Former Minister of Finance and Minister for industry, trade and investment, Mr Olusegun Aganga, has canvassed for Nigerian pension funds be able to invest a portion of their assets offshore and in index/inflation linked instruments.
He said this was very important, as the devaluation of the local currency and rising inflation could lead to an erosion of earnings for the pension funds and subsequently, old age poverty for pensioners and retirees.
Mr. Aganga gave the advice while speaking at a training organized for board members and directors of pension fund operators in Nigeria which was organized by PenOp and FITC in conjunction with PENCOM. At that forum, Aganga also mentioned that the directors of pension funds need to work together with the State Governments, the National Executive Council and the Federal Government to ensure that more states get onboard the contributory pension scheme and to ensure that those states already on the scheme remit both employer and employee contributions to the pension fund administrators as and when due.
He expressed displeasure at the number of states engaged in deducting pension contributions from their employees, but were not remitting it, which he said does not augur well for the future of Nigerian workers and should be discouraged.
Also, he said that as a former Minister of Finance, he realizes that it is not sustainable to move any class of workers outside of the contributory pension scheme (CPS) and move them to the unsustainable defined benefit scheme. This is because the government cannot afford the burden of payment of pension liabilities which keeps growing as the workforce of the civil service keeps growing. What needs to be done is for the pension operators, regulators and the government to find ways to meet demands of various groups within the framework of the CPS.
Mr Aganga, who is also the chairman of Leadway Pension PFA, urged directors to realize their critical positions in shaping policies, guiding directions and setting “the tone” at the top of their organizations.
He emphasized that pension funds should be creative and find structures to earn decent returns for their pension funds and their contributors while positively impacting the communities they operate and protecting the capital they manage.
Oguche Agudah, the Chief Executive Officer of PenOp, said these sessions that PenOp organizes for directors serve as opportunities for directors of pension fund operators to come together and work towards the growth of the industry. He said even though they compete against each other, there are so many things they can work on together and this is an opportunity to build camaraderie within the industry to align interests and to engage with each other and the regulator.
The session tagged; “Effective Pension Fund Governance and Risk Management Oversight: The Role of the Board” had a number of seasoned facilitators including the former Chairman of KPMG Africa, Mr Kunle Elebute and the former MD of Shell Nigeria Closed pension Fund, MR Akeeb Akinola amongst others.
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