Financial Institution Urges Policymakers to Prioritize CPS Growth | The Guardian Nigeria News
Absa, a pan-African bank, has advised policymakers to prioritize the growth of the Contributory Pension Scheme (CPS), among others, to ensure the sector maintains a healthy growth trajectory.
The banking group, which operates two licensed subsidiaries, Absa Capital Markets Nigeria Limited and Absa Securities Nigeria Limited, said it was important to improve pension business in the domestic market.
National head of equity and fixed income sales, Simi Ojumu, said the pensions industry has maintained impressive growth since the enactment of the Pensions Reform Act (PRA) 2004, which required a employer with more than five employees to make regular contributions to the workers’ pension fund.
She said: “The CPS, through the multiple operators and agencies, Pension Fund Administrators (PFAs), Pension Fund Custodians (PFCs), Closed Pension Fund Administrators (CPFAs) and the Regulator, the National Pensions Commission (PenCom), has created an ecosystem of career paths, employment, business and investment opportunities for several Nigerians.
Citing recent reports, she explained that robust policy intervention in the pension sector has led to an increase in the net asset value of Nigeria’s pension assets from a deficit position two decades ago to valuations of N13.6 trillion in 2022, while increasing the sector’s overall contribution to GDP from 0.9% in 2004 to 9% in the current year.
She admitted that CPS continues to face some challenges despite recent growth.
Low coverage, insufficient awareness of the benefits of the scheme and failure to ensure strict compliance by parties are some of the problems still plaguing the sector, he said.
“The most important thing would be to ensure the sustainability of the contributory pension scheme. Ensuring participant compliance by federal, state and private sector governments, raising awareness of benefits, and creating an investor-friendly environment are some of the ways policymakers can ensure the pension industry continues to thrive. and improve its contributions to the country. GDP,” Ojumu said.
She pointed out that the recent case of mergers and acquisitions (M&A) by pension fund administrators to recapitalize is a sign of growth in the industry, noting that new entities that emerge from the framework of mergers and acquisitions will have more resources. at their disposal.
However, she cautioned that a smooth transition in mergers and acquisitions is needed to ensure that recapitalization efforts do not harm contributors’ assets.
“Smooth transitions also depend heavily on investment banking facilitating reorganization and, in this case, mergers and acquisitions. It is one of the core services of Absa Group in Nigeria. At Absa Nigeria, we have proven expertise in managing mergers and acquisitions to ensure a smooth transition of the new company.