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PFAs invest N609.8bn pension funds in shares

By on March 18, 2014

By November last year, the Pension Fund Administrators had invested N609.8bn in shares, or about 15 per cent of the entire pension funds that stood at N4tn at the end of the 2013 financial period.

According to figures from the National Pension Commission on the distribution of pension assets, as of November ending, N558.17bn or about 14 per cent of the pension assets had been invested in domestic ordinary shares, while N51.67bn or one per cent was invested in foreign ordinary shares.

A total of N1.7tn or 44 per cent of the funds was invested in Federal Government of Nigeria securities; N643.45bn or 16 per cent was invested in treasury bills; while N407bn or 10 per cent of the funds was invested in local money market securities.

According to the PenCom figures, N205bn and N192bn were invested in state government securities and real estate properties, respectively.

The PFAs also invested N83.3bn in corporate debt securities, while N65.7bn was invested in cash and other assets.

About N8.7bn was invested in private equity fund, while the rest of the balance of about N736m was invested in foreign money market securities.

The Pension Fund Custodians s are mandated to take instructions from the PFAs on the investment of contributors’ funds, as they must not contract out the custody of pension fund assets to third parties, except for allowable investments made outside Nigeria, according to the latest investment guidelines released to the industry by PenCom.

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

Section 3.3 of the new investment guideline stated, “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 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 Securities and Exchange Commission or a trading facility recognised by the Central Bank of Nigeria.

 

 

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