Nigerian Pension Fund Administrators Pay N49.5 Billion Taxes In 3 Years

[ODUNEWS] August 8 – Pension Fund Administrators (PFA) in Nigeria incurred a sum of N18.85 billion as income tax in 2021, a 15.6% increase compared to N16.31 billion spent in the previous year, and a 31.4% increase when compared to N14.35 billion incurred in 2019. This brings the total tax expenses in the past three years to N49.5 billion, according to a report by the National Pensions Commission (PenCom).

 

The report seen by Nairalytics- the research arm of Nairametrics, shows that Stanbic IBTC, ARM Pension, and Premium Pensions declared the highest income taxes in the review year, jointly accounting for 70.4% of the total tax expenditure of the industry.

The list under consideration includes 21 PFAs, that were operating as of the end of 2021, although this list has shrunk in recent times, owing to some mergers and acquisitions, in a bid to shore up their minimum capital requirement to N5 billion as directed by the PenCom.

PAL Pensions – N839.2 million

A total of N839.2 million was incurred by PAL Pensions as tax expenditure for 2021, an increase of 29% from N649.9 million recorded in 2020. PAL Pensions accounted for 4.5% of the total tax deductions recorded by the PFAs under consideration.

With profit before tax growth of 20% (year-on-year) to N2.56 billion in 2021, PAL Pensions recorded 32.7% of its pre-tax profit as income tax for the year.

Sigma Pensions – N812.4 million

Sigma Pensions incurred N812.4 million as a tax deduction for the 2021 financial year, representing an increase of 10% from N735.4 million recorded in 2020, and a 40% increase compared to N580.3 million recorded in 2019.

In the same vein, Sigma Pensions’ tax expenses for the period represented 33.6% of the pre-tax profit, which had grown by 5% year-on-year to N2.42 billion.

Others include

• Trustfund Pensions – N810 million
• Leadway Pensure – N770.4 million
• NPF Pensions – N626.7 million
• Crusader Sterling Pension – N575.3 million
• FCMD Pensions – N463.1 million

Why rising tax payments matter

Tax collection is a very important revenue bucket for the federal government of Nigeria, accounting for 33.5% of Nigeria’s non-oil revenue in 2021. In order to offset the shortfall recorded in Nigeria’s oil revenue, the non-oil component of the federal government needs to improve.

The Pension industry has been able to improve its tax payments to the federal government in the past three years, despite the covid-19 pandemic in 2020. This is owing to the impressive bottom lines recorded by the Pension Fund Administrators.

This is a crucial contribution by the PFAs in face of the government’s ballooning expenditure profile due to subsidy payments and interest from loan obligations.