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N4.75tn pension funds invested in FG bonds, securities


About N4.75tn of the total funds under the Contributory Pension Scheme has been invested in the Federal Government’s securities.

Figure obtained from the National Pension Commission showed this amounted to more than 70 per cent of the entire funds, which stood at N6.4tn as of the end of April.

According to the commission, substantial amount of the money was invested in the FGN and state bonds and securities, among other investment portfolios.

The Pension Fund Administrators also invested N226.8bn of the increasing funds in real estate.

While several investors have been lobbying the PFAs on how to have access to the money, the operators of the CPS have however said the funds can only be invested according to the investment guidelines laid down by PenCom.

In May, PenCom reviewed the regulation of its investment guidelines.

In the reviewed guidelines, PenCom stated that the PFAs must offer the 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 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 among themselves according to their overall exposure to variable income instruments.”

The commission said the exposure to variable income instruments was defined as the sum of a PFA’s investments in ordinary shares and participation units of open close-ended and hybrid funds; real estate investment trust; infrastructure funds; and private equity funds comprising its current holdings and any future financial commitments to the acquisition of participation units in the funds.

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 were invested in government bonds and that some state governments who had taken the money invested it in infrastructure.

He explained that money that had been borrowed for long term should be used for reasonable 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.

The PenOp chairman noted that if the funds were used for infrastructure, this could have significant impact on the economy.