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Pension funds to be invested in real estate

By on January 4, 2016

The National Pension Commission is set to allow Pension Fund Administrators to invest the growing pension assets in the housing industry, particularly the real estate, in addition to investing it in infrastructure.

As of October 2015, the total pension assets under the Contributory Pension Scheme had risen to N5.14tn. While the PFAs have invested these funds in different classes of assets, the RSA active funds which are contributions of workers and the RSA retiree funds have not been invested in real estate.

The Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, said there was a need to provide adequate risk mitigation tools to guide the investment of pension assets.

“Pension fund managers in Nigeria are amenable to investing part of the pension funds in infrastructure and real estate through viable and secure investible outlets,” she said.

The director-general emphasised the imperative of timely payment of retirement benefits of workers in order not to compromise their comfort after their active working period, which she described as the main objective of saving towards retirement.

She said that the commission had recently made a presentation to the National Economic Council where it highlighted the numerous benefits that states could derive under the CPS.

Based on the feedback at the presentation, she said the commission would also enhance its technical support to the states for speedy compliance.

She noted that that many states in the federation had adopted the CPS and were at various stages of its implementation.

“The Pension Reform Act 2014 gives additional impetus for participation in the CPS by explicitly prescribing the coverage of states and local government employees, in addition to the federal public service and private sector,” she said.

The PenCom boss said the scorecard for the North-West Zone was encouraging, adding that there were some implementation milestones that should be attained by respective states.

She stressed the need for all the states and local governments in the North-West Zone that had yet to adopt or implement the CPS to immediately comply in order to avail their employees of the numerous benefits of the scheme, while avoiding huge future pension liabilities.

According to her, the need for more efficiency in managing finances has never been greater than now, given the lean available public resources.

“The adoption of CPS by states is one effective tool of managing finances by paying monthly pension contributions into employees’ RSAs as opposed to settling these huge liabilities at the point of retirement, being the case in the Defined Benefit Scheme,” she said.

Anohu-Amazu said in its quest to assist the states in the guided implementation, PenCom established functional offices in the six geo-political zones including Kano for the North-West Zone.

She said, “These offices have been equipped to provide the required technical assistance to states and local governments in their efforts to adopt and implement the CPS.

“With enhanced provisions of the PRA 2014, the commission is intensifying efforts at extending coverage of the CPS to the underserved economic segments such as the informal sector, through the micro pensions initiative.”