December 22, (THEWILL) – Amid prevailing economic hardship across the country, the National Pension Commission (PenCom) has embraced tech-driven initiatives in its regulation of the pension industry. This is in pursuit of its mandate of ensuring that retirement benefits are paid as and when due – a measure that also enhances financial inclusion.
Since June 2023 when the government announced the removal of subsidy on petrol, the floating of the naira and upward review of electricity tariff, many businesses have gone into extinction while others have scaled down their operations massively or exited the country.
A recent media report revealed that over 70 firms exited Nigeria in seven years, creating mass job losses – direct and indirect — as well as huge tax revenue deficiency for the government.
The Manufacturers Association of Nigeria has said that 767 manufacturers shut down operations, while 335 became distressed in 2023 following unbearably high cost of operations. .
“The manufacturing sector is already beset with multidimensional challenges. In the year 2023, 335 manufacturing companies became distressed and 767 shut down,” the group said in a statement.
The statement further noted that high energy costs create additional challenge as the firms battle with capacity utilisation in a sector that has declined to 56 per cent amid rising interest rates and scarcity of forex needed to import raw materials and machinery.
It added that inventory of unsold finished products has increased to N350bn and the real growth has dropped to 2.4 per cent.
“The reform policies of the Bola Tinubu-led government have thrown up the unintended consequences of closure of businesses and loss of jobs across sectors, which has put pressure on the assets of the Contributory Pension Scheme (CPS),” said Dr Edith Akhimien, a human resource development expert.
According to PenCom, effective regulation of the pension industry demands accelerated adoption of appropriate technology in all aspects of the Commission’s activities – from enrolment through oversight functions to payment of retirees’ benefits.
At a recent media engagement in Lagos, the Director-General of PenCom, Ms Omolola Oloworaran revealed that the Commission is not slacking in its adoption of technological initiatives as pressure mounts on the agency..
“Technology has become the backbone of transformation across all sectors, and the pension industry is no exception. At PenCom, we have embraced this transformation wholeheartedly.
“Today, we have over 10.5 million contributors and oversee pension assets in excess of 21.9 trillion Naira as of October. This progress demonstrates the strength of our contributory pension system, but we are not without challenges.
”Inflation, for instance, continues to erode the purchasing power of pensioners, and we are actively seeking innovative solutions to address this issue,” Oloworaran said in her address at the occasion, with the theme: , ‘Tech-Driven Transformation: Shaping the Pension Landscape,’
Commenting on the pressure experienced by the Commission amid prevailing economic challenges, the PenCom boss lamented the delay in settling accrued entitlements of contributors – the essence of the tech-driven options, and the way forward.
She said, “We also continue to face the persistent issue of delays in the payment of accrued rights. Recently, 44 billion Naira was approved under the 2024 budget appropriation to settle accrued pension rights for retirees from March to September 2023.
“Moving forward, we are working with the Federal Government to put in place a sustainable solution that ensures retirees receive their benefits promptly and without undue stress.”
Among the automated processes in the Commission’s tech-driven initiatives include the E-Pension Clearance Certificate (EPCC). This is aimed at improving the turn-around time for issuing PCC, engender transparency and promote ease of doing business.
The Commission automated the process by developing the e-Pension Clearance Certificate Application which has the following Modules:Employer Module.
Pension Fund Custodian Module,and the PenCom Module.
A total of N1.14 trillion was realised through the automated E-PCC since inception in 2012, through 484,839 Retirement Savings Accounts (RSAs).
The Commission’s various Innovations in Retirement Benefits Processing added to the enhanced tech-driven initiatives. Under this include Programmed Withdrawal which is administered by the Pension Fund Administrators (PFAs) and Retire Life Annuity administered by licensed life assurance companies approved by the National Insurance Commission.
Others are the Temporary Loss of Employment which has the following features:
Accessing of 25 per cent of RSA balance; Disengaged from employment for at least 4 months,, and the retiree must be less than 50 years of age at the time of application.
Under the process is Death Benefits which is paid to the legal beneficiary(ies) of a deceased contributor
Without a claim of perfection, the Commission lays out what it calls the disadvantages of the current system. This include administrative bottleneck: “The process of reconciling unmatched contributions often involves bureaucratic hurdles that delay resolution, further exacerbating the problem.”
There is also the challenge of unmatched contribution: This resides in “The lack of accompanying schedules for electronic remittances leads to a high volume of unmatched contributions in the Contribution Reconciliation Accounts (CRA). This results in funds remaining uncredited to Retirement Savings Accounts (RSAs), causing inefficiencies in it.
Since assuming office, my team and I have been focused on strengthening compliance, enhancing service delivery, diversifying pension assets to optimize returns, improving benefits, and expanding coverage to include more Nigerians, especially those in the informal sector.
The micro-pension initiative, in particular, is something we are very passionate about. It is our way of saying that no one should be left behind, no matter how small their earnings might be. Technology plays a vital role in driving this inclusion, from mobile enrollment to real-time account management to benefits administration. We intend to use technology to scale the micro-pension plan.
Beyond the adoption of the various tech-driven initiatives, the PenCom D-G says she believes in results and takes delight in success stories as outcome of the agency’s endeavours.
“But beyond policies and systems, what really excites me is the potential to transform lives. Every time I meet a pensioner who is able to live comfortably because of the contributions they made during their working years, it reminds me of why this work is so important.
“And every time I hear from a young entrepreneur or artisan who has signed up for the micro-pension scheme, it strengthens my belief that we are moving in the right direction,” she said.
