The Pension Fund Administrators have invested a total of N224.7bn of the increasing funds under the Contributory Pension Scheme into real estate.
Latest figures obtained from the National Pension Commission indicate that this amount represents 3.03 per cent of the total N7.4tn assets under the management of the pension operators. The commission also stated that substantial funds had been invested in domestic and foreign ordinary shares, the Federal Government of Nigeria and state securities, among other investment portfolios.
Last year, the commission reviewed the regulations for the investment of pension funds, stating that the PFAs must offer a multi-fund structure for the Retirement Savings Accounts of contributors. It also stated 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.
“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,” it stated.
The Pension Reform Act was enacted to provide a contributory scheme for the payment of retirement benefits of employees in both public and private sectors.
The Act mandates every employee to open a Retirement Savings Account in their name with any PFA of their choice and notify their employer.
Employers, according to the law, are required to deduct eight per cent of the workers’ monthly emolument and add another 10 per cent, which should be paid into each employee’s RSA not later than seven days after the salary is paid.
The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarehide Longe, said the pension funds were active in different investment portfolios. “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 can have significant impact on the economy. Longe, who said some investors had been approaching the operators to access the funds, noted that the real sector was not a place where they could just invest huge amount, adding that sectors such as agriculture were areas that needed to be well understood before investing the funds there.