World Pension Summit: Issues that dominated discussions

Pension experts and stakeholders across Africa and beyond converged on Abuja this week to discuss pension reforms and management in the continent.

The two-day WorldPensionSummitAfrica Special, being the second edition consecutively held in Nigeria, brought to the fore issues that have been militating against the management of pension funds, investment pitfalls and the need for African countries to initiate reforms that would enable complete transition from government-centred pension liabilities to the contributory scheme.

Setting the tone for the discussions, the Director General of the National Pension Commission (PenCom), Chinelo Anohu-Amazu, observed that there is an emerging consensus on the continent on the necessity of institutionalising a pension system that is robust enough to tackle the plethora of developmental challenges that plague Africa in the 21st Century.

One issue that caught the attention of delegates was how to draw up the most appropriate strategies for leveraging pension funds in the continent to expedite the execution of critical infrastructure projects.

Experts are of the view that infrastructure development remains a key enabler of sustainable development in Africa and the current rapid increase in the size of pension funds available in the continent provides a rare opportunity for multi-sectoral collaboration in bridging Africa’s infrastructure deficit.

Inhissubmission, thecofounder and Chairman of the WorldPensionSummit, Eric Eggink, posited that the envisioned reforms for developing and structuring a sustainable pension system for African nations will be a step-by-step approach that will take into account other priorities such as poverty reduction, financial inclusion and literacy, and social security.

“Creating a new pension structure means that there is time to share the expertise, learn best practices and put these ‘lessons learned’ into the specific culture of a country,” he stated.

A finance expert, Fiona Stewart, presented a paper on ‘Global Developments in pensions and Key Challenges for African Pension Systems.’

The presentation centred on universal social pension, longevity risks and old age pensions.

A case was made for increasing coverage of the informal sector workers and investing pension assets productively.

This captured the situation in Nigeria where there are agitations for the informal sector to be captured in the contributory scheme.

Already, the inclusion of voluntary contribution in the 2014 Pension Reform Act has opened the window for informal sector participation in the scheme.

The Managing Director and Chief Executive Officer of Infrastructure Bank Plc, Adekunle Abdulrazaq Oyinloye, advocated a wider scope for the investment of pension funds.

Participants at the summit were told that the global trend involved steering retirement and social benefit managers towards channeling pension funds to investments that have socio economic impact.

Emphasis was on the application and investment of pension funds to diversify and boost the economies of African countries.

The Head of Corporate Development of Quantum Global Corporate Services, Frank Behiblo, dwelt on the need for long-term investors to help finance activities that should help support high growth and sustainable development.

It was agreed that for that to happen, Africa has to close the huge infrastructure gap, extimated at 93 billion per year by the World Bank for the next 10 years.

There was concensus that for such investments to happen, there has to be a connection for both public and private financing for innovative financing model.

An expert on micro pension, Gerard Bergsma, made a case for establishment of micro pension products in Africa.

A micro pension is a scheme developed for people with low income in developing countries.

After much attention had been paid to reforms and diversification of pension assets investments, attention shifted to investment risks.