By Nike Popoola

The 24 licensed Pension Fund Administrators in the country invested about N423.12bn of the total pension fund under the contributory scheme in nine different investment assets in 2010.

Investigation by our correspondent revealed that the figure was a 59 per cent rise over the N266bn invested in 2009.

The total pension fund asset had risen to N1.1bn, N1.5bn and N2.02bn as at the end of 2008, 2009 and 2010 financial periods.

As at June this year, the value of assets accumulated under the 2004 Pension Reform Act stood at N2.2tn, and has been described as one of the fastest growing funds in the country at the moment.

According to figures obtained from the National Pension Commission, investment in local money market securities took the largest proportion of 31.29 per cent. Investment in this class of assets rose by 4.81 per cent to N132.4bn in 2010 from N126.32bn in 2009.

This was followed by investment in Federal Government of Nigeria securities, which gulped 29.5 per cent of the total figure, with the fund rising by 348.28 per cent from N27.84bn in 2009 to N124.8bn in 2010.

A total of N118.88bn or 28.1 per cent of the fund was invested in local ordinary shares, an increase of 39.56 per cent over the N85.1bn invested in 2009.

Investment in real estate stood at N21.56bn or 5.1 per cent of the investment funds in 2010, a rise of 39.01 per cent from the N15.51bn invested in this class of asset in 2009.

Though, the pension fund assets were not invested in state government bonds in 2009, 2.15 per cent of the total for 2010 or N9.1bn went into this class of assets.

Another 2.04 per cent of the pension funds were invested in corporate bonds at N8.63bn. This was a 479.19 per cent rise over the 2009 figure of N1.49bn.

In the year under review, 0.8 per cent or about N3.39bn of the fund was invested in unquoted securities, which was a 40.66 per cent increase on the N2.41bn invested in 2009.

However, investment in cash and other assets declined from N7.06bn in 2009 to N3.03bn in 2010, representing just 0.72 per cent of the total fund invested in 2010.

Investment in open/close-end funds came last with 0.31 per cent. This, however, was a 358.62 per cent rise from N0.29bn in 2009 to N1.33bn in 2010.

The Director-General, PenCom, Mr. Muhammad Ahmad, said that the commission would continue to regulate and review investment in pension assets.

For now, he said that the pension fund would not be invested in infrastructure.

Ahmad said, “Based on the current investment regulation, which came into effect in December 2010, pension funds are allowed to be invested in infrastructure bonds that are registered by the Securities and Exchange Commission. No investment has yet been made on such securities largely because they are not available in the market.”

He said that the commission had continued to collaborate with local and multilateral organisations in the revision of the regulations on investment of pension fund assets that was issued in December 2010.

The PenCom boss added that the revision was conducted in order to enhance the risk-return profile and investment universe for pension fund.

The commission only allows Pension Fund Custodians to take instructions from licensed PFAs on investment and management of pension fund assets held in their custody on behalf of contributors.

According to the regulatory guideline, the PFCs, in discharging their contractual functions to the PFAs, shall not contract out the custody of pension fund assets to third parties, except for allowable investments made outside Nigeria, which must be approved by the commission.

Source: Punch