Following recent fears expressed by notable bodies and
individuals, an end, afterall, may be in sight to the raging debate
regarding the possibility of the global financial crisis affecting the
Nigerian economy.
A
worried Mohammed Ahmad, director general of the Pension Commission
(PenCom), last week raised an alarm that the crisis may result in huge
job losses, reduction in returns and performance of pension fund
investment.
Okechukwu Unegbu, first vice president, Certified
Pension Institute of Nigeria, told Business Day that there is no doubt
pension funds are in jeopardy as the global financial ‘virus’ has
spread to many parts of the world. He advised that government should
step up efforts to stem it, otherwise pensioners would lose money. In
the same breath, Unegbu expressed confidence in the current pension
plan, which he said would hedge pensioners against total loss.
But
in the event that Ahmad’s projection comes to pass, then the registered
3,353,522 workers: 1,323,569 or 40 percent from the public sector;
852,429 or 25 percent from the state governments and 1,177,524 or 39
percent from the private sector, will definitely shrink.
Ahmad, who
said this last week when he appeared before the House committee on
pensions, noted that the lingering global financial crisis may affect
employees’ contribution to the scheme as there was the possibility of
reduction in returns and performance on pension fund investment.
Currently, total pension fund stands at N1.6 trillion.
Similarly, he
explained that N242.22 billion or 24.28 percent has been invested in
ordinary shares; N2.204 billion or 0.22 percent in foreign ordinary
shares; N336.39 billion or 33.72 percent in Federal Government
securities and N11.837 billion or 1.19 percent in corporate debt
securities. Moreover, the sum of N12.223 billion has been invested in
Open/Close-end funds; N70.525 billion or seven percent in real estate,
while N48.656 or 4.88 percent has been ploughed into other sectors.
He
added that the investment regulation permits the commission to invest
100 percent of the fund into Federal Government securities and a
maximum of five percent of the pension fund assets in state government
securities.
Before now, pensioners and members of the Certified
Pension Institute of Nigeria (CPIN) had expressed concern regarding the
security of the pension funds. For instance, at the CPIN National
Workshop on “Embracing New Pension System: Benefits and Issues,” Onegbu
called for an appraisal of the implications of the financial meltdown
on the pension funds.
“The pension fund administrators invested some
of the pension monies in the capital market. With the meltdown, we
should be able to define the security of pensioners’ funds so we don’t
drift into days when pensioners were owed,” he said.
On her own
part, Tonia Smart, representative of Centre Point Investment, advised
Pension Fund Administrators (PFAs) not to get panicky over the
financial crisis. She called for huge investments in blue chip
companies now that the market is down so that when it looks up, they
will reap more.
For good measure, Smart suggested that PENCOM should
publicise the major aspects of Pension Act 2004 and the requirements
involved in the processing of benefits to both employees and employers.
Source : Businessday News paper (17/11/2008)
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