How PenCom monitored the Pension Industry in Q4 2020

April 3, 2021 PensionNigeria

The National Pension Commission (PenCom) has different parameters which it uses to regulate and supervise the pension industry in Nigeria. In the 4th quarter of 2020 PenCom used the following parameters; Enhanced Off-Site Monitoring, Review of Fund Reports, Routine Examinations, Issuance of Circulars and Regulations, Sensitization/Capacity Building Workshops and Engagements and Supervision of Pension Transitional Arrangement Directorate (PTAD).

Enhanced off Site Monitoring

PenCom could not conduct On-site Examination of Pension Fund Operators in Q4 2020 due to the COVID-19 pandemic. Nonetheless, the enhanced Off-Site monitoring of the activities of Pension Operators continued during the quarter through reviews of additional monthly reports submitted by the Pension Operators. The reviews indicated that the Pension Fund Operators substantially complied with extant laws and regulations.

Off-Site Examination of States Pension Bureaux/Boards

PenCom conducted off-site review of the implementation of the Contributory Pension Scheme in seven (7) States, namely; Ekiti, Delta, Osun, Lagos, Ondo, Edo and Kebbi. Emphasis were on the remittance of pension contributions, payment of pensions under the Defined Benefit Scheme, payment of accrued rights as well as the receipt and utilization of administration fees.

The review noted the gaps in the monthly pension remittances to the Retirement Savings Account (RSAs) of employees of various States as well as the delay in the payment of accrued rights to retirees. There were also issues of inaccurate data on schedules accompanying pension remittances and other reconciliation issues. The affected PFAs are currently reconciling their records with the State Bureaux.

Review of Fund Reports

PenCom reviewed the quarterly Industry Report of the Financial Condition and Performance of the Licensed Pension Fund Operators (LPOs) submitted by all pension operators, via the Risk Management Analysis System (RMAS) Application. The reports indicated that all the LPOs met the minimum capital adequacy prescribed by PenCom.

Routine Examinations

As at Q4 2020, a total of 625 commitments had been complied with by the Operators out of the 749 remedial actions recommended to address identified inadequacies in their operations arising from the 2019 Routine Examinations.

Issuance of Circulars and Regulations

In the last quarter of 2020, PenCom issued some Circulars and Regulations following the implementation of some new initiatives. The Circulars and Regulations issued are:

i. Circular on Ethics and Business Practices in the Retirement Savings Account Transfer Process. This became necessary after the deployment of the RSA Transfer System to enable RSA holders transfer their Retirement Savings Accounts (RSAs) from one PFA to another in line with Section 13 of the Pension Reform Act (PRA) 2014.

ii. Circular on Fund Accounting: The Circular provides details of necessary accounting entries for the transfer of RSAs from one Pension Fund Administrator to another and upon purchase of Retiree Life Annuity with RSA balances.

iii. Regulation for the Transfer of Retirement Savings Accounts: The Regulation provides operational guidelines for the Pension Fund Operators on how to handle requests for RSA transfers from one Pension Fund Administrator to another.

Sensitization/Capacity Building Workshops and Engagements

PenCom carried out sensitization workshops, capacity building programmes and stakeholders’ engagement meetings. The activities include:

i. Capacity Building Programme for staff and management of States and Local Governments Pension Bureaux/Boards on the RSA Transfer System.

ii. Facilitated at the Pension Management Retreats organized by the FCT Area Councils Staff Pension Board (ACSPB).

iii. Participated in a sensitization programme organized by the Kaduna State Pension Bureau for Pension Desk Officers of the 23 Local Government Councils in Kaduna State.

Supervision of Pension Transitional Arrangement Directorate (PTAD)

PenCom conducted Off-site Examination of PTAD during the quarter under review. PenCom also monitored payment of pensions to Public Service Retirees under the Defined Benefits Scheme (DBS) through monthly statutory returns rendered by PTAD to PenCom.

Check below for PensionNigeria breakdown of all the important aspects of the PenCom 4th Quarter 2020 Report

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DONT MISS PenCom Q42020 Quarterly Report Series
Analysis of Pension Operating Environment Q4 2020
How PenCom monitored the Pension Industry in Q4 2020
5.1 million RSAs have Incomplete Documentation
3.5 million Unfunded RSAs, effects and way forward
Appointments to Pension Operators’ Boards in Q4 2020
PenCom issued 1,877 organizations Compliance Certificates in Q42020
19 Employers paid N170 million Penalty for late Remittance of Pension Contribution
Update on NSITF & Refund of Pension Contribution to Military & SSS
Status of Implementation of CPS in States as at December 2020
Biggest PFAs by RSA Registrations December 2020
Update on the RSA Transfer System (RTS), 2,799 RSA holders Change PFAs
Pension Operators paid N90.99 billion Retirement Benefits Q4/2020

Also Check out
Performance of all PFAs in Nigeria for Full Year 2020
Performance of all PFAs in Nigeria for Full Year 2019
Performance of all PFAs in Nigeria for Full Year 2018

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