With the growth pattern of Nigeria’s pension fund under Contributory Pension Scheme now put at over N5 trillion, the country can be a regional leader and a global player in the sector, according to Expert on Global Economy, Financial markets and Policy Adviser to Mayor of London, Dr. Gerard Lyons.
Lyons, the keynote speaker at the ongoing two days second edition of the World Pension Summit ‘Africa Special’ with theme: “Building Sustainable Pension Systems in Africa”, being hosted in Abuja, Nigeria, noted that the pension reform in the country is comprehensive, impressive and a good foundation for the future.
He said the rest of the world view Nigeria as a country where corruption was prevalent and had security problem, but that the present administration of President Muhammadu Buhari was tackling both issues seriously adding that this will further boost international perception and drive international investment in the pension industry.
Director General of the National Pension Commission (PenCom), Chinelo Anohu-Amazu in her welcome address said the Nigerian pension reform narrative can be situated within the context of Africa’s economic resurgence after the lost quarter of a century.
She said: “Indeed, from operating the old Defined Benefits System that had well over two trillion Naira (circa USD 10 Billion) in deficit at the dusk of the last century, the CPS that was kick started in 2004 now has over five trillion (circa USD 27 Billion) in just over 10 years of operation.
“Infrastructure development undoubtedly remains a key enabler of sustainable development in Africa and the current rapid increase in the size of pension funds available in the Continent provides a rare opportunity for multi-sectoral collaboration in bridging Africa’s infrastructure deficit.
‘By focusing on the long-term sustainability of pension systems in Africa, the summit shall according to her, inter alia, facilitate the setting out of economic pre-conditions and initiatives that are needed for longer-term growth as well as to foster poverty eradication.”
She noted that a key feature of the CPS wais the institutionalization of risk-based regulation as a means of engendering the long-term sustainability of the Pension Industry. Sustainability on this score encapsulates the troika of social, environmental, and economic dimensions of development.
She stressed that regulatory strategies would thus encompass a painstaking consideration of risks as well as the rewards that lie behind endogenous opportunities noting that the impact of poor corporate governance practices on shareholder value, exacerbated by the recent global financial crisis, for instance, has raised issues such as transparency, risk management and business ethics, amongst others, to the front burner of the regulatory agenda.
She said, “Then again, issues of unemployment, diseases, poverty, climate change, and inequality are also pressing needs for Regulators to consider in mapping their regulatory landscape.
“This novel approach to regulatory oversight – Sustainable Regulation – is one that overtly acknowledges the importance to institutional regulators of environmental, social and governance (‘ESG”) factors and the long-term stability of financial markets, especially the Pension Industry. It recognizes that creation of long-lasting return on pension assets is essentially dependent on transparent, predictable and well governed environmental and economic systems; systems that are underpinned by clearly defined prudential regulatory guidelines.
“Unsurprisingly, pension fund managers all over the Globe are changing mandates to reflect considerations of sustainable investment and consequently the growth of ESG mandates in overall investment strategy is on the rise. Nonetheless, many regulators still require further education on how they should quantify performance and assess the extent to which ESG mandates are delivered upon.”
She reiterated that as a regulator, PenCom continuously strived to remain at the cutting-edge in mainstreaming sustainability strategy and practice in the discharge of her statutory remit.
She further disclosed that the Commission in furtherance of its commitment to promoting industry-wide sustainability, is collaborating with Europe’s leading Sustainability Research Centre – The Sustainable Business Initiative at the Business School, The University of Edinburgh, United Kingdom to among other things, develop a set of sustainable pension principles that would set out a minimum standard for entrenching a truly sustainable retirement pension system in the country.
By Pita ochai
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