Despite several arrears of pension owed by federal and state governments, pension funds have risen to N7.5 trillion as at the end of December, 2017, up from N7.41 trillion it was at the end of November 2017, LEADERSHIP can exclusively revealed.
Although, the National Pension Commission (PenCom) is yet to release the December pension funds’ performance figure, credible sources in the pension sector disclosed that the pension assets grew significantly in the last month of 2017. Our investigation revealed that N90 billion was added to the pension assets in December, 2017, bringing the figure to N7.5 trillion.
This means that pension contributors remitted N1.4 trillion to the pension pool in the last one year, translating to about 15 per cent of the pension assets. From N6.1 trillion the pension assets was in December, 2016, it soared to N6.25 trillion in January, 2017, moved to N6.29 trillion in February, leaped to N6.41 trillion in March, even as the pension fund grew to N6.49 trillion in April, 2017.
By May 2017, the pension asset rose to N6.72 trillion, jumped to N6.83 trillion in June, soared to N6.94 trillion in July, increased to N7.09 trillion in August, while in September, it stood at N7.16 trillion. LEADERSHIP findings revealed that the pension funds rose to N7.29 trillion in October, moving up to N7. 41 trillion at the end of November, this year.
Meanwhile, information obtained from the PenCom stated that 70.67 per cent of the pension funds translating to N6.28 trillion had been invested in the Federal Government of Nigeria’s securities as at the end of November, 2017.
These investments in FGN securities include: N4.02 trillion amounting to 54.30 per cent in bonds; N1.21trillion in Treasury Bills (16.29 per cent); N5.99 billion in Agency Bonds (NMRC & FMBN), (0.08 per cent) and N55.69 billion in Sukuk.
The data revealed that N662.72 billion, which is 8.95 per cent of the funds, was invested in domestic ordinary shares; while N102.89 billion, amounting to 1.39 per cent in foreign ordinary shares.
Pension operators invested N148.21 billion (2.00 per cent) in State Government’s Securities; Corporate Debt Securities got N255.21 billion (3.44 per cent); Supra-National Bonds got N11.33 billion (0.15 per cent); commercial papers, N44.59 billion (0.60 per cent); Banks, N564.68 billion (7.62 per cent).
Others are: Reits, N15.60 billion, (0.21 per cent); Foreign Money Market Securities, N31.77 billion, (0.43 per cent); private equity fund, N23.99 billion, (0.32 per cent), Real Estate Properties, N224.72 billion, (3.03 per cent); infrastructure funds, N6.07billion, (0.08 per cent) and cash & other assets, N15.35 billion, (0.21 per cent).
The reason for the constant growth in pension assets, LEADERSHIP learnt, is not unconnected to the fact that pension contributions are made on a monthly basis to the Retirement Savings Account (RSAs) of employees, while the Pension Fund Administrators (PFAs) also make a lot of profits from investment of these funds into Federal Government Bonds, stock market and other less risky investment windows, which also goes into the pension funds pool.
Moreover, with some states now ready to join the Contributory Pension Scheme (CPS), as well as the readiness of the FG to settle some of its arrears, and PenCom going after defaulting employers, experts said, these indicators will continue to push the fund even beyond the current figure.
The consistent increase in the volume of pension funds has allowed pension fund operators invest more in the nation’s economy, while accruing about N2.9 trillion as income from the investment of the pension assets.
Takor, who is also a former board member of PenCom, however, appealed to the federal government and states to pay their respective pension arrears as this will go a long way to redeem the lost image of the new pension scheme that has been recently criticised for various reasons, among which is the multitude of arrears owed, just like what was happening in the old scheme.
He applauded the steps taken by PenCom by partnering with the Economic and Financial Crimes Commission (EFCC) as well as other relevant agencies to prosecute defaulting employers, stating that this will also ensure more compliance in the private sector and make sure the fund keeps growing from time to time.
The Chairman, Pension Funds Operators of Nigeria (PenOp), Mr. Eguarekhide Longe, said pension operators invest in infrastructural development through bonds, adding that the philosophy of managing this pension assets is to add to it. He disclosed that the pension fund operators are ready to invest more of the fund in infrastructure, but that federal government must come out with infrastructure bond of which it is yet to do.
“We are ready to invest in infrastructural bonds whenever the government decides to float them to finance key developmental projects” he said. Promising that the pension fund managers are ready to engage with government to expand the economic space, even though, it is not their primary objective.
He added that, care must be taking not to invest pension fund in a project that will not regenerate it, saying “if you put pension fund in a project that does not regenerate it, the money is gone and in many cases, as we have found, the project has not been delivered because it was not properly conceived.”