Despite the lull in the bond market, Pension Fund Administrators (PFAs) have invested N12.14 trillion from pension fund assets in Federal Government of Nigeria (FGN) securities, which include: bonds and bonds of the Treasury (TB), LEADERSHIP learned.
FGN bonds still promise relatively low interest rates of 19 percent, well below the rate of inflation, but pension operators find comfort in FGN securities as they see them as the only secure investment window .
The N12.14 trillion investment represents about 60% of the N19.5 trillion pension assets as of January 2024.
The investment value is an accumulation since 2004, date of creation of the contributory pension scheme (CPS), until January 2024.
Of the N19.5 trillion, N12.14 trillion was invested in FGN securities, of which bonds attracted N11.59 trillion; Treasury bills N221.81 billion; agency bonds N14.86 billion; sukuk bonds N124.89 billion and green bonds N181.57 billion.
However, the pension fund manager’s investment in federal government securities allowed the government to finance its expenditures and embark on certain investment projects through these local borrowings, even though the pension fund managers ( PFA) continue to consider this instrument as a safe and the best investment option.
According to the LEADERSHIP survey, investment income, the bulk of which comes from investments in FGN securities, has been instrumental in the continued growth of the pension fund, which now stands at N19.5 trillion, despite the fact that the government at the state and federal levels does not pay monthly retirement contributions. of their workers over time.
On the choice of investment, the CEO of the Pension Fund Operators Association of Nigeria (PenOp), Oguche Agudah, said operators view FGN securities as a safe investment window with low risks, as opposed to other investment outlets, Saying that the essence of pension assets is to be able to pay contributors in retirement, which is why the pension industry’s investment guidelines have been so strict about where pension funds can be invested.
Investing in FG securities, he said, provides assurance that pension funds are in a safe investment basket, as the fund cannot run out and will be available when needed .
Disclosing that over time, pension fund operators have profitably invested pension assets in such a way that they generate good returns on investment, he added that pension fund administrators will continue to seek d other viable investment options permitted by law, to increase assets. to ensure that pension contributions can obtain value for their investment.
Similarly, Coronation Asset Management experts, speaking on the choice of PFAs in FGN securities, noted that a large amount of PFA money could likely be tied up in funds for people nearing retirement, adding that these must be allocated to low-income funds. -risky fixed income funds such as FGN Securities.
Similarly, Highcap Securities Vice President David Adonri said that government debt constitutes the main portfolio of financial assets held by PFAs as they always want to maximize their returns in the debt market.
From January 2024, he said, it appeared that the Central Bank of Nigeria (CBN) had adopted the Open Market Operation (OMO) as a monetary tool to curb inflation. very high discount rate, which caused an influx of funds from PFAs into this space.
The increase in interest rates until June 2023, he noted, has also attracted more investment in public debt by PFAs in 2023.
Earlier, PenCom Managing Director, Aisha Dahir-Umar, said the CPS had made a tremendous impact in Nigeria since its implementation began in 2004.
To this end, she added that long-term domestic capital formation, represented by the enormous value of pension assets, owned by over 10 million contributors, is slowly but surely changing Nigeria’s financial landscape. .
By extension, she stressed, this also transforms the course and pace of the country’s socio-economic development.
Despite the lull in the bond market, Pension Fund Administrators (PFAs) have invested N12.14 trillion from pension fund assets in Federal Government of Nigeria (FGN) securities, which include: bonds and bonds of the Treasury (TB), LEADERSHIP learned.
FGN bonds still promise relatively low interest rates of 19 percent, well below the rate of inflation, but pension operators find comfort in FGN securities as they see them as the only secure investment window .
The N12.14 trillion investment represents about 60% of the N19.5 trillion pension assets as of January 2024.
The investment value is an accumulation since 2004, date of creation of the contributory pension scheme (CPS), until January 2024.
Of the N19.5 trillion, N12.14 trillion was invested in FGN securities, of which bonds attracted N11.59 trillion; Treasury bills N221.81 billion; agency bonds N14.86 billion; sukuk bonds N124.89 billion and green bonds N181.57 billion.
However, the pension fund manager’s investment in federal government securities allowed the government to finance its expenditures and embark on certain investment projects through these local borrowings, even though the pension fund managers ( PFA) continue to consider this instrument as a safe and the best investment option.
According to the LEADERSHIP survey, investment income, the bulk of which comes from investments in FGN securities, has been instrumental in the continued growth of the pension fund, which now stands at N19.5 trillion, despite the fact that the government at the state and federal levels does not pay monthly retirement contributions. of their workers over time.
On the choice of investment, the CEO of the Pension Fund Operators Association of Nigeria (PenOp), Oguche Agudah, said operators view FGN securities as a safe investment window with low risks, as opposed to other investment outlets, Saying that the essence of pension assets is to be able to pay contributors in retirement, which is why the pension industry’s investment guidelines have been so strict about where pension funds can be invested.
Investing in FG securities, he said, provides assurance that pension funds are in a safe investment basket, as the fund cannot run out and will be available when needed .
Disclosing that over time, pension fund operators have profitably invested pension assets in such a way that they generate good returns on investment, he added that pension fund administrators will continue to seek d other viable investment options permitted by law, to increase assets. to ensure that pension contributions can obtain value for their investment.
Similarly, Coronation Asset Management experts, speaking on the choice of PFAs in FGN securities, noted that a large amount of PFA money could likely be tied up in funds for people nearing retirement, adding that these must be allocated to low-income funds. -risky fixed income funds such as FGN Securities.
Similarly, Highcap Securities Vice President David Adonri said that government debt constitutes the main portfolio of financial assets held by PFAs as they always want to maximize their returns in the debt market.
From January 2024, he said, it appeared that the Central Bank of Nigeria (CBN) had adopted the Open Market Operation (OMO) as a monetary tool to curb inflation. very high discount rate, which caused an influx of funds from PFAs into this space.
The increase in interest rates until June 2023, he noted, has also attracted more investment in public debt by PFAs in 2023.
Earlier, PenCom Managing Director, Aisha Dahir-Umar, said the CPS had made a tremendous impact in Nigeria since its implementation began in 2004.
To this end, she added that long-term domestic capital formation, represented by the enormous value of pension assets, owned by over 10 million contributors, is slowly but surely changing Nigeria’s financial landscape. .
By extension, she stressed, this also transforms the course and pace of the country’s socio-economic development.