Alleged over N2.4 million per month Jumbo Salary for PenCom Staff, Check here for the issues raised by the House on PenCom staff salary, PenCom DG response and How PenCom makes Money

The National Pension Commission (PenCom) has been questioned by the House of Representatives Committee on Finance over the salaries being paid to its staff.

The questions on the salaries were raised during the interactive session on the 2021/2022 budget defence and presentation of the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), to the Senate Committee on Finance.

This write up covers the issues raised by the House of Representative Committee on the Salaries of PenCom staff, PenCom DG immediate response and How PenCom makes Money.

Issues raised by the House Committee on Salaries of PenCom staff

The House of Representative Committee discovered that PenCom budgeted N12.02 billion for staff salary for its 500 staff and N2.5 billion for other staff costs, for 2022.

The Chairman, House Committee on Tertiary Education, Hon. Aminu Suleiman (APC, Kano) who is also a member of the House Committee on finance, did a quick calculation with N12.02 billion and 500 staff and based on the calculation, the lawmaker said this means that PenCom staff earns an average of N2.4 million monthly. “Are you telling me that the most junior personnel in PenCom earns as much as N2.4 million per month?” he said.

PenCom’s DG immediate response

The DG said PenCom pays high salary because PenCom cannot afford to have staffers that are vulnerable to compromise, hence the need for training, capacity building and competitive salary.

However, she disagreed with the N2.4 million monthly calculation by the lawmaker, she said even though PenCom pays high salaries, no one earns N1 million per month because the items highlighted encompasses all allowances, including training.

“Personnel cost is not restricted to salaries; we have about 14 items here. The salaries, the training, allowances and others, come under this. Nobody earns a million in PenCom from the DG downward. Maybe we are doing it wrongly. However, we categorize everything as personnel cost,’ she explained.

She further said, “the commission has to source and retain highly trained staff. We have to build capacity. We have to train our staff. That is one of the expenses. We have to train them. We have to avoid what is known as regulatory capture. What this means is that our staff will compromise.”

“As we are now when we go to examine the operators, we don’t take more than drinking water from them. We don’t compromise because our staff are well paid. We must earn more than the entity we regulate.”

Conclusion by House Committee after DG response

Unsatisfied with her explanation, Hon Suleiman said: “Everyone knows what constitutes personnel cost. This is a personal emolument to personnel. You cannot bring other components of your expenses here. I will ask that she supply the details of the per head of all the staff.” He, therefore, moved a motion that PenCom should provide the details of the salaries of its staff.

The Deputy Chairman of the Committee, Saidu Abdulahi (APC, Niger), concurred and then ruled that PenCom should provide the needed details of salaries and emolument within one week.

How PenCom makes Money

PenCom makes money from fees charged on pension fund assets under management of operators and fines charged on operators who break established rules/laws.

PenCom DG said: “By the provisions of the Establishment Act, all income earned from investment earned from the Retirement Savings Account are credited back to the RSA of the contributors. Nobody takes a single kobo from it. However, the Commission and the Pension operators are allowed to charge fees on the fund under management, and that is what we survive on.”

“We charge fees as follows. PenCom charges on the RSA fund 0.2 per cent, while the PFAs charge 1.2 per cent and the PFCs charge 0.25 per cent. Those percentages are charged on a daily basis and then divided by 365 days because if you wait to do that the end of the year, it is going to be higher and the RSA account holders will be cheated.”

“The Commission is mandated by the pension reforms act to charge these fees to enable it generate enough revenue to meet its personnel and operational cost. It is also to rid the government of the burden of funding the Commission.”

“We also charge fines which we collect from the operators when they break certain rules. We use what we call a sanction regime to guide us on what they should pay when they break the rules. There are also one-off charges like licensing fees, all these monies are paid into the CBN account.”

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