New Telegraph

February 24, 2024

Pension investment in FG’s securities drops by N380bn

  • COVID-19 hinders employers’ remittances


  • Total assets now N10.57trn


The effect of ravaging Coronavirus pandemic has taken a toll on pension fund investment by Pension Fund Administrators (PFAs).


The situation has seen investment in Federal Government securities drop by as much as N380 billion between January and April this year.


The total assets, which has risen steadily since inception over a decade ago, is currently peaked at N10.57 trillion spread across vari- ous portfolios as stipulated by Pension Reform Act 2014.


Findings by New Telegraph revealed that investment in Federal Government’s securities started nose-diving in February and has continued to drop subsequently as shown by the regulator, National Pension Commission’s (PenCom) monthly compilation.


This is an indication that pension remittance by employers to workers’ Retirement Savings Accounts is beginning to decline due to the effect of COVID-19.


According to the breakdown, in January, a total of  N7.402 trillion was invested in Federal Government securities.


In February, it gave a huge gap by over N300 billion as it dropped to N7.093 trillion. In the same vein, it again declined as the total investment experienced over N70 billion drop to N7.16 trillion before peaking at N7.006 trillion in April. Prior to this moment, there have been palpable fears as to the effect of the pandemic on the assets as a whole now and in the nearest future.


With fear of more job losses underway, it is certain that the pension assets that had been jealously guided by law and risen steadily over the years might be worse off in the coming months.


Over time, the fund managers had successfully spread investment across capital market instruments, thereby boosting contributors’ units.


According to the latest statistics released by the commission for the month of April, it revealed that the fund managers’ investment in infrastructure and real estate increased by about N15 billion within a period of one month.


While Infrastructure Fund increased from N46.979 billion in March to N54.352 in April, that of Real Estate Properties also surged from N217.607 billion in March to N222.084 billion in April.


The summary of pension fund assets as at April 30, 2020, showed that a total of N7.006 trillion was invested in Federal Government of Nigeria Securities with FGN bonds gulping N5.769 trillion; Treasury bills, N1.128 trillion; Agency bonds, N10.667 billion; Sukuk, N83.904 billion and Green bonds, N13.821 billion.


The data also showed that state government securities gulped N158.448 billion.


Other classes of investments such as Corporate Debt Securities show that it gulped a total of N739.367 billion with corporate bonds taking N690.782 billion; Corporate Infrastructure Bonds, N21.745 billion, and Corporate Green Bonds, N26.840 billion. Further analysis shows that Supranuation Bonds was N2.710 billion. For Local Money Market Securities, which consumed N1.669 trillion, Bank Placement was allotted N1.516 trillion while Commercial Paper got N152.610 billion.


Other portfolios include Foreign Money Market, N8.754 billion, Mutual Funds, N34.347 billion, Private Equity Fund, N32.909 billion, Cash & Other Assets, N93.589 billion.


Besides the investment of contributions by workers in the formal sector, Pen- Com recently disclosed that the PFAs had also invested N7.77 billion contributed by micro pension subscribers in Federal Government’s treasury bills and bank placement as at February 2020.


According to the breakdown, N3.10 billion of the micro pension fund was invested in Federal Government treasury bills while N3.75 billion went into bank placement.


The commission said Micro Pension Plan (MPP) had recorded 28,000 subscribers as at October 2019.

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