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‘PFAs’ investing only N4.2bn out of N6.5tn pension funds in infrastructure too poor’

More reasons have emerged on why the infrastructural base of the nation had remained weak.

Part of the reason includes poor investment of pension funds which recently rose to N6.49tn as of April this year in the areas of infrastructure.

Details gathered from the National Pension Commission (Pencom) on Wednesday, showed that only paltry N4.2bn which means about 0.07 per cent of the total funds under the scheme, was invested in infrastructure financing.

Pension Fund Administrators (PFAs), the custodian of the Contributory Pension Scheme, have been finding it hard to invest in long term businesses possibly due to fears of default.

PenCom had in May 2015, revealed that the operators invested N568m in infrastructure for the first time, and increased it to N1.82bn in September 2016.

A set of PFAs officials who visited Business Hilights Office in Lagos on Wednesday revealed during an interactive session that whereas the funds were not lying idle, many of them smartly prefer to rather invest in different portfolios such as the FGN bonds, treasury bills, domestic ordinary shares, local money market securities, corporate debt securities, real estate properties, state government securities, foreign domestic shares and cash/other assets.

They noted that few months ago, PenCom reviewed the regulation of its investment guidelines and stated that the PFAs must offer the multi-fund structure for the Retirement Savings Account and that there would be a transition period of six months.

The agency averred that “The multi-fund structure shall comprise Fund I, Fund II, Fund III and Fund IV (retiree fund). Funds I, II, III and IV shall however differ among themselves, according to their overall exposure to variable income instruments.”

It added further that the exposure to variable income instruments was defined as the sum of the PFA’s investments in ordinary shares and participation units of open, close-ended and hybrid funds, real estate investment trust, infrastructure funds, and private equity funds.

It would be recalled that under the Pension Reform Act, the PFAs administer the funds, which are kept in the custody of the Pension Fund Custodians.

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