Nigeria’s Contributory Pension Scheme, CPS, which commenced in 2004 now has over N5 trillion (about USD 27 billion) in just over 10 years of operation.
This indicates a marked improvement from operating the old Defined Benefits System that had well over N2 trillion (about USD 10 billion) in deficit at the dusk of the last century.
The Director General, National Pension Commission, PenCom, Chinelo Anohu-Amazu disclosed this yesterday at the ongoing World Pension Summit ‘Africa Special’ taking place at the Congress Hall, Transcorp Hilton, Abuja.
The PenCom boss said the Nigerian Pension Reform narrative can be situated within the context of Africa’s economic resurgence after the lost quarter of a century.
She pointed out that a key feature of the CPS is the institutionalisation of risk-based regulation as a means of engendering the long-term sustainability of the Pension Industry.
“Sustainability on this score encapsulates the troika of social, environmental, and economic dimensions of development. Regulatory strategies would thus encompass a painstaking consideration of risks as well as the rewards that lie behind endogenous opportunities,” said Anohu-Amazu.
She noted that the impact of poor corporate governance practices on shareholder value, exacerbated by the recent global financial crisis, for instance, has raised issues such as transparency, risk management and business ethics, amongst others, to the front burner of the regulatory agenda.
Anohu-Amazu urged regulators to consider the issues of unemployment, diseases, poverty, climate change, and inequality as pressing needs in mapping their regulatory landscape.
She stressed that “this novel approach to regulatory oversight – Sustainable Regulation – is one that overtly acknowledges the importance to institutional regulators of environmental, social and governance (‘ESG”) factors and the long-term stability of financial markets, especially the Pension Industry.
“It recognizes that creation of long-lasting return on pension assets is essentially dependent on transparent, predictable and well governed environmental and economic systems; systems that are underpinned by clearly defined prudential regulatory guidelines.”
The PenCom stressed that pension fund managers all over the globe are changing mandates to reflect considerations of sustainable investment, which has necessitated the growth of ESG mandates in overall investment strategy.
“Nonetheless, many regulators still require further education on how they should quantify performance and assess the extent to which ESG mandates are delivered upon,” she added.
According to her, “sustainable regulation precepts thus constrain stakeholders in pension fund administration to critically assess the full spectrum of investment and regulatory risks, opportunities and challenges, so as to adequately allocate capital in a mode that is aligned with the short, medium and long term interests of their clients, beneficiaries and the larger society.”
Anohu-Amazu averred that as a regulator, the National Pension Commission continuously strives to remain at the cutting-edge in mainstreaming sustainability strategy and practice in the discharge of her statutory functions.
“In furtherance of our commitment to promoting industry-wide sustainability, we are collaborating with Europe’s leading Sustainability Research Centre – The Sustainable Business Initiative at the Business School, The University of Edinburgh, United Kingdom to among other things, develop a set of ‘Sustainable Pension Principles’ that would set out a minimum standard for entrenching a truly sustainable retirement pension system in the country,” she disclosed.
Key note Speaker at the summit, who is the Chief Economic Adviser to the Mayor of London, Dr Gerard Lyons said Nigeria faces near term microeconomic situation, which must be clearly defined.
He commended the fiscal policy of the federal government, but urged it to evolve a clear longer term vision on how to manage the economy, which encompasses cash, commodity and creativity.
Dr. Lyons said pension funds can be invested in infrastructure that has steady revenue stream.
Chairman of World Pension Summit, Eric Eggink said the summit is a yearly event for experts and stakeholders to share ideas on secured pension, which entails secured future, transparency, consistency and reliability as key features.
The summit, which has the theme: “Building Sustainable Pension Systems in Africa’’ is being attended by over 400 delegates from over 20 countries across the world, including 15 African countries who are experts in the area of investment, infrastructure financing, real estate and other pension-related fields.