Regulatory and Supervisory Frameworks under CPS in Nigeria. By Chinelo Anohu-Amazu Director General National Pension Commission Nigeria

Transcription

1 Regulatry and Supervisry Framewrks under CPS in Nigeria By Chinel Anhu-Amazu Directr General Natinal Pensin Cmmissin Nigeria

2 Refrm cmmenced in 2004 T address myriad f challenges in the Defined Benefits Scheme T prvide pensins t emplyees f many private sectr institutins that did nt have any frm f pensin arrangements T prvide ld age incme t the self emplyed and persns wrking in the infrmal sectr Refrm Features Pensin Refrm in Nigeria Cntributry Pensin Scheme (CPS) was intrduced fr bth Public and Private Sectrs Established a system with unifrm rules fr bth public and private sectrs Set up a pensin system that is sustainable and prvides a stable, predictable and adequate surce f retirement incme in Nigeria Established Natinal Pensin Cmmissin t direct and versee the verall plicy n Pensin Matters in Nigeria Wrkers are nw able t cntribute (save) and receive their retirement benefits as and when due DB Scheme Streamlined fr thse exempted frm the CPS 28 Octber,

3 Legal Framewrk The System Defined Cntributin Scheme intrduced by an Act Emplyee driven based n individual Retirement Savings Accunt RSA Mandatry fr rganisatins with at least 5 emplyees Private Sectr Managed PFA and PFC Planned Withdrawal f Savings Prgrammed Withdrawal r Life Annuity Life Insurance Cver death in active service Strng Regulatry Framewrk The Operatrs The Business f a PFA is t administer and manage RSAs PFC hlds Pensin Funds and Assets n Trust Separatin f PFA/PFC, Cnditinal licence & Directrs undertakings The Regulatr All regulatins guided by internatinal best practices Supervisry apprach thugh licensing, mnitring, analyses, crrectin, interventin & cmmunicatin Fcus n Integrity and Prfessinal Credentials f Owners & Management s as t limit Agency & Systemic Risks 28 Octber,

4 Institutinal Framewrk PenCm Regulates & Supervises all Pensin Matters in Nigeria Maintains Database f All Pensin Matters Enfrces Cmpliance, Sanctins & Penalties PFA CPFA PFC PTAD Emplyer Registratin RSA Admin Registratin Reprting t PenCm Pensin Assets Admin Custdy f Pensin Assets Cllectin Netwrk Investments Effective Custmer Supprt Services Retirement Benefits Admin Reprting t PenCm Investments Retirement Benefits Admin Executes PFA Transactins Undertakes Related Activities fr PFA Crdinates the Activities f Pensins Offices in Federal Public Service and FCT fr thse Exempted frm CPS Remits Mnthly Cntributins 28 Octber,

5 Regulatry and Supervisry Philsphies Regulatry Philsphy Regulatin is rule-based & limits riented Cnsultative in rule making Cntinuusly challenging and refining practices t remain effective & efficient Balance the burden and benefits f regulatins Supervisry Philsphy Bard & Management f licensed entities have the ultimate respnsibility fr their institutins Market frces allwed t prmte cmpetitin in the industry Prmte effective risk management & best practices Supervisin is practive & riskbased Extensive disclsure requirements 28 Octber,

6 Implementing the CPS - Updates Initially licensed 26 PFAs, 7 CPFAs and 5 PFCs Presently reduced t 21 PFAs, 7 CPFAs and 4 PFCs due t mergers and acquisitins Number f registered cntributrs was 6.7 millin as at August 2015 This represents abut 7.1% f ttal wrking ppulatin in Nigeria and 3.8% f ttal ppulatin 26 States f the Federatin had adpted the scheme and are at different stages f implementatin while the remaining 10 States are at bill stage At least 200,000 private sectr emplyers f labur are implementing the CPS Over 130,224 had retired under the Scheme as at June 2015 and are currently receiving pensins as and when due Ttal pensin fund assets had grwn t ver N5 trillin ($25.25 Billin) as at August, 2015 Average mnthly cntributins f N30 billin ($ millin) The assets were equivalent t 5.84% f the Nigerian rebased GDP 60% f the ttal pensin fund assets belngs t the private sectr 28 Octber,

7 Pensin Assets ($ Billin) Pensin Assets as Percentage f GDP Implementing the CPS Pensin Asset Grwth Pensin Assets Grwth E 0 Assets ($ Billin) GDP The dip in the prprtin f Pensin Assets t GDP in 2010 reflected the rebasing f Nigeria s GDP 28 Octber,

8 Implementing the CPS Pensin Fund Prtfli Spread Pensin Industry Investment Prtfli: 2006 August: % 90% 80% 4.55% 9.21% 3.31% 70% 60% 50% 40% 67.98% 30% 20% 10% 10.19% 0% August, 2015 DOMESTIC ORDINARY SHARES FOREIGN ORDINARY SHARES FGN SECURITIES STATE GOVT. SECURITIES CORPORATE DEBT SECURITIES SUPRA-NATIONAL BONDS LOCAL MONEY MARKET SECURITIES FOREIGN MONEY MARKET SECURITIES OPEN/CLOSE-END FUNDS REAL ESTATE PROPERTIES PRIVATE EQUITY FUNDS INFRASTRUCTURE FUNDS CASH & OTHER ASSETS 28 Octber,

