Nigeria Grows Pension Assets by 310.5% in 10 years,  Targets $100bn in 20 Years

The Federal Government of Nigeria on yesterday projected that the country’s pension assets may grow to $100 billion in the next twenty years.
 President Goodluck Jonathan and the Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo Iweala who spoke at the World Pension Summit, Africa Special in Abuja agreed on the projection.
The President said,  “in 10 years of sustained policy innovation and meticulous management, these have facilitated confidence and credibility in our pension system and administration.
“We have also strengthened our pension institution as you can see from the deficit of about N2 trillion then, that is about $12.9 billion in 2004 to accumulated pension assets of over N4.21 trillion, that is about $27.2 billion by March this year. So, we can see that within ten years, if we could move from a deficit of about N2 trillion to positive N4.21 trillion, that means we agree with the CME that in another two decades we should get up to $100 billion.”
The new Pension Reform Act 2014, President Jonathan said, “seeks to consolidate the gains of the reform, address the identified implementation challenges to provide the enabling legal environment, and facilitate the creation of quality instrument through which pension assets could be best invested for infrastructure and development.”
He also emphasized that the protection of pension assets for the payment of retirement benefit as at when due will always be his administration’s paramount objective.
Earlier in her address, Okonjo-Iweala said, “two decades from now the federal government expects Nigeria to have pension assets exceeding $100 billion.”
Pension size, she said can stimulate growth in local economies but she was worried that the “contribution of pension to African economy is rather low, we need to capture a significant proportion of our work force especially those in the informal sector and we need to encourage countries to switch to the Contributory Pension Scheme, to harness the potentials of pension funds as a source of funds for development especially for infrastructure where the financing gaps are big and where long term financing is required.”
Infrastructure financing, she lamented is still seen as a government responsibility but, “we don’t deny that, but the trend in government budget demands that we look to pension funds and other sources for this kind of investable pool. We also need to review regulations and laws. The 2014 Pension Act was amended to strengthen pension law not only the punitive aspect but also to give more flexibility so that we can use our resources as investable pools of savings.”
The finance minister also disclosed that the Nigeria Sovereign Investment Authority (NSIA) and GrantsCo a development finance fund whose key objective is developing private sector involvement in domestic financing of infrastructure “are entering into an arrangement to explore the potential of the creation of a Nigeria Credit Enhancement facility with the specific objective of attracting the great interest of a pool of capital such as the pension fund.”
Government she said is “not unmindful of the need to ensure that even as we draw on these pension resources we also have to provide the means to ensure that those who have put their money down get it back with added interest.”
The Federal Government of Nigeria, she said will do more for the Nigerian economy “also in Africa to ensure that pension resources take their right place in our development. The Nigerian experience has demonstrated that in Africa it is possible to generate long term finances that will meet our needs for economic development. We need to be mindful of the way in which we craft our laws that guide these resources so that we can also use them to invest within the continent and not outside to ensure our own development.”
Such laws, she noted should focus on best practices and also ensure that all workers have security in retirement “as we seek growth and development we must also seek stability and integrity to protect pensions of African workers.”
Also speaking on the sideline of the summit, the Delta State governor, Dr. Emmanuel Uduaghan said the state in 2007 started the contributory pension scheme which is a share responsibility between the workers and the state.
Between 2007 and now, Uduaghan said the Delta state government had contributed about N60 billion to the scheme.
“We started with 16.5 per cent as against the 17.5 per cent that the law allowed. It is not easy starting. But the challenge is between the old scheme and the new scheme. Some workers are caught between the old scheme and the new scheme. And trying to clear up that has been a big challenge to us. But, we are almost clearing that one now,” he said.

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