In the first part of this series, we discussed what has changed in the Nigerian pension industry since the Contributory Pension Scheme (CPS) was adopted in 2004. In this article, we will look at the major players in the Nigerian pension industry and what they do.
There are currently 7 key players in the Nigerian pension landscape. These are listed below:
- The National Pension Commission (PenCom)
- The Pension Fund Administrators (PFAs)
- The Closed Pension Fund Administrators (CPFAs)
- The Pension Fund Custodians (PFCs)
- The Pension Transitional Arrangement Directorate (PTAD)
- The Pension Fund Operators Association of Nigeria (PenOp)
- Recovery Agents
1. The National Pension Commission (PenCom)
PenCom is the regulator of the Nigerian pension industry. The Pension Reform Act 2004 established the National Pension Commission (PenCom) as the body to regulate, supervise and ensure the effective administration of pension matters in Nigeria.
The functions of the Commission include:
- Regulation and supervision of the Scheme established under the Act.
- Issuance of guidelines for the investment of pension funds.
- Approving, licensing, regulating and supervising pension fund administrators, custodians and other institutions relating to pension matters as the Commission may, from time to time, determine.
- Establishing standards, rules and guidelines for the management of the pension funds under the Act.
- Ensuring the maintenance of a National Data Bank on all pension matters.
- Carrying out public awareness and education on the establishment and management of the Scheme.
- Promoting capacity building and institutional strengthening of pension fund administrators and custodians.
- Receiving and investigating complaints of impropriety leveled against any pension fund administrator, custodian or employer or any of their staff or agents.
- Performing such other duties which, in the opinion of the Commission, are necessary or expedient for the discharge of its functions under the Act.
2. The Pension Fund Administrators (PFAs)
The PRA requires that pension funds are specifically managed by licensed pension fund administrators (PFAs). Therefore, the PFAs are saddled with the responsibilities of opening retirement savings accounts for their registered clients, invest and managing the funds on behalf of their clients. Upon retirement, they are to pay retirement benefits to the retired employees, which include monthly pensions.
The PFAs currently have different products on offer to cover different types of benefits payments. These include:
- 25% payment
- Enbloc payment
- Program Withdrawals
At the moment there are 20 licensed PFAs in Nigeria as at the time of writing this piece. These are:
- FCMB Pension Limited
- Tangerine APT Pension Limited
- ARM Pension Managers Limited
- Crusader Sterling Pensions Limited
- Fidelity Pension Managers
- First Guarantee Pension Limited
- Norrenberger Pensions Limited
- Guaranty Trust Pension Managers Limited
- Leadway Pensure PFA Limited
- NLPC Pension Fund Administrators Limited
- NPF Pensions Limited
- OAK Pensions Limited
- Pensions Alliance Limited
- Premium Pension Limited
- Radix Pension Managers Limited
- Sigma Pensions Limited
- Stanbic IBTC Pension Managers Limited
- Trustfund Pensions Plc
- Veritas Glanvills Pensions Limited
- Nigerian University Pension Management Company (NUPEMCO)
3. The Closed Pension Fund Administrators (CPFAs)
The CPFAs are pension funds administrators of some private companies in existence before the start of the CPS in 2004. They operate just like the PFAs only that they administer the pensions of their sponsor company alone unlike the PFAs that manage pensions for any employee that registers with it irrespective of the employer. Employees in CPFA are allowed to opt out and join the mainstream PFA of their choice if they so wish.
However, the PRA 2014 has foreclosed new entrants into the CPFAs from July 1st 2014. This means that any new employee of the sponsor company that operate a CPFA from July 1st 2014 must register with a PFA.
The CPFAs are equally licensed by PenCom after fulfilling all relevant regulatory requirements. They are equally subject to the same regulations the other PFAs are subjected to.
There are 6 CPFAs in Nigeria currently. They are:
- Chevron Closed PFA Limited
- Nestle Nigeria Trust Limited
- Nigerian Agip CPFA Limited
- Progress Trust CPFA Limited
- Shell Nig. Closed Pension Fund Administrator Limited.
- Total (E&P) Nigeria CPFA Limited
4. The Pension Fund Custodians (PFCs)
The PFCs are licenced pension operators that are saddled with the responsibilities of keeping in safe custody pension assets on behalf of employees. A PFA chooses the PFC it will work with. The PFCs are independent of the PFAs and are unrelated.
All instructions to move funds in and out of the Pension Funds accounts must pass through the PFC who are obliged to carry out the instructions so far as they are in compliance with the regulatory rules and procedures. Any instruction that is not in line with laid down rules and regulations as stated in the PRA and guidelines issued by PenCom from time to time will not be carried out. Such reason would be communicated to the PFA for correction.
There are presently 4 PFCs in the pension industry. They are:
- First Pension Custodian Nigeria Limited
- UBA Pensions Custodian Limited
- Zenith Pensions Custodian Limited
5. Pension Transitional Arrangement Directorate (PTAD)
The PTAD was established as part of the transitional arrangements for the public sector from the old DBS. Accordingly, PTAD took over the functions of the various Pension Departments of the Public Service which are the Civil Service Pension Department (CSPD), the Police Pension Department (PPD) and the Customs, Immigration and Prisons Pension Office (CIPPO). The PTAD is responsible for payment to existing retirees of the Federal Government that retired up to June 2007 and are thus exempted from the Contributory Pension Scheme (CPS) as stated in the PRA.
6. Pension Fund Operators Association Of Nigeria (PenOp)
Pension Fund Operators Association of Nigeria (PenOp) is an independent, non-governmental, non-political and non-profit-making body established to promote the operations of the pension industry, provide for self-regulation and ensure that international best practices relating to the industry are observed by the operators registered in Nigeria.
Its members comprise of all the PFAs, CPFAs and PFCs in the pension industry. They are all 29 in number as at the time of writing this article.
7. Recovery Agents
Recovery agents are private consultants employed by PenCom to help confirm whether employers have remitted monthly deducted pensions correctly or not. They report any infraction or irregularity discovered to PenCom and help calculate interest penalties as a result of non-remittance or under-remittance of pension contributions. If you have any questions or comments, feel free to email us here Or you can chat with us on Whatsapp