Following the devaluation of the naira and rising inflation in the country, the former Minister of Finance and Minister for industry, trade, and investment, Mr. Olusegun Aganga, has advised Nigerian pension fund Managers to invest a portion of their assets offshore and in index/inflation-linked instruments.
Mr. Aganga who spoke at a training organised for board members and directors of pension fund operators in Nigeria which was organized by PenOp and FITC in conjunction with PENCOM said, the devaluation of the naira and rising inflation could lead to an erosion of earnings for the pension funds and subsequently, old age poverty for pensioners and retirees.
He said, the industry needs to get this going as soon as possible to protect the gains of the pension reforms and truly provide financial security for retirees.
Speaking further, he said, there was a need for the directors of pension funds to work together with the State Governments, the National Executive Council, and the Federal Government to ensure that more states get on board 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 said, it was quite regrettable that some states were deducting pension contributions from their employees but were not remitting them, which he said does not augur well for the future of Nigerian workers and should be discouraged.
He said, as a former Minister of Finance, he realizes it was 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 the demands of various groups within the framework of the CPS”, he said.
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 further mentioned that the tone at the top must embody the 4 Ps of corporate governance which he put as people, purpose, processes, and performance.
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.
Mr Aganga also commended PENCOM for their commitment to the principles of corporate governance and the growth of the industry in general.
Also speaking, the Chief Executive Officer of PenOp, Oguche Agudah said, these sessions that PenOp organizes for directors were very important because it was an opportunity 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 were so many things they could work on together and this was an opportunity to build camaraderie within the industry to align interests and to engage with each other and the regulator.
Mr. Agudah also thanked FITC for working with PenOp to provide these bespoke trainings and sessions for the industry. This particular 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.
