In a recent report obtained exclusively by Infostride News from the Pension Fund Operators Association of Nigeria, Pension Fund Administrators (PFAs) have showcased a remarkable N7.98 trillion in profits generated from strategically investing workers’ contributions in their Retirement Savings Accounts (RSAs) under the Contributory Pension Scheme (CPS).
As of the end of the second quarter of 2023, the total funds managed under the CPS reached an impressive N17.37 trillion. This surge was fueled by worker contributions from both private and public sectors, amounting to N9.37 trillion during the period under review. The report, aptly titled ‘At the Dawn of 20 Years of Pension Reform, What Are the Gains?’ and released by the Chief Executive Officer of PenOp, Mr. Oguche Agudah, delved into the nuanced dynamics of the pension landscape.
A noteworthy revelation from the report is that workers’ contributions constituted 54 percent of the entire pension funds, while the return on investment contributed 46 percent. This balance signifies a prudent investment strategy that has not only safeguarded workers’ funds but also mitigated the impact of inflation on pension savings.
Further dissecting the figures, the PFAs, as of the end of the third quarter of 2023, successfully recovered N24.8 billion from defaulting employers. During Q2, 2023, a substantial N665.13 billion was disbursed as a lump sum to annuity retirees, with an additional N964.24 billion allocated to programmed withdrawal retirees. This cumulative disbursement amounted to a substantial N1.64 trillion, benefiting 442,000 retirees.
The report also shed light on the compassionate aspect of pension management, revealing that N208.86 billion was disbursed to 475,235 workers who lost their jobs before reaching the official retirement age and were unable to secure new employment after four months.
In the same quarter, death benefits amounting to N356.32 billion were disbursed to 91,214 beneficiaries. Additionally, 649 contributors received approval to access N7.89 billion from their RSAs for residential mortgages, reflecting the multifaceted support provided by the pension system.
Looking ahead, the report outlined the expectations of pension operators in 2024 and beyond. Mr. Agudah expressed anticipation for the celebration of the 20th anniversary of the Pension Reform Act, with a heightened focus on micro pensions. The operators also indicated their intention to explore the revision of investment guidelines, envisioning increased interest and approvals for RSA mortgages, potential commencement of offshore investments, and the establishment of an infrastructure consortium.
The Pension Reform Act (PRA), established as an Act to institute the CPS for employers in the public, Federal Capital Territory, and private sectors, has witnessed substantial growth. Between 2007 and July 2023, contributors under the CPS surged from 2,543,178 to an impressive 10,023,314, signaling the widespread adoption and confidence in the contributory pension system in Nigeria. Infostride News remains committed to providing insightful coverage of pivotal developments shaping the financial landscape in Nigeria and beyond.
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