The Contributory Pension Scheme’s assets increased by N842.73 billion in the first half of 2022, reaching N14.27 trillion at the end of June.
The National Pension Commission’s (PENCOM) unaudited report on the pension funds sector portfolio for the period ending June 30, 2022; approved existing schemes, closed pension fund administrators, and RSA funds (including unremitted contributions @CBN & legacy funds) revealed the figures.
According to the report, N9 trillion of the total funds were placed in Federal Government assets, which included bonds and treasury bills.
Domestic and international ordinary shares were also invested in, as were corporate debt securities such as corporate bonds, corporate infrastructure bonds, corporate green bonds, and supranational bonds.
During the time under consideration, the overall number of RSA holders was 9,795,957, according to PenCom.
The Pension Reform Act, which resulted in the CPS, was signed into law in 2004.
It establishes a contributing scheme under which both the employer and the employee contribute to the workers’ RSAs.
The Pension Fund Administrators handle the monies held by the Pension Fund Custodians.
“The monies are invested by the Pension Fund Administrators on behalf of the workers, based on recommendations published by the Regulator,” said Ivor Takor, Director of the Centre for Pension Rights Advocacy.
“The investment is carried out with two principal objectives, which are adequate return on investment and the safety of the fund.”
According to the Pension Funds Operators Association of Nigeria, the CPS has helped to foster a savings culture in Nigeria.
The Chief Executive Officer, PenOp, Oguche Agudah, said before the enactment of the act, Nigeria did not have large pools of domestic savings.
He said, “Many Nigerians do not have any other form of savings, except through this Contributory Pension Scheme. What we should be doing as a nation is to encourage more of these savings rather than looking to dismantle the system. This is probably the only form of savings most Nigerian workers can put aside for their retirement years
“What we need to promote, and the pension industry is leading on that, is to encourage more workers to add to their statutory deductions while working, as this would enable them to shore up their balances over time.
“What we need to advocate more is the consistency and discipline in the contributions that will even remove the need for any large lump sum payout when retired.”
Explaining how the savings work for the contributors, he said, “If a worker were to save N20,000 consistently every month for 15 years with an interest rate of 10 per cent per annum compounded for the 15 years, at the end of the period, he would have amassed over N16m. This is the power of consistency and compounding which the current system provides, and which should be encouraged.”
He added, “If you were wealthy while working, healthy savings, like a pension, will make you wealthier. Thus, the pension will make you comfortable in retirement.”
The PenOp boss said under the CPS, it is the worker’s savings in his RSA plus investment returns that he gets out.
