PFAs invest N2.8t pension funds in FG securities -Sola Alabadan

As at October 31, 2014, the Pension Fund Administrators (PFAs) invested about N2.8 trillion of Nigeria’s pension fund assets in Federal Government securities, representing 61.8 per cent of the total pension assets under the contributory pension scheme in the country.
The total pension fund assets under the scheme stood at N4.57 trillion as at October 31, the National Pension Commission (PenCom) disclosed.
A review of pension fund investment portfolio shows that the quantum of pension fund investment in money market securities stood at N562 billion as at the end of October, accounting for about 12.2 per cent of the total pension funds assets.
This means that about 73 per cent of the total pension assets were invested in Federal Government Securities and Money Market Securities as at October 31.
Although it has been argued that over-concentration of pension funds in these debt instruments might be limiting the growth potential of the retirement fund for young pension contributors with long term investment horizon, the Pension Fund Operators Association of Nigeria (PenOp) has, however, faulted this argument.
PenOp denied the insinuation that the PFAs were investing majority of the pension funds in low yield debt instruments, saying that contrary to the thinking in some quarters, the Federal Government Securities are not low yield debt instruments as bonds are giving enough yields.
PenOp explained that the PFAs have continued to show preference for certain portfolio of investments because the pension operators were trying to ensure the safety of the pension assets under management.
Based on the figures released by PenCom, as at October 31, while investment in State Government securities was N179 billion (3.92 per cent), investments in Corporate Debt Securities amounted to N91 billion (2.0 per cent).
Investment in ordinary shares amounted to N647 billion representing 14.1 per cent, while private equity accounted for N9.45 billion (0.21 per cent), and real estate properties accounted for N204 billion (4.4 per cent).
A further review of pension fund investment portfolio shows that the Retirement Savings Account (RSA) active funds accounted for about N2.88 trillion of the total pension fund assets, while RSA retiree fund accounted for about N361 billion.
Similarly, the Closed Pension Fund Administrators (CPFAs) contributed about N651 billion and Approved Existing Scheme (AES) accounted for about N677 billion.

Culled from Daily Independent