Pension fund administrators (PFAs) in the country have concluded plans to look for an alternative investment option in bonds and treasury bills to increase returns on investments and make up for the N51.39 billion loss in pension assets in February.
The Chief Executive Officer, Pension Fund Operators Association of Nigeria (PenOp), Oguche Agudah, said at a virtual training organised by PenOp for journalists in Lagos.
Agudah explained that the decline in pension fund assets by N51.3 billion in February was traceable to the depreciation in the prices of fixed income securities (FISs) in the trading portfolios of the Approved Existing Schemes (AES), RSA Funds II and IV and Closed Pension Fund Administrators (CPFA).
He explained that the loss in percentage is minimal when subtracted from the N12.29 trillion pension assets.
According to him, “if you examine the N51.3 billion depreciation from the N12.29 trillion pension funds in January 2021, you will notice that it is not even up to 0.01 per cent, so the percentage loss is minimal.
“However, we know there are concerns about the decline in the pension value of assets and the truth is that pension funds need to invest more in other asset classes outside of the government bonds and treasury bills, which are the safest. So, safety is the first option adopted when investing in any asset.
“Currently pension funds cannot invest in foreign bills because there are regulations that need to be approved by the government. However, we are looking out for other various outlets and areas where the funds can be invested; areas like private equity, but the truth is that we need to balance between safety and returns. Notwithstanding, the industry is looking at other alternative investment instruments.”
In a similar vein, the Head of Media, Communications and Branding Committee, PenOp, Amaka Andy-Azike, explained that the decline in the pension funds is unrealised loss according to the terms of the equity market but pension funds operators are sourcing for other means to increase the yields.
“As operators, we focus more on the safety of funds when investing even as we try to also give fair returns on your investments. The decline in pension funds was because of market volatility; the money market, bonds and treasury bills have been fluctuating due to the nature of what the economy experienced last year and is still going through,” he said.