PENCOM REVOKES NNPC PENSION LICENCE OVER N134BN DEFICIT

The National Pension Commission (PENCOM) has revoked the licence granted to the Nigerian National Petroleum Corporations (NNPC) Pension Fund over failure to meet its requirements.

A letter dated September 8th 2014, addressed to the Group Managing Director NNPC, and signed by the Ag. Director General, PENCOM Chinelo Anohu-Amazu, said that the commission has come to the conclusion of the unwillingness of NNPC to comply with the provisions of the Pension Reform Act (PRA) 2014 and the conditions attached to the approval granted it to continue with the existing scheme.

In 2006, PENCOM granted temporary approval for NNPC Pension Fund to operate as a Close Pension Fund Administrator (CPFA) pending compliance of guidelines issued by the commission and the provision of the PRA. But out of the five pending provisions, NNPC could not meet up with anyone.

In the letter, PENCOM said; Section 50 (1) (g) of the PRA, 2014 and clause b) (i) of the approval conditions provide that the scheme shall be fully funded at all times and that any shortfall shall be made up within ninety days.

“NNPC has breached this condition considering that the scheme has remained in deficits since inception in 2006. NNPC made an undertaking to transfer additional assets to address the deficit. Despite several commitments, NNPC has failed to provide the additional assets. As at December 31st 2012, the deficit in the scheme was N133.56bn (inclusive of the N182.26bn receivable from NNPC). The commission is concerned that eight years after the grant of approval to continue with the existing scheme, NNPC has failed to honour its promises to fund the deficit despite several commitments.”

Another violation PENCOM stated is that Clause b) (ii) of the approval conditions provides that the funds and assets of the scheme shall be passed to licensed Pension Fund Administrator(s) of NNPC’s choice for management. But NNPC is in violation of this condition and section of the PRA 2014 by failing to transfer all funds and assets to licensed Pension Fund Administrators for managements. Based on the actuarial valuation as at 31st December 2012, only N97.52bn or 26.43% of the assets has been transferred to the PFAs for management.

Other offences by the NNPC according to PENCOM are failure to transfer real estate properties on the pretext that the PFAs were not adequately equipped for its (real estate) management, failure to transfer all pension fund assets to the custodian, failure to provide any undertaking to the commission since the approval of the scheme in July 2006 and that NNPC did not provide evidence that employer and employee pension contributions were being remitted to the licensed operators as required by the PRA 2014.

Some NNPC workers who pleaded anonymity blamed NNPC Board, headed by the Minister of Petroleum Resources, Mrs. Deizani Alison- Madueke for the revocation, saying that already their unions and management have reached accord on how to strengthen the scheme and fund it properly but the board failed to address the issue.

Daily Trust learnt that a memo from the NNPC management to the board was submitted in 2012 and resubmitted this year on the plans to meet the requirements of the PENCOM but the NNPC board could not meet since then.

The sources at the NNPC said since the inaugural meeting of the board members in 2012, no other meeting has been held, except the one by the establishment committee of the board chaired by the Steve Oronsanya.

Copy of the NNPC management’s memo waiting for the approval of the board obtained by Daily Trust revealed plans to meet the PENCOM requirements.

“The workers have made a lot of sacrifices in order to address these issues to the effect that we agreed to contribute our total emolument since 2011 in order to fund the pension gap,” one of the workers told Daily Trust.