About N224.30 billion of pension funds representing about 2.89 per cent of pension assets has been invested in the real estate sector of the economy going by statements from the National Pension Commission (PenCom).
PenCom, decision followed pressures from stakeholders urging the regulator not to allow pension funds to be lying idle in the vault but to allow Pension Fund Administrators (PFAs) to invest the growing pension assets in the housing industry, particularly in real estate, in addition to investing it in infrastructure.
The total pension assets as at January 31, 2018, under the Contributory Pension Scheme (CPS), according to Commission, rose to N7.737 trillion as against the total of N5.14 trillion it stood as at October 2015.
The PFAs have invested these funds in different classes of assets, with a total of N224.30 billion only being invested in real estate. This, according to some pension experts, is as a result of the toxic nature of the sector and inability to provide adequate risk mitigation tools to guide the investment of pension assets in the sector.
The Commission, in a statement in its website stated that, “pension fund managers in Nigeria are amenable to investing part of the pension funds in infrastructure and real estate through viable and secure investible outlets.”
The Acting Director General of PenCom, Aisha Dahir-Umar, had emphasised the imperative of timely payment of retirement benefits of workers in order not to compromise their comfort after their active working period, which she described as the main objective of saving towards retirement,” she noted.
She said that the Commission had recently made a presentation to the National Economic Council (NEC)where it highlighted the numerous benefits that states could derive under the CPS. She stated that based on the feedback at the presentation, the commission would also enhance its technical support to the states for speedy compliance.
She agreed that many states in the federation had adopted the CPS and were at various stages of its implementation. “The Pension Reform Act 2014 gives additional impetus for participation in the CPS by explicitly prescribing the coverage of states and local government employees, in addition to the federal public service and private sector,” she said.
The PenCom boss said the scorecard for the North-West Zone was encouraging, adding that there were some implementation milestones that should be attained by respective states. She stressed the need for all the states and local governments in the North-West Zone that were yet to adopt or implement the CPS to immediately comply in order to avail their employees of the numerous benefits of the scheme, while avoiding huge future pension liabilities.
She said the need for more efficiency in managing finances has never been greater than now, given the lean available public resources.
“The adoption of CPS by states is one effective tool of managing finances by paying monthly pension contributions into employees’ RSAs as opposed to settling these huge liabilities at the point of retirement, being the case in the Defined Benefit Scheme,” she said.