9 Issues that Pensin Refrm Act, 2014 was meant t Address Cverage Limited t Public Sectr (FGN & FCT) and Private Sectr rganizatins with at least 5 emplyees Infrmal Sectr nt cvered, but can participate vluntarily Nn-mandatry t States and Lcal Gvernments Cmpliance with CPS Lack f cmprehensive database f emplyers f labur t enfrce cmpliance by the Private Sectr particularly the Small and Medium Scale Enterprises (SMEs) Many emplyers view emplyer s prtin f the cntributin as additinal peratinal cst Lng waiting perid t access RSA balances in case f lst f jb up t six mnths Limited Quality Investment Outlets Mstly shrt term investments instruments Many gd cmpanies nt listed n the Stck Exchange Dearth f instruments t facilitate implementatin f initiatives fr natinal develpment Insufficient/Obslete Punitive Measures t Curb Infractins N prvisin fr fund guarantee/bridging shrtfall due t financial lsses Investment incme was nt tax exempt Agitatins fr imprved rate f cntributin by emplyers f labur Prvisin was made fr Minimum Pensin Guarantee, but n prvisin fr funding 28 Octber,

10 Refrm Initiatives Pensin Refrm Act, 2014 was enacted t address the implementatin challenges Repealed PRA, 2004 Operatinal frm 1st July, 2014 Cverage Cverage expanded t States & Lcal Gvernment Infrmal sectr Private rganizatins with less than 3 emplyees Self emplyed persns Persns exempted frm the Scheme may make vluntary cntributin AES & CPFA nw clsed fr new emplyees Cmpliance Emplyers t pen Transitinal Retirement Savings Accunt (TRSA) n behalf f emplyees that fail t pen RSA within 3 mnths f assumptin f duty Empwerment f PenCm n its rle t supervise States & LGs Strengthened Sanctins and penalties Issuance f Cmpliance Certificate Incentives Apply a prtin f RSA balance fr equity participatin in residential mrtgage Supplementary effrts Engagement f pensin cntributins recvery agents Recvered cntributins include interest penalty 28 Octber,

11 Refrm Initiatives Transparency & Accuntability Cnflict f interest issues nw strictly sanctined The Bard reprts directly t the President f the Federal Republic f Nigeria Bard f the Cmmissin nw includes Trade Unin Cngress, Nigeria Stck Exchange and Natinal Insurance Cmmissin Enhances the prtectin f pensin fund assets Issued a cmprehensive regime f sanctins and penalties t peratrs Pensin Fund Investments Retains ffshre investment Allwed, but still subject t the apprval f Mr. President Maintains investible instruments Investment in infrastructure thrugh bnds and funds Real Estate Develpment (including Husing) Real sectr financing thrugh Crprate Debts Alternative Assets (including Private Equity) Cntinuus industry wide capacity building t meet manpwer needs 28 Octber,

12 Refrm Initiatives Cntributin rati reviewed Minimum cntributin rate:18% f mnthly emlument Pwer t bargain cntributin rati with emplyer Only incme earned n vluntary cntributins are subject t tax Pensin fund investment incme nw tax exempt Emplyer may make additinal benefits payment Benefits Administratin Sme Public Sectr Emplyees eligible t full terminal benefits Access 25% balance f RSA after 4 mnths withut emplyment Intrduced Pensin Prtectin Fund T be funded by: Annual Subventin f 1% f mnthly wage f FGN emplyees Annual Levy n PenCm and Pensin Operatrs Incme frm investment f the fund Utilizatin f PPF: Funding f Minimum Pensin Guarantee (MPG) Cmpensatin fr shrtfall r financial lsses frm investment activities Any ther eligible purpse 28 Octber,

13 Refrm Initiatives Micr Pensin Plan Framewrk has been cncluded t bring the infrmal sectr n bard thrugh the Micr Pensin Plan The Micr Pensin Plan is expected t extend cverage f the Cntributry Pensin Scheme t the self-emplyed and the persns wrking in rganisatins with less than 3 emplyees The aim is t reduce ld age pverty thrugh the prvisin f ld age incme plans t all Nigerians The target is t extend cverage t a ttal f 20 millin Nigerians by 2019 and 30 millin by 2024 Already cllabrating with varius stakehlders: Cmmenced sensitisatin f Trade Unins acrss the cuntry Building awareness acrss the value chain Talking t IT Slutin prviders, mbile mney peratrs, etc Aiming t develp apprpriate slutins with the right value prpsitin and service delivery perating mdel 28 Octber,

14 Impact f the CPS n the Nigerian Ecnmy The CPS has facilitated the develpment f: Crprate bnd market Insurance market Grup Life Insurance Life Annuities Alternative asset classes Currently prmting c-investing frm the diaspra Mrtgage market Nigeria Mrtgage Refinancing Cmpany s N50 billin bnd PRA 2014 prvides fr a prtin f the pensin funds in an RSA t be utilized as equity cntributin fr payment f residential mrtgage Guidelines have been expsed t stakehlders fr inputs prir t issuance Crprate gvernance in cmpanies where pensin funds have been invested Facilitated the establishment f additinal qualified Rating Agencies 28 Octber,

15 Thank yu. 28 Octber,