Pension Funds Downsize Investments By 36%

Findings in the data from the National Pension Commission has shown  that the Pension Funds Administrators investments in state government securities fell by a huge 36 percent to N97.89 billion in the first half of 2021 (H1’21).

This is from N152.93 billion recorded in the corresponding period in 2020 (H1’20).

But the PFAs’ interest in Federal Government of Nigeria (FGN) securities spiked during the period with their total allocation in the asset class rising to N8.475 trillion.

This represents about 13.67 percent year-on-year (YoY) growth against the N7.5 trillion allocated to the FGN securities in H1’20. 

This also represents a 4.6 percent year-to-date (YtD) increase from N8.102 trillion invested in FGN securities as at January 2021.

Moreover, while PFAs’ investments allocation to state government securities accounted for mere 7.7 percent of their total investments during the period, the allocations to FGN securities accounted for a whopping 66.96 percent of the total PFAs investments within the period.

Total PFAs investment for the six month period stood at N12.66 trillion.

Additionally, the Pension Funds allocation to the state governments’ securities fell by 26.7 percent YtD from N133.57 billion in January, 2021. 

States’ pension status

As at second quarter of 2021, Q2’21, only 24 states of the federation and FCT Abuja had enacted pension laws on Contributory Pension Scheme (CPS), while seven states were at the bill stage, 17 years after the initial Pension Act mandated them to do so.

Five states are operating other pension schemes, four of which have adopted the Contributory Defined Benefits Scheme (CDBS), while one, (Yobe State) operates the Defined Benefits Scheme (DBS). 

Check shows that Akwa Ibom, Bauchi, Borno, Cross-Rivers, Gombe, Jigawa, Kano, Katsina, Kwara, Plateau, Yobe and Zamfara are yet to key into the contributory pension scheme as at the end of June,  2021.

Meanwhile, findings in the profile of PFAs commitment to the FGN securities showed that FGN bonds accounted for a chunk of the investment stake, representing 92.21 percent of the PFAs’ investment and 61.7 percent of total PFAs investment in the review period. A total of N7.8 trillion was invested in FGN bonds during the period.

Treasury Bills (TBs) followed, accounting for 6.5 percent of the PFAs investment in FGN securities at N548.13 billion, while FGN Sukuk ranked third in the scale of their investment with N86.1 billion, representing 1.02 percent of PFAs investment in the federal government’s securities.

Agency bonds (Nigeria Mortgage Refinance Company) and Green Bonds placed fourth and fifth with N13.6 billion and N12.88 billion total investments, representing 0.17 percent and 0.15 percent of FGN securities respectively.

Kehinde Ogunyale

Reporting on the data-driven economy, and investigations.

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