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How surveyors can boost real estate with pension fund

By Victor Gbonegun
25 July 2016   |   2:44 am
The Director General of the National Pension Commission, (PENCOM), Mrs. Chinelo Anohu-Amazu made the disclosure while presenting a paper titled: An Overview of the Pension Reform Act 2014 and the Provision for Investment Outlets in Real Estate Sector...
Pencom DG, Mrs. Chinelo Akohu- Amazu

Pencom DG, Mrs. Chinelo Akohu- Amazu

As the total value of pension fund assets with licensed Pension operators rise to about N5.6 trillion, a senior official of the National Pension Commission has urged stakeholders in pension administration to utilise the provisions of the Pension Reform Act for more infrastructure and real estate development in the country.

The Director General of the National Pension Commission, (PENCOM), Mrs. Chinelo Anohu-Amazu made the disclosure while presenting a paper titled: An Overview of the Pension Reform Act 2014 and the Provision for Investment Outlets in Real Estate Sector’’ at a seminar organised by Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State Branch, held at the Lagos City Mall, Victoria Island.

She informed participants that the new Pension Reform Act (PRA 2014), has made provisions for states and local governments to embark on Pension Fund investments in the housing sub-sector, unlike the 2004 act which only include the federal government service, ’’ the contribution pension rate has increased from 7.5 per cent for the employers and 7.5 per cent for employees to 10 per cent employers and 8 per cent employees respectively’’.

Under new initiative, PenCom had remarkable growth in Pension fund assets from N2.9trillion in 2012 to N5.3trillion by December 2015 and increased pension contributors from N5.39million to N6.89million retirement Savings Accounts (RSAs) over the same period.

Represented by Mr. Ibrahim Kangiwa of the Commission, he stated: ‘‘We have 21 Pension Fund Administrators, four Pension Fund Custodians and seven Closed Pension Fund Administrators.The PFA as we know them are pension operators charged with the responsibility of managing pension funds, they take care of collection, investments and pay out while the custodians are licensed to be in custody of pension funds”.

She expressed the willingness of the Pension Industry to support the mortgage finance sector to create more jobs, ”The 2014 act has also tried to incorporate the private sector by way of introduction of a micro pension scheme which is currently been developed by the commission with regulations and guidelines been finalised’’.

While saying that the act has also brought in provisions to protect pension funds by bringing in disciplinary measures like jail terms for anybody found to be involved in skimming, to deprive pensioners of their pensions, she urged real estate valuers and other stakeholders to device means of ensuring massive investments in housing for Nigerians, since the act made provisions for increased investments in infrastructures and housing development.

One of the ways it’s been done is that the PFA’s cannot have direct access to pension assets, the PFA’s directs the PFC’s to invest the pension assets but, they cannot for example; request for N10milion, any instruction given by the PFA’s before the custodians releases funds, it has to receive value for the money it has released’’.

In a paper; ‘’Investment of Pension Fund and Idle Funds in Housing Development: The Estate Surveyor and Valuer’s Perspectives’’, Chudi Ubosi said with Nigerians still experiencing about 15 million and 17 million housing deficits and the demand for housing put at 10:1 for demands and supply, about N59trillion are needed to bridge the gap in housing production pointing out that the sector contributes about 1.3per cent to the nation’s Gross Domestic Product (GDP).

Citing Lagos which has been described as the most vibrant property market, he stated that home ownership is still less than 20per cent with about 1500 net settlers daily and housing demands outstripped supply by 4.40million units and 1,42million, hence a shortfall of 3Million has erupted as the current situation of things in housing sub-sector, in Lagos

Ubosi harped on the need for the three tiers of government to develop greater use of professionals; estate surveyors and valuers in feasibility, viability and project management of the housing sector to promote integrity and accountability while all limiting laws and regulations preventing deployment of pension funds as well as direct investments in housing infrastructures are removed without further delay.

“Nigeria is one of the few countries in the world with no mortgage, funds may just be in the banks; there is the need to create financial products and mortgage backed securities”, he stated.

Managing Director of Stanbic IBTC Pension Manager Limited, Mr. Eric Fajemisin observed that pension funds have not been idle as widely speculated; rather the majority of the funds have been used basically for infrastructural development in the country.

Delivering a lecture themed:’’ Challenges and benefits for investment of pension fund in housing development in Nigeria and global approach’’, he pointed out that one of the challenges in pension administration in the country is that out of about 180 million Nigerians, 7 million of them are registered contributor to the scheme, representing 4per cent of Nigerian’s total population as at March, 2016.

He stressed that if all Nigerians participate in the Mortgage sector, it could contribute about 30-70percent to the nations’ GDP, reduce poverty and improve standard of living amongst Nigeria.According to him, the Federal Mortgage bank estimates that about N56trillion is required to meet the current shortfall in Nigerian housing need while the current sources of housing finance are not adequately equipped to fund the supply deficits.

Also speaking, Chairman Lagos State Branch of NIESV, Offiong Samuel Ukpong advised Nigerians to invest in pension fund: ’’If N20, 000 can buy a transistor radio for a workers now and instead of buying it, he decides to invest that money into pension fund, by the time he would be exiting the fund, in 30 years, would that same money buy him the same appliance or furniture’’, he asked.To him, the Pension Fund if well directed could solve the housing problems in the country and secured investments for the future.