2019 Examination of Pension Operators by PenCom

The National Pension Commission (PenCom) being the Regulator for pension in Nigeria reviews the activities of all pension operators in Nigeria. PenCom maintains a consultative philosophy in the regulation and supervision of the pension industry using a risk-based examination approach as a way of promoting transparency and providing early warning signals as well as encouraging pension operators to regularly self-evaluate their positions. The period reviewed here is January to September 2019.

PenCom started the review for 2019 by conducting a retreat in the first quarter, to review the Standard Operating Procedures (SOP) and Manual of Pension Operators in preparation for the 2019 Routine Examination. As at September 2019 PenCom had conducted the 2019 routine examination of the following Licensed Pension Operators;

i) AIICO Pension Managers Limited
ii) First Guarantee Pensions Limited
iii) FCMB Pensions Limited
iv) Pension Alliance Limited
v) Stanbic IBTC Pension Managers Limited
vi) Radix Pension Mangers
vii) Premium Pension Limited
viii) Investment One Pension Mangers Limited
ix) IEI- Anchor Pension Managers Limited
x) Veritas Glanvils Pensions Limited
xi) Sigma Pensions Limited
xii) Chevron Nigeria CPFA Limited
xiii) Total (E&P) Nig. Limited
xiv) First Pension Custodian Limited

PenCom has presented the Draft Reports, for the 2019 routine examinations concluded, to the Board of Directors of the fourteen (14) Pension Operators. PenCom also forwarded all the major findings to the operators for their responses in line post-examination standard practice. PenCom did not make public, the full details of the routine examination report for each pension operator, but below are some information readily available on 2019 examination of Pension Operators by PenCom.

Corporate Governance

As at the end of Q3 2019, all Operators had forwarded their Corporate Governance Reports for the year ended 31 December 2018 to PenCom. The major issues observed from the review of the reports were inadequate composition of the Board, non-submission of Annual Performance Evaluation of individual Directors, inclusion of Executive Directors as members of the Board Audit Committee while some Directors were members of all Board Committees. In addition, Board meetings were held same day with that of the Board Sub Committees in some instances. PenCom has written to all the Operators to take remedial actions in addressing the observations.

Compliance Reports

PenCom reviewed the monthly Compliance Reports submitted by Pension Operators. The major issues observed from the review of the reports were un-credited pension contributions, delay in the payment of retirement benefits to the retirees and outstanding commitments from previous routine examinations. The above issues were outlined in the routine examination of the operators and implementation timelines on corrective action were obtained for follow up by PenCom.

Sanction

During the 3rd quarter of 2019, PenCom issued a warning letter to a Pension Fund Administrator (PFA) for publishing the 2018 Audited Financial Statements of RSA Funds (I – IV) without due approval, this is in line with PenCom’s approved regime of sanctions for such infractions. Pension Fund Administrators (PFAs) are required to get PenCom approval before they can publish the company or Funds Audited Financial Statements.

Branch Inspection

PenCom conducted inspection of PFA branches in Ondo and Ekiti Sates. A total of thirteen (13) PFAs were inspected in each of the States. The inspections were to determine the extent of compliance by the PFAs with the Circular on “Minimum Requirements for Opening of Branches and Service Centers” as well as the quality of services rendered to stakeholders in the States. It also sought to ensure that staff of the PFAs were conversant with the provisions of the States Contributory Pension Laws, relevant regulations and guidelines issued by PenCom. At the end of the branch inspections of the PFAs, the issues that were observed include Inadequate Staffing; Poor record keeping; Lack of staff training; Inadequate ICT facilities and Poor service delivery.

PenCom also conducted an inspection of PFA branches in Rivers State. A total of eleven (11) PFAs were inspected in Rivers State. The inspections were to determine the extent to which staff of the PFAs were conversant with the provisions of the Rivers State Contributory Pension Law and extant regulations and guidelines issued by PenCom, the level of compliance of the PFAs with PenCom’s Circular on “Minimum Requirements for Opening of Branches and Service Centers”, the quality of services rendered to stakeholders by the PFAs as well as benefits administration and payment arrangements. The major issues that were observed include inadequate Staffing; Poor record keeping; Lack of staff training; Inadequate ICT facilities and Poor service delivery.

The recommendations on corrective actions from the Inspection Report on the PFA branches in the States (Ondo, Ekiti and Rivers) have been issued to the PFAs for implementation while PenCom continues to monitor operators accordingly.