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Contributory pension assets rise to N4.4tn

By BusinessNews Staff on August 29, 2014

The total pension assets under the Contributory Pension Scheme rose to N4.4tn at the end of June financial period, with 6.12 million workers registered under the plan.

Figures obtained from the National Pension Commission showed that N637.8bn and N55.8bn, or 14.4 per cent and 1.2 per cent of the total assets, were invested in domestic ordinary shares and foreign ordinary shares, respectively.

As stipulated by the law, Pension Fund Administrators manage the funds, while the Pension Fund Custodians are in custody of the growing pension asset.

PenCom also disclosed that N2.6tn, N2.04tn and N587bn, or 59.5 per cent, 46.2 per cent and 13.3 per cent of the total pension assets were invested in Federal Government of Nigeria securities, FGN bonds and Treasury bills.

The figures showed that N187.5bn, N82.9bn and N1.2bn, or 4.2 per cent, 1.8 per cent and 0.03 per cent were invested in state government securities, corporate debt securities and supra national bonds.

The commission indicated that N527.4bn, N496.04bn, N21.6bn and N228.7bn, or 11.9 per cent, 0.01 per cent, 0.49 per cent and 5.18 per cent of the total pension assets were invested in local money market securities, foreign money market securities, open/close end funds and real estate properties, respectively.

The statistics showed that N9.1bn and N46.09bn, or 0.21 per cent and 1.04 per cent of the funds, were invested in private equity funds as well as cash and other assets.

According to the latest investment guidelines released by PenCom, the 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.

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

However, this section is applicable when acquiring bonds and securities issued or fully guaranteed by the Federal Government of Nigeria, or the CBN, or eligible MDFOs; and when trading with units of open/closed-end or hybrid investment funds on the memorandum list of a securities exchange registered by SEC, or a trading facility recognised by the CBN.

According to the guidelines, the pension fund assets can be invested in bonds, Treasury bills and other securities, including bonds denominated in foreign currencies and issued by the Federal Government and the CBN or their agencies, as well as special purpose vehicles and companies created/owned by the Federal Government, provided that the securities are fully guaranteed by the CBN or the Federal Government.

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