State govts borrow N151.95bn from pension funds

State governments have borrowed a total of N151.95 billion of the total pension fund assets invested by pension fund operators in the country as of June 2018.

According to data obtained from the National Pension Commission (PenCom), the amount, which was invested under the Contributory Pension Scheme (CPS), represents 1.85 percent of the total pensions funds of N8.23 trillion in the review period.

The development emerged in spite of the restriction placed on pension operators from investing the increasing funds in state government’s securities that had yet to comply with the CPS.

The data further showed that the operators invested N5.82 trillion into Federal Government’s securities, amounting to 70.75 percent of their assets value for the period.

PenCom noted that, of the thirty six states in the federation, twenty seven states have already enacted laws on the CPS, while eight states are at the bill stage.

It however pointed out that the remaining one state was yet to commence the process of enacting the law on the scheme.

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Also, the commission added that twelve out of the thirty six states had commenced remittance of contributions into the Retirement Savings Accounts of their employees, while eight states had commenced the funding of their Retirement Benefit Bond Redemption Fund Accounts.

A report by the pension regulator revealed that the commission had invested in securities of the Federal Government of Nigeria (FGN) including FGN Bonds, Treasury Bills, Agency, Sukuk and Green Bonds.

Others include Supra-National Bonds, Commercial Papers, Foreign Money Market Securities, and Open/Close-End Funds.

It added that the pension funds operators also invested funds into other investment portfolios like real estate investment trusts, private equity funds, infrastructure funds, cash and other assets.

In her reaction, PenCom Director-General, Aisha Dahir-Umar, said the sector contributed about 6.54 percent to the nation’s Gross Domestic Product (GDP) in Q1 2018, adding that the fund had provided capital that further deepened the financial markets.

Dahir-Umar also noted that the pension funds had helped in improving workers’ savings culture and constituted a pool for investment.

 

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