PFAs invest N2.6t pension funds in FG securities

By Sola Alabadan  / Senior Correspondent

 

A review of pension fund investment portfolio shows that the Pension Fund Administrators (PFAs) continued to invest bulk of pension funds in Federal Government securities at 59.53 per cent accounting for N2.6 trillion as at June 2014, the National Pension Commission (PenCom) revealed. The total pension fund assets under the contributory pension scheme established by the Pension Reform Act 2004 stood at N4.4 trillion as at June 30, 2014.

The pension regulator also said the quantum of pension fund investment in money market securities stood at N527 billion as at the end of second quarter, representing about 11.94 per cent of the total pension funds assets.

As these indicate that more than 70 per cent of the total pension assets are invested in Federal Government Securities and Money Market Securities, 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, 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 June 30, 2014, investment in State Government securities was N187 billion (4.2 per cent), and investments in Corporate Debt Securities amounted to N82 billion (1.9 per cent).

According to commission, investment in ordinary shares amounted to N692 billion representing 15.6 per cent, while private equity accounted for N9.1 billion (0.21 per cent), and real estate properties accounted for N228 billion (5.1 per cent).

A further review of pension fund investment portfolio shows that the Retirement Savings Account (RSA) active funds accounted for about N2.74 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 N670 billion and Approved Existing Scheme (AES) accounted for about N586 billion.

Source : Independent

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