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PFAs invest N619.5bn in shares

By on May 12, 2014

The Pension Fund Administrators under the contributory scheme have invested about N619.5bn of the growing pension funds in shares as of the end of February, this year.

This amounts to about 15 per cent of the total pension fund assets, according to a document obtained on Friday from the National Pension Commission.

The record showed that N566.5bn was invested in domestic ordinary shares while N52.9bn was invested in foreign ordinary shares.

The total pension fund stood at N4.12tn in the period under review, it was learnt.

In January, when the pension asset was N4.08bn, about N630.6bn had been invested in shares, which amounted to 15.4 per cent of the entire pension asset.

The data revealed that by January 2013, the total pension funds stood at N3.2tn, while N462.6bn which was about 14 per cent of the assets, had been invested in shares.

The Acting Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, said that the commission remained steadfast with the implementation of the Contributory Pension Scheme, noting that in about 10 years of its existence, some modest achievements had been recorded.

Foremost among such achievements, she said, was the consistent payment of retirement benefits to all employees who retired under the scheme since 2007 without the bottlenecks that were experienced in the past.

She said the pension scheme had grown at an average rate of 27.05 per cent annually between 2004 and 2013, adding that from inception, it succeeded in reversing the N2.6tn pension deficit that weighed down the defined benefits schemes in the country and accumulated more than N4tn as of February 2014.

Anohu-Amazu said the number of contributors under the scheme rose to 5.9 million in April even as the operators projected that half a million more workers would join the scheme before the end of this year.

She observed that prior to the enactment of the Pension Reform Act 2004, pension administration in the country was enmeshed in a myriad of challenges.

The PenCom boss said in the public sector, which operated the defined benefit Pay-as-you-go scheme, some of the major challenges encountered included lack of transparency in the administration of pensions, which resulted in the accumulation of huge pension liabilities and irregular payment of pensions to retirees.

She  said, “The PRA 2004, which sought to address, in a holistic manner, the perennial problems associated with pensions in both the public and private sectors, established the CPS and created PenCom to regulate, supervise and ensure the effective administration of pension matters in Nigeria.”

Firms with at least five employees are mandated to register their workers with a PFA of their choice and ensure a regular monthly contribution into their Retirement Savings Accounts in accordance with the Section 11 of the Act.

Under the CPS, the PFAs manage the RSA accounts while the Pension Fund Custodians guarantee the assets. These pension operators are regulated by the PenCom.

The employer deducts 7.5 per cent of the employee’s remuneration and adds another 7.5 per cent to make a total of 15 per cent of the worker’s emolument, which is credited to the RSA.

 

 

[Punch]