PenCom: PFAs can invest only N2.4trn of pension funds in infrastructure

The National Pension Commission (PenCom) says pension fund administrators (PFAs) can only invest N2.4 trillion in infrastructure.

A recent communique from the 22nd Nigeria Governors’ Forum (NGF) teleconference meeting said the forum was adopting a proposal by the National Economic Council (NEC) ad hoc committee on leveraging a portion of accumulated pension funds for investment.

It was reported that the governors wanted to borrow N17 trillion from pension funds, even though the total assets as at October 2020 were only N12 trillion.

TheCable recently did an analysis showing that the reported attempt to borrow N17 trillion was impossible.

In a statement released on Friday, PenCom said sections 85-91 of the PRA 2014 have stipulated the classes of assets that pension funds should invest in and has provided that PFAs can invest pension assets for infrastructure development, through infrastructure bonds and funds, respectively up to a maximum of 15 percent and 5 percent of assets under management (AUM).

PenCom noted that to qualify for pension fund investments, an instrument must be approved by Securities and Exchange Commission (SEC) or Central Bank of Nigeria (CBN).

“Thus, given the valuation of the pension assets as at October 2020 ( N12.05 trillion), up to the sum of N2.4 trillion could be invested by the PFAs in infrastructure funds and bonds,” the statement said.

“The commission has further issued regulation on investment of pension fund assets to provide guidance to the Pension Fund Administrators (PFAs) on the quality of the allowable assets and quantitative limits in order to ensure safety and fair returns on the investments.

“Both the PRA 2014 and the investment regulations demand that every PFA must have risk management and investment committees of the board to instill high level of governance and ensure that all investments are as stipulated in the Act and meet the quality requirements enshrined in the regulations.

“This establishes transparency and fair valuation, thus, removing all ambiguity on the real market values and tradability of the assets. PFAs can then readily buy and sell at prevailing market prices.”

The commission said it would support efforts at issuing eligible instruments for pension funds to support infrastructure development in Nigeria, noting that this must be done in a safe and well-structured vehicles that align with the provision of the PRA 2014 and the regulation of investment of pension fund assets.

The commission said it would continue to maintain a firm stance on enabling law and legislation to ensure the safety of the pension assets, and are available for payment of pensions to the contributors as and when due.