BY Emma Ujah, Abuja Bureau Chief
ABUJA — The nation’s pension fund assets have hit N2. 29 trillion, National Pension Commission, PenCom, said in its newly published 2010 Annual Report.
According to the report, the fund grew by as much as 33 per cent over the 2009 record which stood at N1.53 trillion, Pencom attributed the growth to registration of more contributors as a result of greater compliance by employers.
It said: “The period under review witnessed a remarkable increase in the value of pension fund assets from N1.53 trillion as at 31 December 2009 to N2.29 trillion as at December 2010, indicating a 32.70 per cent growth. The growth of pension fund assets resulted from new contributions by contributors, additional capital injections by legacy scheme sponsors as well as investment income.”
Total pension contributions into the Retirement Savings Account, RSA, in the private and public sectors last year amounted to N289.81 billion.
A breakdown of contributions showed that the public sector contributed N162.46 billion while the private sector contributed N127.35 billion, which represent 56.06 per cent and 43.94 percent respectively.
The gross investment income was put at N205.30 billion or 10.12 per cent of the total pension assets during the year under review.
The Retirement Savings Account, RSA, ‘Active’ Fund recorded a significant growth of N231.421 billion, representing 30.9 per cent increase during the year under review.
Similarly, the ‘Retiree Fund’ also witnessed an impressive growth of 42.66 per cent from N89.24 billion.
Furthermore, assets of the Closed Pension Fund Administrators and Approved Existing Schemes grew from N342.36 billion and N266.1 billion in 2009 to N404.37 billion and N423.12 billion, at the end of 2010, respectively.
The report indicated that the areas in which the pension funds could be invested were expanded last year, to include infrastructure, thereby creating an avenue for the funds to be invested in such critical infrastructures as rail ways and roads.
Similarly the pension funds can now be invested in Private Equity Funds, as well as, Supranational Bonds under the expanded investment assets classification.
“During the year under review, the Commission, with the technical assistance of the International Finance Corporation/World Bank Group under the Efficient Securities Markets Institutional Development (ESMID) African Programme, revised the Regulation on Investment of Pension Fund Assets.
“Amongst other issues, the allowable asset classes were expanded to include pension fund investments in alternative assets such as Private Equity Funds, Infrastructure Funds and Supranational Bonds”, the report said.
The report said PenCom continued to focus on the development of a sound and transparent regulatory and supervisory environment for the industry.
It said “in this regard, a number of regulatory and supervisory measures were taken, which included among others, further issuance of guidelines, regulations and using risk based supervision to conduct both on-site and off-site examination of pension fund operators”.
The report said various strategies were applied ranging from public enlightenment and awareness campaigns, on-site inspection of employers, mailing of compliance letters to identified eligible organizations, collaboration with regulatory and professional bodies and application of regime of sanctions, in order to ensure compliance with Pension Reform Act, PRA, (2004) by employers.
“As a result of moral suasion employed, the year witnessed an increase in the number of states implementing the Contributory Pension Scheme, CPS, as two additional states joined the CPS. This brought the number of states that implemented the scheme to 16.
“In addition, five states have opened and commenced funding their Retirement Benefit Redemption Bond Account with the Central Bank of Nigeria. This would assist them settle all accrued retirement benefits inherited from the Defined Benefit Scheme”, PenCom reported.
It said that the pension industry operated in a favourable macro-economic environment in 2010 as the capital market, which is one of the platforms for investing pension funds, witnessed improved performance compared to the previous year.
The surge in the pension funds investment in State Governments’ bonds that increased by 134 percent in 2010 compared to the previous reporting period, was noted as a major feature of the market during the year under review.
PenCom said it would continue to leverage on the state of-the-art information and communication technology facilities to enhance its surveillance and supervisory activities of the industry and that the deployment of the Risk Management Analysis System (RMAS) would enable the Commission obtain timely information on the pension industry thereby enhancing its supervisory oversight of the Pension Fund Operators.