The National Pension Commission (PenCom) has announced plans by the Federal Government to issue a N758 billion bond by the first week of October 2023 to address outstanding pension liabilities. This bond issuance is geared towards settling debts accumulated under the old Defined Benefit Scheme (DBS), which predates the current Contributory Pension Scheme (CPS) implemented in 2004. The process for the bond issuance has already been initiated and is progressing rapidly, having received approvals from both the Federal Executive Council (FEC) and the National Assembly. PenCom expressed confidence that the bond will be ready for disbursement by the end of September or early October, providing much-needed relief to pensioners who have long awaited these payments. The decision to issue the bond signifies a significant step towards fulfilling the government’s obligations to retirees and ensuring their financial well-being.
The announcement of the bond issuance coincided with the inauguration of the Pension Industry Leadership Council, a pivotal development described by PenCom Director-General, Omolola Oloworaran, as a “historic milestone” for the pension industry. This council is designed to provide coordinated leadership and strategic direction, mirroring the role of the Bankers’ Committee in the banking sector. Oloworaran emphasized the council’s crucial role in addressing key challenges within the pension landscape, including expanding coverage, particularly within the informal sector, enforcing governance and fiduciary standards, optimizing asset utilization for national development while protecting contributors’ interests, fostering innovation, and bolstering public trust in the pension system.
The PenCom DG highlighted President Bola Tinubu’s commitment to pension reform, dubbing it “pension revolution 2.0.” This renewed focus on pension reform includes directives for improved healthcare provisions for retirees and the establishment of a minimum pension guarantee, reflecting the President’s dedication to ensuring social protection for senior citizens. These reforms aim to enhance the well-being and financial security of retirees, addressing critical aspects of their welfare.
Addressing concerns regarding the impact of inflation on Retirement Savings Accounts (RSAs), Oloworaran explained that PenCom is actively revising investment regulations to allow Pension Fund Administrators (PFAs) greater flexibility in investing in alternative and real assets. This strategic move seeks to hedge against inflation and currency devaluation, safeguarding the value of retirees’ savings. She affirmed that under the CPS, retirees are receiving their benefits promptly and that all outstanding arrears have been cleared. The DG emphasized the efficiency of the current system, assuring retirees of timely access to their benefits upon retirement, provided they adhere to the prescribed procedures.
While acknowledging the underperformance of the micro-pension plan in capturing the informal sector, the DG promised the unveiling of new initiatives aimed at expanding coverage. These upcoming reforms underscore PenCom’s commitment to continuous improvement and adapting to the evolving needs of the pension landscape. They further demonstrate the government’s focus on extending the benefits of the pension system to a wider segment of the population, particularly those in the informal sector.
The N758 billion bond issuance represents a substantial financial commitment by the Federal Government to address longstanding pension liabilities. This initiative not only fulfills obligations to pensioners but also contributes to economic stability by injecting funds into the economy. Furthermore, the establishment of the Pension Industry Leadership Council signals a concerted effort to strengthen the pension sector, enhance its efficiency, and improve its responsiveness to the needs of retirees. Coupled with the ongoing reforms and focus on expanding coverage, including within the informal sector, these actions indicate a significant step towards ensuring a more secure and sustainable retirement for all Nigerians.
