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Banks borrow N764bn from pension fund



Operators invest N250bn pension funds in real estate

The National Pension Commission, PenCom, has said Nigerian banks borrowed a total of N764.32bn from pension funds under the Contributory Pension Scheme, CPS.

The commission added that the figure, which is as at the end of September this year, is 19.16 percent of the N8.34 trillion total pension asset.

A report by the commission said the total amount Pension Fund Administrators, PFAs, invested in the banking sector was N409.48bn in January 2017.

The Pension Reform Act requires PFAs to administer the funds, while the Pension Fund Custodians keep custody of the assets.

According to PenCom, the operators had invested a substantial part of the pension funds in the Federal Government’s bonds, treasury bills and state government securities.

The report further stated that some of the money was invested in agency bonds, supra-national bonds, commercial papers, foreign money market securities, and open/close-end funds.

Other investment portfolios where the operators invested the funds are real estate investment trusts, private equity funds, infrastructure funds, cash and other assets.

The PenCom report also revealed that the number of contributors grew by 312,291 from 7.89 million in December 2017 to 8.27 million as of September.

Read also: FG to raise foreign debt ratio to 40% in 2019

Aisha Dahir-Umar, the acting Director-General of the commission, said the CPS had facilitated a pool of pension funds which had consistently accumulated since its inception.

According to her, there was enormous potential for the growth of Nigerian pension funds to account for a significant proportion of the Gross Domestic Product, adding that it planned to expand the coverage of the CPS to the underserved sectors of the economy through micro-pension and renewed enforcement of compliance.

“Our objective in this direction is to attain at least 20 million contributors by the year 2019,” she added.

The commission noted further that the Pension Reform Act established a mandatory CPS for the employees of the Federal Government, the Federal Capital Territory and the private sector organisations with three or more employees.

According to it, unlike the former Defined Benefits Scheme, the CPS is contributory in nature, fully funded, managed and kept in custody by licensed private operators (the PFAs and PFCs) and is based on individual portable accounts, which are the Retirement Savings Accounts.

PenCom also noted that available statistics showed that the CPS had greatly improved access to retirement benefits for employees in both the public (Federal Government) as well as the private sectors, adding that it had also helped to improve the issue of funding even though more work was still needed in that regard.

The commission said it had released the guidelines on micro pension.

“This is the first step in giving effect to Section 2(3) of the Pension Reform Act (PRA), 2014 which provides that employees of organisations with less than three employees as well as the self-employed persons shall be entitled to participate in the CPS in accordance with the guidelines issued by the commission.”

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