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Pension Fund Administrators (PFAs) invest N1.9tn in FGN bonds.
Acting Director-General, National Pension Commission, Mrs. Chinelu Anohu-Amazu,
The Pension Fund Administrators have invested a total of N1.9tn in the Federal Government of Nigeria bonds.
A document obtained from the National Pension Commission on Tuesday indicated that the figure represented 45.2 per cent of the total pension funds under the custody of the PFAs as of March, 2014. PenCom gave the total assets under the Contributory Pension Scheme as N4.2tn.
The report also showed that the PFAs had invested N737.2bn and N548.7bn in the FGN treasury bills and domestic ordinary shares, which are 17.5 per cent and 13.04 per cent of the total funds, respectively. It gave the amount invested in the local money market securities as N355.2bn; real estate properties, N228.4bn; state government securities, N195.2bn and corporate debt securities, N79bn.
The PenCom report also showed that N53.16bn was invested in foreign ordinary shares; N46.2bn, cash and other assets; N22bn, open/close-end funds and N9.3bn, private equity funds. According to the figures, N286m also went to foreign money market securities. The Pension Reform Act 2004 empowers the PFAs to manage the funds while the Pension Fund Custodians are in custody of the money.
The Acting Director-General, National Pension Commission, Mrs. Chinelu Anohu-Amazu, said that the Contributory Pension Scheme had safeguard measures to protect the growing funds. “The Contributory Pension Scheme ensures the separation of the function of management from that of the custody of pension assets,” she said.
According to her, the CPS also sees to the meticulous investment limits and risk rating, daily monitoring of pension funds investment and fit and proper persons requirements for pension funds management. She also said that it would ensure strict corporate governance and disclosure requirement, adding that pension assets could not be used to meet the claim of any creditors or be sold, or granted as loan.
The acting director-general said that under the statutory reserve funds, the PFAs were required to set aside 12.5 per cent of profit after tax to absorb any losses. Giving the figures of pensioners receiving benefits under the CPS as of March, she said that 86,628 retirees were being paid through programmed withdrawal while there were 9,212 annuitants.
The PenCom boss said that prior to the Pension Reform Act 2004, the public sector operated Defined Benefit Scheme that was largely unfunded or underfunded. She noted that the old scheme was marred by weak, inefficient and less transparent administration, adding that it was unsustainable due to accumulated pension debts.
The private sector under the old pension arrangement, she explained, was also characterised by low coverage and compliance level, leaving most workers with no or inadequate retirement benefit arrangement. Speaking on the role of pension in emerging economy, Anohu-Amazu said that it would provide social security by alleviating old age poverty, ensure that every pensioner received pension as and when due.
She stressed that the CPS had stemmed further growth of pension liabilities because it was fully funded towards future pension obligations. She noted that the CPS had also curtailed the burgeoning pension liabilities of the federal and state governments.
According to her, the pension scheme has an efficient avenue for infrastructure and economic development, availability of investible funds to support the development of the real sector, stimulates job creation and creates employment generation both directly and through third party service providers to the pension industry.