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Pension Commission allocates N1.6 trillion to infrastructure investments in new scheme



Hopes may be rising for the long-sought financing of critical infrastructure in the country with the hugely pooled pension contributions, as about N1.6 trillion, representing 20 per cent of the N8 trillion contributed, would be invested for that purpose.
The amount, which is the minimum investment for infrastructure, is the fallout of the framework guiding the new pension scheme, as approved by the National Pension Commission (PenCom).
Describing the planned infrastructure investment as an important tool to boost economic development, the Acting Director-General PenCom, Aisha Dahiru-Umar, said less than five per cent of the allocated fund has been accessed.
She noted that the assets of the Nigerian pension industry under the Contributory Pension Scheme (CPS) has maintained a fast-paced growth, following N500 billion increase recorded between December 2017 and March 2018.
Citing statistics, she said the assets managers recently increased their investments with N5.5 trillion, representing about 70 per cent of the total contributions on Federal Government’s securities.
Also, the Head, Investment Supervision Department, PenCom, Ehimeme Ohioma, however, admitted that any infrastructure project where funds from the CPS will be invested must satisfy its stipulated criteria.
He maintained that such projects must be commercially viable and self-financing to generate the needed cashflows to repay itself overtime, while bid processes must be open and transparent.
“Investment in infrastructure would be beneficial to Nigeria and its citizens as adequate infrastructure development would sustain employment, promote entrepreneurship, enhance returns on pension fund investments, as well as increase the pool of pension savings for economic development.
“The current stock of infrastructure is inadequate to support the present and future socio-economic needs of the country, including the imperative to diversify the economy away from oil.
“Pension funds remain a potential source of private financing to finance infrastructure in Nigeria, but can only be invested indirectly through structured instruments, such as bonds and the stipulated requirements for pension fund investments in infrastructure, are robust and provides adequate safeguard for pension fund assets,” he said.
He maintained that there must be availability of commercially sustainable projects and full repayment guarantees by the federal government, especially in the early stages of projects financing; and strong political will and consistency in formulation of policies to retain investors’ confidence.
From earlier reports, the Pension Fund Administrators (PFAs) invested a total of N31.77 billion in offshore securities, which represented 0.43 per cent of the total assets being held in trust for registered workers under the CPS.
The report also revealed that about N148.21 billion of investments was in state governments’ securities and with other capital market instruments, in line with the reviewed Pension Reform Act 2014 under which the scheme was set up.

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