- Orders PFAs to shore up capital in 12 months
Pension foremost regulatory body, PenCom has improved the minimum regulatory capital requirement for PFA by a whole 400 percent from the current N1 billion naira to N5 billion. This is according to a circular on revised minimum share capital requirement for licensed PFAs made available on PenCom’s website.
In the circular addressed to MDs and CEOs of all licensed pension fund operators and signed by Ehimeme Ohioma, Head, surveillance Department, PenCom, the regulator stated that the move was necessary to consolidate the PFA’s capacity and deliverability to pension holders whilst also informing that PFAs have a period of 12-month to meet the new minimum capital requirement.
The circular read in part: “The board of the commission, at its 48th meeting on the 27th April 2021, approved the increase of the minimum regulatory capital (Shareholders’ fund) requirement for PFAs from the current N1 billion to N5 billion, unimpaired by losses.
“The increase in the minimum regulatory capital is necessitated by the need to improve the capacity of PFAs, in terms of operational efficiency and effectiveness as well as service delivery.
“The board also approved a 12-month transition period, effective 27th April 2021, within which PFAs are to meet the new minimum capital requirement.”
PenCom had in recent times canvassed for the amendment of Pension Reform Act 2014 to allow prompt and sufficient payment of retiree’s fund. Speaking during a visit of the senate committee on the establishment and public services to the commission in Abuja, Aisha Umar, the Director-General, PenCom expressed discontent on the poor pattern of retirees’ pension payment which according to her was birthed alongside the 2014 pension act.
“The fundamental objective of the pension reform is to ensure that every worker receives their retirement benefits as at when due. However, it is sad to report that today, there are a large number of Federal Government employees who retired from March 2020 to March 2021 under the Contributory Pension Scheme (CPS) that are yet to receive their pensions due to non-payment of their accrued pension rights.
“This challenge, which started in 2014, was essentially triggered by the appropriation of insufficient amounts for payment of accrued pension rights of retirees and further aggravated by late or non-release of full appropriated amounts,” She said.
Meanwhile, stakeholders have expressed concern on the possibility of recapitalization exercise especially considering how that of insurance was postponed on several occasions.