PFAs Stake N6.05tn on FGN Securities

Ebere Nwoji
Despite the transition from double fund structure to a multi-fund structure, investment pattern for pension fund assets showed that federal government securities still take lion share of pension assets.

As at October 2018, Pension Fund Administrators (PFAs) investments in federal government securities was N6.05 trillion, out of a total N8.45 trillion pension assets.
Latest data from PenCom also showed that 71.68 per cent of the pension funds had been invested in the federal government securities.

The investments include: N4.33 trillion amounting to 51.32 per cent in Bonds; N1.65 trillion in Treasury Bills (19.59 per cent); N10.21 billion in Agency Bonds (NMRC & FMBN), (0.12 per cent); N48.00 billion in Sukku (0.57 per cent) and N6.39 billion in Green bonds, (0.08 per cent)
PenCom in the report, noted that in line with the multi-fund structure, Retirement Saving Account (RSA) Fund 1, investment was N6.55 billion; RSA Fund 11 got N3.75 trillion; RSA Fund 111 – N2.00 trillion and RSA Fund IV, N654.29 billion.

It stated that N602.04 billion, which is 7.2 per cent of the funds, was invested in domestic ordinary shares; while N59.57 billion, amounting to 0.70 per cent in foreign ordinary shares.

PenCom maintained that pension operators invested N154 billion (1.82 per cent) in state government securities; corporate bonds got N518.54 billion (6.13 per cent); corporate infrastructure bonds received N7.68 billion (0.09 per cent); supra-national bonds got N6.13 billion (0.07 per cent); commercial paper – N78.50 billion (0.93 per cent); banks – N640.25 billion (7.57 per cent).

Others were REITs – N5.97 billion (0.07 per cent); foreign money market securities – N3.27 billion (0.04 per cent); private equity fund N32.83 billion (0.39 per cent); real estate properties – N228.88 billion, (2.71 per cent); infrastructure funds – N15.56 billion, (0.18 per cent) and cash & other assets – N30.83 billion (0.36 per cent).

Though pension fund investment guideline favours investment of substantial part of the funds in government securities, investment analysts noted that though such investments guarantees safety of the contributor’s’ funds, on the other side, it does not guarantee the growth of other sectors of the economy that needed such funds for growth.

THISDAY recalls that in recent time, there have been too much pressure from both government and private sector side for investment of substantial part of the funds in Infrastructural development but this could not be granted due to security issues.
To protect the funds further, PenCom had in its investment outline stated that not more than 10 per cent of the total value of the RSA Funds shall be invested in securities issued by a corporate entity (equity, money market and debt) and not more than 4.5 per cent of any one Fund shall be invested in the ordinary shares of a quoted company.

It further said in addition, not more than 10 per cent of the total value of the RSA Funds shall be invested in the issued share capital of a quoted company and not more than 45 per cent of pension assets managed by a PFA shall be invested in a sector of the Nigerian economy.
Data released by the commission had stated that as at December 2017 about N6.86 billion from the workers’ monthly contributions, was invested in bonds for Infrastructural development, which was a total N7.51 trillion accumulated then.

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