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PFAs invest N49.6bn in foreign market

By on October 3, 2013

Pension Fund Administrators have invested about N49.6bn out of the total funds in the Contributory Pension Scheme in foreign markets, an investigation has shown.

According to figures on the activities of the PFAs, which were obtained by our correspondent from PenCom on Tuesday, the total assets under the management of the operators stood at N3.6tn as at the end of August.

The statistics showed that N46.57bn was invested in foreign ordinary shares, while N3.12bn was invested in foreign money market securities.

PenCom noted that the amount invested in foreign markets sometimes varies every month due to the investment regulatory activities of the commission.

According to the commission’s latest guideline on investment on pension funds, PFCs are mandated to only take instructions from the PFAs on the investment, as they must not contract out the custody of pension fund assets to third parties, except for allowable investments made outside Nigeria.

On foreign investment, the PFCs are to obtain a prior approval from PenCom before engaging a global custodian for such allowable foreign investment.

Section 3.3 of the investment guideline states, “All primary market investments by PFAs in participation units of open, close-end, hybrid investment funds, including ETFs and specialist investment funds (REITs, infrastructure fund and private equity fund), shall be through a public offering or private placement arrangement.”

It added that all secondary market trading of pension assets shall take place in a securities exchange (local and offshore) recognised by the Security and Exchange Commission or a trading facility recognised by the Central Bank of Nigeria.

However, it added that this section is applicable on four conditions, which include: when acquiring bonds and securities issued or fully guaranteed by the Federal Government of Nigeria or CBN or eligible MDFO; and when trading with participation units of open/close-end or hybrid investment funds on the memorandum list of a securities exchange registered by SEC or a trading facility recognised by CBN; or specialist investment funds (infrastructure and private equity), registered by SEC.

Meanwhile, the commission on Monday issued the guideline for employer code request to the PFAs.

PenCom noted that one of the functions of the PFAs, according to the PRA 2004, Section 45(a), is to open Retirement Savings Accounts for all employees and obtain Personal Identification Numbers for the employees from the commission.

In order to do this, the employers, whether from the federal, state or the private sectors, must first be recognised and issued with unique employer codes.

The employees’ PINs are attached to their respective employer codes in PenCom’s database and are to be adopted only within the pension industry.

 

 

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