PFAs invest 70% of pension fund in FGN bonds, treasury bills




At least 70 per cent of the N5.3 trillion pension fund has been invested in Federal Government bonds and Treasury Bills, Newswatch Times learnt.
To this end, the Federal Government is currently using the fund to finance recurrent expenditure.

While criticising some government officials, who felt the Pension Fund Administrators(PFAs) don’t want to invest pension fund to fix infrastructural deficit in the country, the Chairman, Pension Fund Operators Association of Nigeria (PenOp), Mr. Eguarekhide Longe, said the larger chunk of the money is already with the government.

According to him, “70 to 75 per cent is invested in Federal Government bonds and treasury bills. Currently, FGN Bonds is being used to finance recurrent expenditure. If this so much is invested in recurrent expenditure and it’s not bringing capital into the industry, we are not quarreling with government, we are very open and ready to partner with government on well-conceived projects.”

While defining a well conceived project, he said: “A well conceived project will have a clear concept, as to where this money could really be going, what we want to achieve. Designing this project cost money. The cost of delivering an infrastructure project is 10 per cent in the preparation. If a project is to cost N500 billion, you are going to spend 10 per cent of that money preparing the project and as you prepare the project, there is no income coming back and in some cases, you can prepare the project and its a dry one.

“These are the issues that need to be thought through. After this, there is a concession process and you have to ensure you get the right concessionaire. Then, you get a world-class contractor who will deliver the project, which is very scarce in the part of the world. After this, there is the operational stage. Here, you structure who is going to pay for it, how is the money going to come back. And in all of these, you could spend years. So, it’s very cumbersome process and care must be taken not to throw away retirees money.”

He said the pension fund operators are ready to assist the government with funding, provided the government floats infrastructure bonds to which the operator can invest in, noting that such infrastructure products must follow the investment guidelines in the Pension Reform Act(PRA) 2014.

“The fact is that there are ample provisions in the investment guidelines that allows for investment in projects, so to say, infrastructure, private equities and real estates, bonds, among others. But what has happened is not that the money is idle in the PFAs or that the fund managers have not looked for those projects. In truth, it is not their job to go and create projects, but we have actively sort the investment banking community to develop products that we can invest in.”

Meanwhile, Longe said his association would soon instil code of ethics to stem unhealthy competition amongst members.
The association, he said, wants to wipe out unhealthy competition, improve service delivery and functional skills of members.

He said one of the items on the agenda of the association for the foreseeable future – 2015 to 2017, is to instil the code of ethics.

“We want to wipe out unhealthy competition, improve service delivery and improve the functional skills of our operators. As a self regulatory organisation, you find out incidence of fraud is almost non-existence in this industry. So, I think it is more of the rules of engagement as far as competitions amongst the operators are concerned. That is where the real work is as far as self regulating activities are,” he said.

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