Salami: N23tr Pension Assets Dip When Valued Against Dollar

Former Chief Economic Adviser to President Muhammadu Buhari, Dr. Doyin Salami, has expressed concern over the worth of Pension assets when  valued against foreign currencies.

He called to question the continuous drop in value of contributors’ pension fund assets when denominated in foreign exchange and benchmarked against inflation.

Pension fund assets which stand at N23trillion as at date valued in dollar exchange rate amounts to $14.28billion.

While speaking during an on-going three-day Pension Industry Leadership Retreat organised by Pension Fund Operators Association of Nigeria (PenOp), Salami said the regulator and operators have been too laid back, watching the value of the pension assets diminish without addressing it.

He spoke on the theme – Strategic Blueprint for Economic Development and Inclusion.

Salami who made a presentation on 2025 Global Outlook expressed discontent, stating that as a pension contributor himself under the Contributory Pension Scheme (CPS), he is not happy with the return on investment (RoI) on his pension fund, noting that many contributors feel the same way.

He said: “Permit me to switch from being an economist to being a pension contributor. As pension operators, you have totally bastardised the assets that we all give you, which is management of our pension fund.

“A person has worked for 15 to 20 years and made regular contributions. You are collecting management and performance fees and the assets that you are managing continue to diminish in value and there’s nobody speaking for the contributors. This is not good enough and unless there are those who are speaking to the wealth of the contributors, nothing will change,” he added.

“I have a fund that I set up as my shadow fund against my pension, but I cannot bring myself to collect my pension, why? because it is nothing so I left it for the industry. You do not represent us as pension contributors but represent yourself. You are taking fees and commissions here and there. You are all wearing shining suits yet I’m the one contributing the money,” Salami said.

He said the industry needs to manage pensions for contributors to experience an increase in real value and not nominal value.

He stressed that the economy is challenged but making progress.

The question he said is, do the regulator and operator have the capacity to manage pensions for the benefit of contributors or are they just interested in themselves alone.

“For me, the regulatory ambiance has been on the side of the government and not the contributors and this needs to change,” he pointed out.

In her opening speech, the Director-General of PenCom, Ms. Omolola Oloworaran said the theme of the retreat is not only timely but important.

She said the industry has achieved remarkable milestones of over N23trillion as assets under management, including more than 10 million contributors and regulatory framework that are globally respected.

Meanwhile, at a different occasion, PenCom has urged the Lagos State Governor, Babajide Sanwo-Olu, to extend periodic pension increases currently enjoyed by Defined Benefit Scheme (DBS) retirees to those under the Contributory Pension Scheme (CPS) to boost their monthly pensions.

PenCom DG made the request during a courtesy visit to the governor at the Lagos State Government House.

The visit was to present the report of PenCom’s 2024 routine inspection of the Lagos State Pension Commission (LASPEC) amongst others.

Ms. Oloworaran said currently, only DBS retirees are paid pension increases in Lagos, leaving out their counterparts under the CPS.

She made a case for the prioritisation of retirees under the CPS given the contributory nature of the scheme.

She however lauded Lagos as a leading model in the federation for its effective implementation of the CPS.

She highlighted key achievements, including consistent deduction and remittance of employee contributions to their Retirement Savings Accounts (RSAs), full settlement of all backlog of accrued pension rights, the existence of a valid Group Life Insurance Policy for most public service employees, and the deployment of advanced ICT systems to enhance pension administration in the state.

Despite this progress, she proposed a partnership with the state to make the Pension Clearance Certificate (PCC) a mandatory requirement for companies seeking state government contracts and services, as practiced at the federal level.

In addition, the DG recommended transitioning unremitted contributions currently held in commercial banks’ escrow accounts into Transitional Contribution Fund (TCF) accounts managed by Pension Fund Administrators (PFAs), to optimise investment returns.

She also advised the state to implement an Irrevocable Standing Payment Order (ISPO) for pension contributions to be automatically deducted and remitted from Federation Account Allocation Committee (FAAC) allocations. This is to protect pension remittances from potential administrative delays.

While commending the state for its N600 million bailout for outstanding accrued rights of Lagos State University of Education (LASUED) retirees, the DG appealed for further intervention to address unpaid benefits from 2023 and 2024.

She also urged the governor to consider implementing the Minimum Pension Guarantee (MPG), similar to what obtains at the mandatory CPS level. She informed the governor that the Federal Government had started its MPG contributions and included it in the recent approval to issue the N758 billion bond to clear pension liabilities.

In response, Governor Sanwo-Olu reaffirmed the state’s commitment to pension reforms and praised the collaborative relationship with PenCom under the current leadership.

Mr Governor expressed support for implementing pension increases for CPS retirees and stressed the importance of workers’ welfare in his administration’s agenda.

While he was optimistic about the sustainability of reforms by future administrations, he noted that an ISPO may not be necessary at this time.

The governor also called on PenCom to support the state’s developmental initiatives by encouraging pension fund investments in government-issued bonds.