PFAs invest over 85% of pension assets in govt securities

By Maduka Nweke

Pension Fund Administrators (PFAs) have invested N4.28 trillion out of the N6.02 trillion pension assets totalling about 85 per cent in Federal Government’s securities as at November 2016.

In the summary of pension fund as at November 2016, the National Pension Commission (PenCom) said the Federal Government bonds gulped N3.53 trillion (58 per cent) of the pension assets, while N749.13 billion (12.45 per cent) was invested in treasury bills.

According to PenCom, N3.79 billion (0.06 per cent) was invested in agency bonds (NMRC and FMBN), noting that N481.81 billion (8 per cent) was invested in domestic ordinary shares, while foreign ordinary shares got N82.34 billion (1.37 per cent). State governments’ securities, it said, accounted for N126.26 billion (2.10 per cent) and corporate debt securities received N287.11 billion (4.77 per cent).

The Commission noted that supra-national bonds got N12.71 billion (0.21 per cent); local money market securities gulped N405.78 billion (6.74 per cent); foreign money market securities got N4.75 billion (0.08 per cent); open/closed-end funds received N10.13 billion (0.17 per cent) and Reits got N8.10 billion (0.13 per cent)

Others are real estate, N209.06 billion (3.47 per cent); private equity funds, N23.71 billion (0.39 per cent); infrastructure funds received N2.18 billion (0.04 per cent); and cash and other assets, N72.48 billion (1.25 per cent).

Despite the huge sum injected in Federal Government’s securities, PenCom says the most critical challenge of the implementation of the Contributory Pension Scheme (CPS) in Nigeria today is the non-payment of retirement benefits of Federal Government employees due to insufficient appropriation and late release of appropriated funds for payment of accrued pension rights.

In the words of the Director General, PenCom, Mrs. Chinelo Anohu-Amazu, the dearth of products is responsible for the continuous investment of funds in Federal Government’s securities and urged pension operators and investors to develop alternative products.

“The PFAs are constrained; they are unable to develop the products they invest, which is why we have a preponderance of the pension funds in Federal Government securities, there are no alternatives,” she said.

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