PFAs Want Compulsory Health Insurance For Retirees

Pension fund operators are proposing to provide compulsory health insurance for retirees under the Contributory Pension Scheme (CPS).

The operators under the aegis of Pension Fund Administrators(PFAs) are also proposing the inclusion of securities lending as a permissible investment outlet for the pension industry.

They lament that this area of investment of pension funds outside Nigeria has remained non-operational, with negative long-term implications for contributors.

The operators are, therefore, advocating that, in the long term, the mandatory requirement for presidential assent be expunged.

The Managing Director, UBA Pensions Custodian Limited, Bayo Yusuf, spoke on behalf of the operators at the yearly retreat by the Pension Fund Operators Association of Nigeria (PenOp) for the National Assembly Joint Committee Members on Establishment & Public Service and Pensions in Akwa Ibom State.

He said they found that expenses incurred by retirees were mainly on medicals, hence, their proposal for compulsory health insurance to be included in the PRA 2014.

In a paper entitled: “Proposed Changes for PRA 2014 and Pension Industry Strategic Issues”, he stated that the introduction of a compulsory medical insurance to be paid out of their RSA balance would go a long way in ameliorating the sufferings of retirees.

He said the following sections should be amended: “Section 86 and Section 87 (1) give allowance for investment of pension funds outside Nigeria.

‘’Section 87(2) of the PRA 2014 notes that the Commission may, subject to subsisting Central Bank of Nigeria (CBN) foreign exchange rules, recommend to the President for approval, portfolio limits for investments of pension funds or assets outside the territory of the Federal Republic of Nigeria.

“We propose inclusion of securities lending as a permissible investment outlet for the industry.This area of investment of pension funds outside Nigeria has remained non- operational, with negative long-term implications for contributors. In the long term, we advocate that the mandatory requirement for Presidential assent should be expunged. In the medium term, we believe that it is imperative that PenCom urgently explores this section to benefit RSA’s contributors and for the long-term integrity of the industry by seeking Presidential assent as well as collaborating with the CBN to develop a framework.”

He said they were also seeking amendment of Section 2(2) of the PRA 2014.

“Section 2(2) of the PRA 2014 provides that “in the case of the private sector, the scheme shall apply to employees who are in the employment of an organisation in which there are 15 employees or more. We are recommending that to accurately reflect the industry position which is that it applies where an organisation employs three or more persons.

“Section 4(b) provides that an employer may “elect to bear the full responsibility of the scheme provided that in such a case, the employer’s contribution shall not be less than 20 of the monthly emoluments of the employees. The minimum should be 18 and not 20 in keeping with the minimum contribution rates. It should be eight per cent for employees and 10 per cent for employers as provided for in the Act. Increasing the threshold where the employer elects to bear the entire burden of the contribution is a disincentive.’’

The Nation