Pencom’s N2.5trn needs compliant investment vehicles, says Longe
….Decries balkanization of pension funds
The Nigerian pension fund has over N6.8 trillion in its kitty, however part of which are tied to different forms of investments, but about N2,5trn of the funds still need viable investment routs to follow.
This was coming as the National Pension Commission (PenCom) has condemned a Bill seeking to balkanize pension scheme.
The proposed Bill is seeking the exclusion of paramilitary agencies from the new of pension scheme of 2004; and was rejigged in 2014.
The bill, sponsored by Mr. Oluwole Oke, is also seeking exempt of the Nigerian Prison Service (NPS), Nigerian Immigration Service (NIS) and the Economic and Financial Crimes Commission (EFCC) from the scheme.
Chairman, Pension fund Operators Association of Nigeria (PenUp), Engr’ Eguarekhide Longe reveled recently in Lagos, that even though the Pencom funds had about N2.5trn investible funds, such assets would not be invested in FG bonds because of the devastating experiences caused by devaluation.
He noted that just as the Federal Government is working towards freeing pension funds with new form regulation, which PenUp is resisting, the nation’s retiree’s pension funds had suffered severe losses due to inflation, as the fund managers and custodians have decided not to risk retirees’ funds, going by time value of the funds.
Longe, who called on stakeholders to resist any form of regulation by the federal government that would weaken the funds, said that based on prevailing inflation rate, pension funds investment in FG bonds is eaten by about 10 to 16 per cent.
While calling for the establishment of corporate debt fund, Longe challenged the government and debt capital market o debt market instruments that would be tailored to the pension fund needs, in order to attract the N2.5trillion, in need of appropriate investment channel.
“ I challenge DCM to come up with instrument that meet the challenge of pension funds and enhance offer to stop the balkanization of pension fund, so that the fund can grow.”
Daily Times Nigeria recalls that, the Nigerian pension fund, with about N6.8trn funds and invisible funds of about N2.5trn, lacks the motivation to invest in the FG’ bonds because of negative impact of inflationary trend on the retiree’s funds.
