News Column

How the NPF Pensions Will Operate

May 20, 2014

William Jimoh

The National Pension Commission, PenCom, recently issued an Approval-in-Principle to NPF Pension Limited, to manage the pension assets of men of the Nigeria Police Force (NPF).

According to PenCom, the move is in line with the recommendations of the Oransanye Committee, which advised that with the exception of the military which was granted exemption, no other federal government institution or force should be exempted from the contributory pension scheme.

Explaining how the NPF Pensions came about, the pension regulator said it was borne out of government's refusal to allow members of the Nigeria Police to pull out of the contributory pension scheme and the directive that they remain in the CPS and seek administrative solutions to their grievances within the framework of the pension law.

In compliance with this directive, the police authorities incorporated a limited liability company, the NPF Pensions Limited which has been licensed to operate as a Pension Fund Administrator, PFA.

Economic benefits of NPF Pensions

Notwithstanding the challenges posed by the licensing of the police PFA, there are many benefits that the pension industry as well as the Nigerian economy stands to gain from the establishment of the PFA.

The first has to do with the sense of fulfilment among police officers across the board.

Currently, members of the Nigerian Armed Forces and other security agencies are exempted from the contributory pension scheme by virtue of the nature of their job. The Nigerian Police Force, an arm of the security network in the country feels short-changed not being allowed to go the way of other security agencies. They tried so much to pull out of the system, even taking their agitation to the Presidency which directed them to remain in the scheme and find other means of addressing their grievances.

Now with the establishment of a PFA specifically for them, they feel secured, believing that issues relating to their job and career specifically would be adequately addressed to suit their peculiar needs like other security agencies.

In addition to this, they are also assured that their retirement savings will never be pilfered by anybody since the funds are under the custody of licensed Pension Fund Custodians (PFCs).

Another equally important benefit is that PenCom will conduct biometrics for members of the force who joined the scheme. This exercise would ultimately put an end to the series of fraud in police pension department by accurately identifying police officers who have RSAs such that payouts would be made to the true beneficiaries only.

The licensing of a Police PFA is also expected to help the Federal Government save money by plugging the holes in police pension management system and ensure that only the true beneficiaries get paid by government, putting an end to menace of ghost officers and multiple payments to some retirees.

Management of Police PFA

The new police PFA would be managed independently by professionals who pass the fit and proper persons test in addition to having satisfied the due diligence requirements and approved by the Commission in line with the guidelines for appointment to board and top management positions of PFAs and PFCs.

"NPF Pensions Limited will operate like any other licensed PFA where the pension assets under its management will be held in custody by licensed PFCs," PenCom assured.

PenCom, according to reliable sources, has put in place necessary structures to ensure that NPF Pensions would, at all times operate like any other PFA, observe all the rules and regulations applicable to PFAs and manage accumulated pension savings of men of the force without keeping custody of the fund.

The pension regulator has also assured Nigerians and members of the police force who have Retirement Savings Accounts, RSAs, and are contributing under the scheme particularly, that there is no intention whatsoever to deprive them of their right to choose a PFA to manage their fund.

"Every police officer will, in line with section 11(2) of the PRA 2004, be at liberty to transfer to another PFA of his/her choice when the transfer window opens," the regulator stressed.

Controversy over N305 billion

On the issue of transfer of N305 billion to the NPF Pensions, PenCom explained that what is to be transferred is just the administration of RSAs of members of the police force. There is no movement of money or accumulated savings of police officers to anywhere, since the money is and would remain under the custody of licensed PFCs.

To make the process smooth, the regulator has developed an operational framework guiding the reassignment of Personal Identification Numbers (PINs) and transfer of records of all Nigeria Police contributors to the NPF Pensions Limited over 18 months.

It promised to continue to engage all licensed operators and stakeholders on the modalities for reassigning PINs and transfer of records for the benefit of the pension industry. Also, PenCom monitors investment activities of PFAs daily and the institution of strict pay-out authorisation requirements.

These ensure that PFAs are not reckless in their investment decisions, while ensuring that only the right beneficiaries would have access to pension money.

Also, pension assets held by PFCs are guaranteed to the full sum and value even as risks for instruments that pension funds could be invested in are rated constantly by PenCom.

Contrary to the insinuations that the N305 billion accumulated pension savings of members of the police force would be handed over to the police hierarchy, the fund remains in the custody of PFCs in line with provisions of the law. Also, NPF Pensions would be managed by fit and proper persons without any interference by the police hierarchy.

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Source: AllAfrica

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