In line with Section 68 of the Pension Reform Act (PRA)2004, the Compliance Officer of the Pension Fund Administrators (PFA)and Pension Fund Custodians (PFC)has the statutory responsibility to report any breach of the Pension Reform Act 2004, codes, guidelines, rules and regulations issued by the National Pension Commission (PenCom), in the course of the company's business, to the regulator.

This forms part of the Whistle Blowing Guidelines issued by PenCom. The guidelines provide lucid guidance for reporting breaches in PFAs, PFCs and CPFAs and benchmark examples on reporting. The guidelines also restrict reporting to significant matters.

Transparency is one of the core values of the commission which has been encouraged amongst the operators.

As a regulatory philosophy, the commission has adopted a stakeholder approach in its regulatory activities. This philosophy has often encouraged operators to make meaningful contributions that would add value to regulatory initiatives thus engendering amongst stakeholders, a sense of responsibility towards the industry.

Section 68 of the Pension Act provides that "Every pension fund administrator shall employ a compliance officer who shall:

(a)be responsible for ensuring compliance with the provisions of this act, any rules and regulations made thereunder and the internal rules and regulations made by the pension fund administrator;

(b)have relevant professional and cognate experience; .

(c)report to the Chief Executive Officer of a pension fund administrator and the Commission on any non compliance by the pension fund administrator and

(d)liaise with the Commission with regard to any matter which in the opinion of the Commission will enhance the compliance of the pension fund administrator with the provisions of this Act and guidelines issued thereunder."

The duty of compliance officers to breaches of the Pension Act, codes, guidelines, rules and regulations to the Commission, is also part efforts to ensure that the aims of the pension reform are not defeated.

The Pension Act embodies a number of checks in order to preserve the pension fund assets include the fact that the functions of the PFA and PFC are so clearly delineated that it is difficult for either to misuse the pension funds assets to the detriment of the contributor. At no time will the PFA have the custody of contributions of the employee. The contributions go directly from the employer to the custodian. On the other hand, the custodian will not invest the pension assets except to the order of the PFA.

Companies proposing to as custodian are required to issue a guarantee to the full sum and value of the pension fund and assets held by it or to be held by it.

In order to keep track of their activities, the licensed operators are required to make a regular report of their activities to PenCom. Though this is considered an onerous requirement by PenCom but in view of the volume and nature of the funds the PFAs will handle, it becomes necessary to be able to spot any wrongdoing early. Besides this information is expected to be passed on to PenCom electronically and would not constitute a hardship for any fully automated operators.

Every PFA is required to maintain a Statutory Reserve Fund, which shall be credited annually with 12.5 per cent of the net profit after tax, or such percentage of the net profit as may be stipulated by PenCom to meet claims.

Clear legal and administrative sanctions have been provided for non-compliance with rules and regulations. Any operator found wanting shall be penalised as provided for in the Pension Act.

PFAs and Custodians are required to disclose their rates on return and publish their audited accounts. This will assist in determining how well the operators are doing to prevent collapse of the scheme.

These checks are included in the Act to give the contributors rest of mind. Employees are therefore encouraged to desist from being skeptical about the new contributory pension scheme. The pension reform has addressed problems of past pension schemes to a large extent.

Pension reform, which is now the in-thing throughout the world became necessary due to the problems that bedeviled pension administration in the past. It follows therefore that efforts must be made to ensure that pension debacle becomes a thing of the past.

Thus, the importance of safety of the pension fund assets cannot be over-emphasised as the success of the pension reform is hinged on the availability of funds to contributors when they retire. Since the pensioner will utilise the fund at the end of his working life, it becomes imperative that adequate measures be taken for its protection.