FGN Securities generate 84.02% of pension sector’s N773.70bn interest income


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Chuks Udo Okonta

Federal Government of Nigeria (FGN) securities generated 84.02 per cent of the N773.70 billion interest income earned by Pension Fund Operators (PFOs) in year 2020, Inspenonline reports.

FGN securities which include; bonds; treasury bills; agency bonds; Sukuk and green bonds, over the years have remained haven of investment
owing to the high interest yield.

According to National Pension Commission (PenCom) interest/coupon income for the year 2020 declined by 5.28 per cent to N773.70 billion relative to N816.84 billion in 2019 due to general drop in yields on fixed income securities during the period. It added that significant sources of interest income for the year 2020 were FGN Securities, which yielded 84.02 per cent and money market instruments generating 8.62 per cent.

The pension sector regulator noted that Fund II had the highest amount of dividend income as it accounted for 82.94 per cent of total dividends received during the year.

PenCom maintained that the total investments in FGN Securities was N5.74 trillion as 31 December 2020, adding that the maturity profile of the investments in FGN Bond ranged from 1 to 10 years and represented 68.78 per cent of the portfolio value of the RSA Active Funds and that 91.58 per cent of the Funds investment in FGN securities were in FGN bonds.
“A review of the Bond Portfolio reveals that pension fund assets of Funds I and II are equally split between tenures below and above 10 years. However, in line with the demography of Fund III contributors, investments in FGN bonds were mostly in short to medium term (below 10 years) maturity bucket that accounted for 60.89 per cent of the Fund’s FGN bond portfolio,” it submitted.

Inspenonline also gathered that as at September 2021 pension fund assets stood at N13.00 trillion, which in United States Dollars, amounted to $31.69 billion at an exchange rate of N410.30/$.

PenCom maintained that N8.22 trillion out of the N13.00 trillion had so far been invested in Federal Government securities as at September 2021.

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