PFAs investment in infrastructure increases to N5.38

Matthew Otoijagha
The total pension funds invested by the Pension Fund Administrators (PFAs) in infrastructure have risen to N5.38bn. Figures obtained from the National Pension Commission (PenCom) revealed that the total assets under the management of the Contributory Pension Scheme (CPS) rose to N7.09tn at the end of August 2017.
In May 2015, the operators invested a sum of N568m in infrastructure for the first time and increased it to N1.35bn in December 2015. They invested N1.82bn in infrastructure bond in September 2016, and had gradually increased the pension funds invested in the portfolio.
The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarehide Longe, said the pension funds were active in different investment portfolios. According to him, the bulk of the funds have been invested in government bonds and some of the funds invested in infrastructure.
Ideally, he explained, the money that had been borrowed for a reasonable long term should be used for long-term assets and not to fund recurrent expenditure. “We are there to invest in a way that the funds will not be lost,” he said. According to him, if the funds are used for infrastructure, this will have significant impact on the economy.
Earlier in the year, the commission had reviewed the regulations of investment of pension funds. And in the reviewed regulations, PenCom had stated that the Pension Fund Administrators must offer a multi-fund structure for the Retirement Savings Account and that there would be a transition period of six months, effective from the commencement date of the multi-fund structure for all the PFAs to restructure their respective portfolios.
It stated, “The multi-fund structure shall comprise Fund I, Fund II, Fund III, and Fund IV (retiree fund). Funds I, II, III, and IV shall however differ, according to their overall exposure to variable income instruments.”
The National Pension Commission (PenCom) has also said it will raise the pensions of retirees who opt for programmed withdrawal and are being paid by the Pension Fund Administrators this month.
The Acting Director-General, National Pension Commission, Aisha Dahir-Umar, said this when the commission submitted a memorandum to the Senate Committee on Establishment and Public Service at the public hearing on a bill for an Act to amend the Pension Reform Act, 2014, to provide for definite percentage a retiree can withdraw from his Retirement Savings Accounts and for other matters related thereto.
She, however, stated that some retirees would not be entitled to the increase due to low balances in their RSAs.  Dahir-Umar said, “Indeed, the commission has just concluded an exercise to increase the monthly pension of all retirees on programmed withdrawal due to the income earned on investing their pension assets.
“The outcome of this exercise showed that 30 per cent of the retirees would not benefit from the increase due to insignificant income earned on the small balances in their respective RSAs.”


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