The National Pension Commision (PenCom) has disclosed that the cumulative pension fund’s assets stood at N1.8 trillion in 2010. The Director General of the Commission, Muhammad Ahmad who made the disclosure in Lagos at a conference of directors of licensed pension operators, listed the asset classes as equities, government securities, money market, corporate bond and real estate, among others.
He also disclosed that the Commission is reconsidering bank guaranty for pension assets in light of the new banking model on whether to allow banks to continue to provide guarantee for pension assets or make the holding company provide the guarantee.
Under the Contributory Pension Scheme which came into effect in 2004, Pension Assets are guaranteed by the parent bank of the Pension Custodian, which is the company that has custody of pension funds contributed by employers and employees through the Pension Fund Administrators.
Mr Ahmad also called on pension operators to adopt long-term approach in their investment strategies. He said that a recent assessment of the pension industry by a foreign consultant indicated prevalence of short-term investments in the industry. He attributed this to “lack of proper understanding of the long-term nature of the pension business” by the board members of pension fund companies.
He also disclosed that after having implemented the Pension Reform Act 2004 for more than six years, the Commission would devote more attention to compliance with the provisions of the act.
According to him PenCom would be focusing more on risk and market-oriented regulation, place emphasis on potential conflict of interest, engender more Retirement Savings Account (RSA)-holder participation and devote more attention to compliance.