N93.49 Billion Pension Contributions not in Contributors Retirement Savings Account

Leaky Dollar Bucket

The National Pension Commission (PenCom) has released its 2021 Annual Report on the pension industry, the report revealed that N93.49 Billion Pension Contributions were not in contributors Retirement Savings Account (RSA) as at December 2021.

The amount relates to Un-Credited Pension Contributions in the Contribution Reconciliation Account (CRA) N73.97 billion and the Transitional Contributions Fund (TCF) N19.52 billion, with Licensed Pension Fund Operators (LPFOs).

What is Contribution Reconciliation Account (CRA)?

The Contribution Reconciliation Account (CRA) is an account that contains pension contributions remitted by employers to the Pension Fund Custodians (PFCs) but are yet to be credited into the employees’ Retirement Savings Accounts (RSAs) by Pension Fund Administrators (PFAs) due to the submission of incomplete or inaccurate schedules by employers.

What is Transitional Contributions Fund (TCF)?

The Transitional Contributions Fund (TCF) was created to keep pension funds of employees that failed to open RSAs in line with Section 4.1.1 of the Guidelines for Transitional Contributions Fund. This requires a PFA, chosen by employers whose employees have received salary for a minimum of six months, but failed to open a Retirement Savings Account, to create and maintain a TCF to manage the accumulated pension contributions pending when the employees open their Retirement Savings Accounts.

What is the effect of having your pension contributions in CRA or TCF?

Any RSA holder who has pension contributions in the Contribution Reconciliation Account and or Transitional Contributions Fund, will not be getting the same Return on Investment (ROI) that normal RSA holders get, because their pension contributions will most likely only get normal bank interest rates or standard fixed income investment rates. In addition, there is the likelihood of total loss of pension contributions, where it is never discovered that an RSA holder has pension contributions in CRA or TCF.

How can I know if my pension contributions are in these accounts?

Get a copy of your RSA statement from inception to date from your PFA, check the statement to see if there is any month missing from when you started working to date. If you discover any missing month, contact your employer to know if remittance was made for this month/period, if Yes, contact your PFA, your pension contributions are most likely enjoying in the Contribution Reconciliation Account (CRA) and or Transitional Contributions Fund (TCF) with PFAs.

What is the Regulator (PenCom) doing about this?

PenCom in the 2021 Annual Report disclosed that it has given a six month timeline to the PFAs and PFC to follow up with the respective employers and ensure that the funds in the Contribution Reconciliation Account (CRA) are appropriately transferred to the employees’ RSAs. For Transitional Contributions Fund, PenCom said it has mandated the PFAs to ensure resolution of all outstanding contributions in the TCF and forward monthly status reports to PenCom.

Is the amount in CRA & TCF increasing or decreasing?

PensionNigeria reports that Un-Credited Pension Contribution is a big issue in the Contributory Pension industry that all stakeholders need to do their part to resolve. As at 31 December 2021, the total Un-Credited Pension Contribution stood at N93.49 Billion which is 0.89% of the N10.51 Trillion RSA pension fund assets under management of PFAs.

In 2019 annual report, PenCom stated that one of the key issues observed from the review of the compliance reports of pension operators include increase in the value of uncredited pension contributions. In 2020 annual report, PenCom mandated the PFAs to ensure resolution of all outstanding un-credited contributions and file progress reports, accordingly. The 2021 Annual Report, represents the first time, since PensionNigeria started tracking the issue, that PenCom released the actual figures for Un-Credited Pension Contribution for the industry and we hope the awareness that this brings will lead to a reduction in the figure going forward.

Checkout PensionNigeria breakdown of important aspects of the PenCom 2021 Annual Report

PenCom 2021 Annual Report Breakdown

Chairman’s Statement in PenCom 2021 Annual Report
Director General’s Report in PenCom 2021 Annual Report
Analysis of Pension Operating Environment for the Year 2021
Micro Pension Registrations per PFA as at Dec 2021 and Fastest Growing PFAs by Micro Pension Registrations
Update on the Micro Pension Plan for Year 2021
N93.49 Billion Pension Contributions not in Contributors Retirement Savings Account
Defaulting Employers pay Penalties of N10.03 billion into Employees RSA as PenCom takes 67 Employers to Court
Redacted Reports – Unfunded RSAs and RSAs with Incomplete Documentation
PTAD paid N99.94 billion to Federal Government Retirees in 2021
PenCom Stakeholder Engagement and Public Enlightenment Activities in 2021
Biggest PFAs by RSA Pension Fund Assets under Management & Fastest Growing PFAs in 2021
Update on Implementation of Minimum Pension Guarantee
PenCom provides Scanty Update on using RSA for Payment of Residential Mortgage
PenCom approved over N1.46 Trillion for PFAs to pay RSA Holders
PFAs made over N340.57 Billion Total Income in 3 years

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