Pension Funds: PFAs Reduce Banks Investment to N1.6tn

The Pension Funds Administrators reduced the funds under the Contributory Pension Scheme that were invested in fixed deposits and bank acceptance to N1.6tn in February.

According to the National Pension Commission, this was as the total funds under the scheme hit N15.49tn in the period under review, .

PenCom disclosed this in its unaudited report on the pension funds industry portfolio for the period ended February 28, 2023.

The data provided information on the approved existing schemes, Closed Pension Fund Administrators and Retirement Savings Funds (including unremitted contributions at the Central Bank of Nigeria and legacy funds).

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At the end of December 2022, the PFAs had invested N1.94tn in fixed deposits and bank acceptance.

The commission had, in its amended investment regulation, highlighted the requirements for investing the funds in line with the provisions of Pension Reform Act, 2014.

It said the purpose of the regulation was to provide uniform rules and standards for the investment of pension fund assets.

According to the regulation, pension fund custodians must only take written instructions from licensed PFAs with respect to the PFAs’ investment and management of pension fund assets held in the custody of the PFCs on behalf of the contributors.

It said the PFCs, in discharging their contractual functions to PFAs, must not contract out the custody of pension fund assets to third parties, except for allowable investments made outside Nigeria.

It said, “In addition to the requirements of other guidelines issued by the commission on corporate governance, ethics and business practices, each PFA shall establish an investment strategy committee as well as a risk management committee, in compliance with section 78 of the Pension Reform Act, 2014.

“The investment strategy committee, in addition to other functions specified in the Act, shall formulate internal investment strategies to enable compliance with this regulation, taking into cognisance the macro-economic environment as well as the investment objectives and risk profile of the respective PFA Funds.”