Says FG is committed to prompt payment of pensions, protection of assets

Nnamdi Duru and James Emejo in Abuja

President Goodluck Jonathan yesterday directed the Coordinating Minister for the Economy (CME) and Minister of Finance, Dr. Ngozi Okonjo-Iweala, Minister of Federal Capital Territory (FCT), Senator Bala Mohammed and their Aviation counterpart, Sam Ortom, to ensure the commencement of work on the second runway for the Nnamdi Azikiwe International Airport in Abuja.

He was responding to the observations of the Co-chairman of the World Pension Summit (WPS), Mr. Eric Eggink, on the closure of the Abuja airport last weekend.

In his address at the opening ceremony of the two-day “WPS, Africa Special” summit, jointly organised by the National Pension Commission (Pencom) and WPS, the president directed the relevant government agencies to provide an alternative runway for the Abuja airport to forestall similar inconveniences in the future.

“Let me also address the concern of some of you who came in to Abuja at the weekend on the issue of the airport.  We are just trying to resurface the runway. I think the Coordinating Minister for the Economy, the FCT Minister and the Aviation Minister must meet and the Abuja second runway must commence next year,” the president added.

He also stated the federal government’s commitment to the payment of pension benefits to retirees and protection of pension assets.

Jonathan stated government’s expectations that pension assets in the country would tower above $100 billion in the next 20 years.

The president said his administration was committed to the protection of pension assets, now in excess of N4 trillion as well as the payment of retirement benefit pensioners as at when due.
“Expectations are that PenCom will put in place the necessary regulatory and supervisory framework that will facilitate and accelerate the objectives of the reform. The protection of pension assets and the payment of retirement benefits as at when due will always be our paramount objective,” he said.

Reviewing the progress made by the pension sector, the president said: “In 10 years of sustained policy innovation and meticulous management, these have facilitated confidence and credibility in our pension system and administration.

“We have also strengthened our pension institution as you can see from the deficit of about N2 trillion then, that is about $12.9 billion in 2004 to accumulated pension assets of over N4.21 trillion, that is about $27.2 billion by March this year. If we could move from a deficit of about N2 trillion to positive N4.21 trillion within 10 years that means we agree with the CME that in another two decades we should get up to $100 billion,” the president added.

According to him, government had succeeded in addressing the problems of defined benefits schemes with the establishment of the Pension Transitional Arrangement Department, adding that the new pension law would consolidate on the gains of the past.

“The new law seeks to consolidate the gains of the reform, address the identified implementation challenges to provide the enabling, legal, and facilitate the creation of quality instrument through which pension assets could be best invested for infrastructure and economic development.

“I am confident that these fresh initiatives will assist us to consolidate the remarkable achievements recorded by PenCom in the implementation of the contributory pension scheme over the last ten years for the benefit of contributors and the entire economy,” the president said.

Also the Minister of Finance said government expects that pension assets in the country would be grown in excess of $100 billion by 2034.

“Two decades from now expects Nigeria to have pension assets exceeding $100 billion. Pension size can stimulate growth in local economies,” Okonjo-Iweala said.

She reaffirmed a shift in government’s focus to pension fund as a major financier of long term investments and projects across the country, saying the role of pension fund in the economic development had to do with to the provision of a pool of investible funds in an economy.
Investible funds could either be financed using domestic savings or foreign borrowing, venture capital and private equity among others sources.
The minister, who observed that sustainable development requires long-term financing, said government cannot continue to rely on banks to finance long-term investment, a role that had since been taken over by institutional investors including pension funds and insurance companies.

She therefore advised African governments to put the necessary laws and machinery in place to ensure that accumulated pension assets in the continent are used to grow infrastructure across Africa not allowing leakages outside the continent.

Meanwhile, in her welcome address, the acting Director General of the National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu said the rate of growth of pension assets in relation to the Gross Domestic Product (GDP) have continued to rise.
This, she said, rose from 1.47 per cent in 2006 to 9.57 per cent last year.

“Not surprisingly, the success of the contributory pension scheme has triggered an exponential growth in the pension funds and size of assets under management across the globe.  We are very pleased to state that in Nigeria, the value of pension assets have grown from 1.47 per cent in 2006 to 9.57 per cent in 2013 or our national GDP,” Anohu-Amazu said.