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60% of Pension funds were borrowed by FG – PFAs

By on October 1, 2012

Pension Fund Operators in the country have said that 60 per cent of the total pension fund assets have been borrowed by the Federal Government.

The borrowing, according to them, was done through the issuance of bonds having maturity dates of between three and 10 years.

Addressing journalists on the developments in the industry in Abuja, the Managing Director, Legacy Pensions Manager Limited, Mr. Misbahu Yola, said the borrowing, though huge, did not call for panic as the Federal Government had over the years demonstrated its ability to repay debts.

Present at the briefing were representatives of PFAs, such as Stanbic IBTC Pension Managers, ARM Pensions, IEI Anchor Pension Manager and Sigma Pensions.

Yola said it was less risky to lend to the Federal Government than corporate organisations.

He said, “The total employees registered in the Contributory Retirement Savings as at August 2012 were 5.23 million and the assets under management in the Retirement Savings Account Funds as at May 2012 is N1.4tn.

“The FG has borrowed about 60 per cent of the pension fund assets through the bond market.

“The bonds range from three to 10 year bonds and these are long-term instruments. Since pension fund assets are long-term funds, lending to the Federal Government is one of the safest and less riskier way to preserve this fund because government bonds attract the highest returns on investment.”

A breakdown of the N1.41tn Retirement Savings Accounts Fund Investments as at May 31, 2012, included ordinary shares, N136.6bn; FGN securities, N1.009tn; state government securities N64.01bn; corporate debt securities N27.16bn; and money market securities N150.58bn.

Others were open/close-ended fund, N7.25bn; real estate, N386m; private equity, N2.48bn; and other assets, N16.99bn.

Earlier, the Head, Risk and Compliance, Mrs. Idu Okwuosa, called on employers to embrace the Contributory Pension Scheme by ensuring timely funding of RSAs.

She said since accumulated pension assets could be invested in infrastructure development, there was the need for the government to come up with effective policies that would drive the process.

Source: PUNCH