PFAs Invest N55.3bn Pension Funds in Infrastructure

Pension Funds

By Adedapo Adesanya

The National Pension Commission (PenCom) disclosed that Pension Fund Managers (PFAs) invested N55.3 billion under the Contributory Pension Scheme (CPS) in infrastructure in the first five months of the year.

The commission, in its latest statistics published under the report titled Summary of Pension fund assets as at May 31, 2020, also revealed that the total assets under management by the operators stood at N10.79 trillion in the period under review.

The commission had stated in its last amended investment regulation the requirements to invest the funds in line with the provisions of Pension Reform Act, 2014.

It stated that the purpose of the regulation was to provide uniform rules and standards for the investment of pension fund assets.

In the regulation, Pension Fund Custodians (PFCs) must only take written instructions from licensed PFAs with respect to the PFAs investment and management of pension fund assets held in the custody of the PFCs on behalf of the contributors.

It stated that the PFCs, in discharging their contractual functions to PFAs, must not contract out the custody of pension fund assets to third parties except for allowable investments made outside Nigeria.

“The PFC shall obtain prior approval from the commission before engaging a global custodian for such allowable foreign investments,” it stated.

According to the regulation, the PFAs, in discharging their contractual functions to contributors, must not contract out the investment/management of pension fund assets to third parties except for open/close-end/hybrid funds and specialist investment funds allowed by this regulation.

PenCom stated that the PFAs must maintain a multi-fund structure as provided in the regulation to govern the investment of pension fund assets of RSA Funds.

It stated, “In addition to the requirements of other guidelines issued by the commission on corporate governance, ethics and business practices, each PFA shall establish an investment strategy committee as well as a risk management committee, in compliance with section 78 of the Pension Reform Act, 2014.

“The investment strategy committee, in addition to other functions specified in the Act, shall formulate internal investment strategies to enable compliance with this regulation, taking into cognisance the macro-economic environment as well as the investment objectives and risk profile of the respective PFA Funds.”

It also stated that the internal investment strategies must be approved by the PFA in a formal board meeting at least once every year or as frequently as changes occur in the macroeconomic environment that may affect pension fund assets.

During the same period, N7.2 trillion of the total assets under the Contributory Pension Scheme in the Federal Government’s securities Out of which N5.98 trillion was invested in FGN bonds; N1.11 trillion in treasury bills; N11.36 billion in agency bonds [Nigeria Mortgage Refinance Company (NMRC) & Federal Mortgage Bank of Nigeria (FMBN)]; N84.65 billion in Sukuk bonds; and N11.27 billion in green bonds.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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