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PFAs invest N228.3bn in real estate

By on July 14, 2014

The Pension Fund Administrators have invested N228.3bn in real estate, investigation has revealed.

According to statistics obtained from the National Pension Commission on Friday, this amount is about 5.2 per cent of the N4.3tn total pension asset as of May, 2014.

The report also showed that N190.8bn and N78.8bn had been invested in state government securities and corporate debt securities, representing 4.1 per cent and 1.8 per cent of the pension asset, respectively.

It stated that N813m and N7.5bn had been invested in foreign money market securities and private equity funds in that order.

The Acting Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu, said the success of the Contributory Pension Scheme had triggered an exponential growth in pension funds and size of assets under management.

“In Nigeria, the value of pension assets has grown from 1.47 per cent in 2006, to 9.57 per cent in 2013 of the Gross Domestic Product,” she said.

Despite the fundamental role of infrastructure in promoting national growth and competitiveness, she noted that most African governments had been unable to adequately invest in infrastructure, given the decline in traditional sources of government funding and the paucity of funds.

She said many public finance initiatives remained hamstrung due to the lingering effects of the 2008 global financial crisis.

Given the size of pension fund assets across Africa, she said there was a real opportunity for policymakers to collaborate with pension professionals so as to effectively leverage these assets for sustainable progress.

Anohu-Amazu stressed the need to reach a consensus on how best to harness the continent’s pension fund assets as catalysts for economic development and prosperity of its economies.

She said the Pension Reform Bill, 2014 which amended the Pension Reform Act of 2004 and was recently signed into law by the Federal Government, laid the foundations for the next decade in the country’s pension regulation.

As the proportion of retirement income provided by private pensions continued to grow, she said the regulatory framework designed to protect the funds had become more crucial.

The PenCom boss stressed the essence of institutionalising a risk-based approach to the supervision and control of pension markets across the continent.

This risk-based approach, she said, focused on the identification of potential risks faced by pension funds and strengthened mechanisms in place to satisfy those risks.

“This ultimately allows the regulatory agencies to channel their resources towards issues that pose the greatest threat to the stability of the industry,” she said.

She said the existence of pensions as an instrument of social redistribution was at the core of contemporary national economies.

According to her, the shift towards contributory pensions is a collective resolve to invest a portion of current earnings in order to have a more predictable and prosperous retirement.

Anohu-Amazu said beyond Africa’s infrastructure needs, a critical challenge facing the continent was managing the radical change in projects funding.

 

 

[Punch]