Pension Fund Assets Hit N10.8trn
Pension fund assets under the Contributory Pension Scheme (CPS) rose to N10.8 trillion in May, growing by N330 billion from the N10.577 trillion recorded the previous month.
The number of Retirement Savings Account (RSA) holders grew to 9,016,324 in the period under review from 8.79 million.
This was contained in a report entitled: “Summary of Pension Fund Assets as at 31 May, 2020” by National Pension Commission (PENCOM). It was released on Monday.
Of the N10.8 trillion, 68.8 per cent was invested in Federal Government’s securities while N17 billion was invested in Private Equity Fund.
Other major investments include Local Money Market with N1.58 trillion investments and Corporate Debt Securities with N758 billion investments.
Further analysis of the N7.2 trillion invested in Federal Government Securities showed that Treasury Bills took N1.11 trillion, Agency Bond (NMRC & FMBN) gulped N1.1 billion; Sukuk Bonds, N84 billion; and Green Bonds, N14 billion. State Government Securities, however, got N154 billion.
A breakdown of the report showed that the pension fund, which has been reclassified into the Multi-Fund structure – Fund I, stood at N25 billion; Fund II, N4.67 trillion; Fund III, N2 trillion; Fund IV, N582.2 billion and the newly introduced Fund V, N24.8 million, culminating in the N10.8 trillion total fund.
However, Closed Pension Fund Administrators Fund (CPFAs) has N1.31 trillion and Existing Schemes (ES) N1.13 trillion.
Notably, under the commission’s investment guideline on allowable instruments, pension fund assets are only allowed to be invested in Real Estate Investment Trusts (REITs) registered by Securities and Exchange Commission (SEC); Private Equity Funds registered with SEC; and Infrastructure Funds registered with SEC.
The Acting Director-General, Mrs. Aisha Dahir-Umar, said the commission has been very careful and cautious in allowing pension fund managers to invest.
She stated that the commission has been cautious in investing the funds in the capital market and other instruments.
She said: “Since the introduction of the Multi-Fund Structure that created four different funds, the investment of the funds has varied from one another. Fund 1 has a maximum limit of 30 per cent, Fund II has a maximum of 25 per cent and Fund IV allows maximum of five per cent.
“The allowable exposures to variable income instruments have been designed such that Fund I has the highest allowable limit, followed by Fund II, III and IV. This reduces the risk and uncertainty of contributors in line with their ages.’’
She explained that in investing, everyone has a limit to the amount of risks that they can take and the amount of uncertainty they can handle.