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PFAs to invest pension funds in housing

By on March 10, 2014

The Pension Fund Administrators have resolved to invest part of the contributed N4tn pension funds in housing and infrastructure.

Already, they have forwarded the request to the regulator of the pension matters, the National Pension Commission, for approval.

They said this would enable workers to utilise part of their Retirement Savings Account balance for the acquisition of houses.

The PFAs and the Pension Funds Custodians took the decision at their last meeting held recently in Lagos under the auspices of Pension Fund Operators Association of Nigeria.

The minutes of the meeting, a copy of which was made available to SUNDAY PUNCH on Friday, read, “The executive members discussed the concept with PenCom and the concept is to fund both the demand and supply side and allow some part of the Retirement Savings Account balance to be used as credit allowance for mortgage.”

PenCom, according to the association, insists that there is a need to amend the Pension Reform Act 2004 to accommodate the proposal.

But the operators noted that this might not be achievable as quickly as possible except by buying into some financial instruments.

The Managing Director, AIICO Pension Managers Limited, Mr. Eguarekhide Longe, supported the suggestion to go for financial instruments which would reduce the cost of mortgages.

The Managing Director, Pensions Alliance Limited, Mr. Dave Uduanu, also said this would offer more benefits to the RSA holders.

The association said they had decided to work with advisers that would spell out the modalities and risks involved, adding that it would also push for the amendment in preparation for the implementation of the proposal.

According to the last investment guideline by PenCom, the PFAs are only allowed to invest the money in Exchange Traded Funds.

There was also the introduction of guidelines for global depository receipt, notes and Eurobonds with a maximum restriction on transactions done by the PFAs.

The PFCs were mandated to take permission from the PFAs before any investment, as they must not contract out the custody of the pension fund assets to third parties, except for allowable investments made outside Nigeria.

In the aspect of foreign investment, the PFCs were to obtain prior approval from PenCom before engaging a global custodian for such allowable foreign investments.

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

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

 

 

[Punch]

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