PenCom Approves New Fee Structure to Address challenges in Micro Pension Plan Implementation by PFAs
L-R: Mr. Dauda Ahmed, Head, Micro Pensions Department, (PenCom); Dr. Babatunde Alayande, Head, South-West Zonal Office (PenCom) and Mr. Abdulqadir Dahiru Head, Corporate Communications Department (PenCom) at the 2022 workshop organized by PenCom for journalists in Lagos.
The National Pension Commission (PenCom) said it has approved a new fee structure to address challenges in the implementation of Micro Pension Plan in Nigeria by the Pension Fund Administrators.
The new fee structure was approved in April 2021.
This was disclosed yesterday by Ibrahim Kangiwa, Head, Investment Supervision Department National Pension Commission in his presentation at the 2022 workshop organized by PenCom for journalists in Lagos with the theme “Increasing Informal Sector Participation in the Contributory Pension Scheme (CPS): The case for Micro Pension Plan.”
Kangima who was speaking on the sub topic: “What you Need to Know About the Investment of the Micro Pension Fund (Fund VI)” said there are two broad types of allowable fees chargeable to pension funds which are Administration Fees and Asset/Income Based Fees.
Asset based fees, according to him, are charged on the RSA ‘Active’ Funds while income based fees are charged on the Retiree Funds.
He said all statutory charges (taxes) and transaction costs shall be borne by the pension funds while Bank charges shall be borne by the Pension Fund Custodian (PFCs).
According to him, the Commission approved a new fee structure in April 2021 for the Micro Pension Fund.
“The revised fees is based on Hybrid Asset and Income Based Fee structure.
“The fee structure was amended to address some challenges in implementing the Micro Pension Plan (MPP) by PFAs,” Kangima explained.
In the new fees dispensation applicable for Micro Pension Fund, according to Kangiwa, “no fee shall be charged until the Funds under Management (FuM) reach a threshold of N5 million.
“PFAs shall not charge fees once the Daily Value of Accounting Unit of the fund falls below N1.00 to ensure that principal contributions are not eroded.
“The Commission shall not participate in Micro Pension Fund fee regime until Fund under Management (FuM) of a PFA attains the threshold of N4 Billion.”
Earlier in his opening remarks, the Director General of the Commission, Aisha Dahir-Umar, who was ably represented at the occasion by the Head of Corporate Communication Department, Abdulqadir Dahiru emphasized the importance of the workshop to create awareness on Micro Pension Plan (MPP) especially amongst the workers in the informal sector.
The DG who said the theme of the workshop aligns with the Commission’s objective of expanding coverage of the CPS, explained the objective of the workshop which she said is to bring in to the CPS, Nigerians working in the Informal Sector and those who are Self Employed through the Micro Pension Plan (MPP).
PenCom DG expressed the Commission’s readiness to sustain the existing cordial relationship with the media, which, according to her, would translate to the general public being better informed about the pension industry.
“Let me re-affirm the Commission’s commitment to creating awareness and holding social dialogue on the workings of the Contributory Pension Scheme with relevant stakeholders towards the smooth implementation of the Contributory Pension Scheme in Nigeria.
PenCom DG said strategic efforts to drive the Micro Pension Plan (MPP) remain one of the significant areas of focus of the Commission.
“The MPP was conceptualized to expand pension coverage to the informal sector, including small-scale businesses, entertainers, professionals, petty traders, artisans, and entrepreneurs.
“The MPP was implemented to curb old-age poverty by assisting the workers, as mentioned above, to contribute while working and build long-term savings to fall back on when they become old. To create awareness of the Micro Pension Plan.”
