from the assets, in terms of deploying the funds to help in closing the huge infrastructural gap across the country. It is also throwing the challenge of prudent management of the resources, deploying technology to advance the CPS and also how more Nigerians, particularly the informal sector, can also benefit from the security pension provides.
Stakeholders, government officials and public commentators have consistently advocated some of these views. The WPS-Africa Special set out to address all of these concerns and more. Indeed robust engagements and discussions were held across these dominant themes and more.
Stakeholders agreed at the confab that developing appropriate framework would guarantee sustainability and national development.
They also agreed that technology adaptation and policy framework are critical components in deepening pension penetration in Africa and that Nigeria’s CPS has performed enough to embrace.
Pension administration is critical to every government. This, perhaps, explained why President Goodluck Jonathan personally attended the summit to declare it open.
He said during the summit that “pension is globally recognised, occupies a strategic place in national socio-economic development. It is not only a vital component of social security; it is also a veritable vehicle for nation building.” He also said that “indeed, investment in pension has profound impact on the well-being of pensioners, society and the economy at large. As such, it is imperative that stakeholders in this life-shaping industry engage constantly in dialogue to bolster management frameworks and practices in their respective jurisdictions.”
The president emphasised that the protection of pension assets for the payment of retirement benefits, as and when due, should always be the paramount objective of all stakeholders in the ever-important pension industry.
Also speaking at the conference, Mrs. Chinelo Anohu-Amazu, the Acting Director General, PenCom, said, “we must be mindful of the fact that our hopes and aspirations as a continent are primarily hinged on the evolution and development of retirement benefits into a veritable instrument of social change. Not in a theoretical or abstract sense, but in terms of an intrinsic transformation of our institutions, and our operations.”
Thus, participants agreed that the regulator and operators should build up the necessary capacity to enable them develop new products and platforms to make the deployment of pension assets for infrastructural development possible.
It was also advocated that contributors be allowed to draw from their pension savings for mortgages and even health insurance as add-ons. A view the Nigeria Labour Congress (NLC) favours. Nigeria currently has 100 million housing deficits and mortgage rates are currently out of reach of ordinary citizens.
Issa Aremu, Vice President, Nigeria Labour Congress at the summit charged pension stakeholders to deploy pension asset to financing home ownership schemes for workers. He said this is one of the ways to deploy pension funds for the benefit of contributors directly.
This position was underscored by the Chief Executive Officer, Retirement Benefits Authority, Kenya, Edward Odundo, who explained that “houses are expensive when mortgage institutions and other intermediaries build for sale to workers. Therefore, in Kenya, workers are allowed to borrow from their retirement savings to build houses.”
Indeed there were several other far-reaching solutions reached at the summit. But this is hoping Nigeria and other African countries wouldn’t see the opportunity the WPS presented as a talk shop but would deploy the solutions proffered to better their economies and their pension industries.