Money saved by public and private sector workers in Nigeria for their pension under the National Pension Commission (PenCom) reached the N10 trillion mark in 2019, that is, after 15 years of consistent saving.
The National Pension Commission, the regulatory body watching over private-sector pension entities that are the Custodians of the money and Pension Fund Administrators that operate like fund retailers, are the ultimate trustees of the pension money owned by about nine million Nigerians.
The N10 trillion pensioners’ money has attracted the attention of the National Economic Council (NEC). It is being targeted as a source of loan to finance infrastructure projects in the country.
Deploying pension fund for infrastructure development is normal, even good; but lending the N2 trillion would take borrowing by the federal and some state governments to over N8 trillion.
When the N2 trillion is lent, and all the monies invested from the Pension Fund in various instruments are put together, the total will be above N9 trillion, well-above the 20 per cent legal ceiling. The investments at August 2019 are Federal Government Securities, N6.81 trillion; Local Money Market Securities, N1.06 trillion; Corporate Debt Securities, N556.2 billion and Mutual Funds, N22.3 billion.
The biggest pension fund in Africa is South Africa’s Government Employees Pension Fund (GEPF) with an asset base exceeding $135 billion or SAR 1.82 trillion. And it has only 1.2 million workers on its register and slightly over 400,000 retirees to whom it pays pensions regularly.
“The giant African pension fund is South Africa’s Government Employees Pension Fund (GEPF), which had an investment portfolio of $124 billion as at 31 March 2017,” a report by Price water house Coopers tagged “Africa Asset Management 2020,” says.
The investment arm of the GEPF has stakes in companies and businesses in and outside South Africa, including in MTN Nigeria and Dangote Group. Both companies are flourishing and annually declare huge after-tax profits from their Nigerian lucrative market.
Its other investments are in 904MW of renewable energy including Bokpoort (50MW concentrating solar power CSP), wind and the 175MW photovoltaic (PV) Solar Capital Plant. GEPF has also backed 646 housing projects and unlisted investments include $290m into the Pan African Infrastructure Development Fund.
The report says that Namibia has 2.5 million people in the Government Institutions Pension Fund (GIPF), and assets worth $7.9 billion or 64% of the nation’s Gross Domestic ProductSS in 2017. Part of the fund was invested in tourism and infrastructure development, among others. Botswana Public Officers Pension Fund has assets under management of $2.6 billion in the year 2017 and part of the fund is invested in various businesses by the Fund.
PenCom puts the pension fund assets at N10 trillion by December 2019, which is roughly $27.7 billion at an exchange rate of N360 to $1. A large chunk of the assets (over N7 trillion) is invested in government bonds and private sector entities.
The government has announced a desire to borrow N2 trillion more from the RSAs. Some commentators think that the money should be invested by the Commission and Pension Fund Administrators themselves in the priority areas outlined by the government.
This is the common practice by the other African pension funds mentioned earlier in this item. Indeed, it is what obtains around the world. To invest seamlessly, PenCom should create a special purpose vehicle through which the N2 trillion can be invested.
The returns on investment should be credited to the RSAs. Meanwhile, the United Nations Joint Staff Pension Fund (UNJSPF) has tested the use of biometrics and other modern technologies to certify pensioners’ benefit entitlements after more than 70 years of a manual, paper-based process. By going digital, the UNJSPF, a Defined Benefit Pension Fund worth $60.8 billion (€54.9bn), is catching up with our Pension Transitional Arrangement Directorate (PTAD).
Source: dailytrust
