BY ZAKA KHALIQ |
The Pension Fund Administrators (PFAs) have invested N8.1 trillion from the nation’s N12.29 trillion pension assets, in federal government securities, as at the end of November, 2020, LEADERSHIP can now reveal.
This investment represents 66.22 per cent of the total pension fund assets.
The investment allows government to use the proceed of the fund to meet its financial obligations, such as recurrent expenditure as well as capital projects.
The nation’s pension fund assets had earlier risen to N12.29 trillion as at the end of November, 2020.
A latest data released by the National Pension Commission (PenCom) over the weekend, which gave the breakdown of how the fund was invested, shows that, out of the N8.139 trillion invested in FGN Securities, FGN Bonds got N7.379 trillion; N642.02 billion was invested in Treasury Bills; Agency Bonds investment pulled N6.02 billion; Sukuk has N100.07 from pension funds invested in it while N11.814 billion was invested in Green Bonds.
However, domestic ordinary shares was N790.85 billion; Foreign Ordinary Shares N17.33 billion; State Government Securities N150.58 billion; Corporate Debt Securities N731.57 billion; Local Money Market Securities N1.79 trillion; Mutual Funds N145.22 billion; Real Estate N158.60 billion; Private Equity Funds N31.70 billion; Infrastructure Funds N57.07 billion; and Cash and Other Assets N190.08 billion.
Investment income, according to LEADERSHIP investigation, was instrumental to the continuous growth in pension fund, despite the fact that governments at majorly, State level are not paying the monthly pension contributions of their workers as and when due.
Similarly, the huge increase, according to findings, was attributed to new pension contributions received, interest from fixed income securities and net realised on equities and mutual fund investments.
Speaking in an exclusive interview with LEADERSHIP recently, the president, Pension Fund Operators Association of Nigeria (PenOp), who is also the managing director/CEO, ARM Pensions, Mr Wale Odutola, said the pension fund operators have most of their investments in federal government bonds because it is the safest investment instrument that consistently gives good returns on investment.
Although, he said, each PFA has its investment model that best work for them, he added that, even with the drop in bond yields, it’s still the safest
According to him, “Each PFA has different investment strategies and they always invest in investment outlets according to what suits their investment strategies. So, capital market is an investment outlet that we are looking at, so also is fixed income, government securities, money market instruments and so on.”
He said, though, the safety of the pension fund assets is germane to operators, they are also concerned about investment returns to pension contributors, adding that, the growth of the pension assets in recent years was attributable to investment returns rather than contributions.
This, he said, shows that operators are investing wisely, by adhering to the pension industry investment guidelines as stipulated in the Pension Reforms Act (PRA) 2014, stating that, PFAs will continue to play active role in the capital market transactions in the current year.
Meanwhile, the nation’s pension assets rose significantly by 1.76 trillion in the last one year, growing from N9.81 trillion in October 2019 to N11.57 trillion as at the end of September, 2020.
This was an increase of N720 billion within two months, precisely between September, where the fund was N11.56 trillion and November, 2020. However, from October to November, 2020, the fund rose by N229 billion, having closed the month of October at N12.053 trillion.