By Jude Njoku

With contributions to the Nigerian contributory pension scheme said to be in excess of N1.7 trillion, built environment experts have called for the review of the National Pension Commission (Pencom) Act to enable Pension Fund Administrators (PFAs) invest part of the funds at their disposal on housing development.

Pension funds will boost construction of such houses

Pension fund managers can only invest 25 percent of their assets in equities at the moment under two types of fund — a conservative and balanced fund.

President of the Nigerian Institution of Estate Surveyors & Valuers (NIESV), Mr Bode Adediji who canvassed a review of the Pencom enabling act to enable the PFAs to invest the excess liquidity at their disposal into housing. Adediji who spoke to Vanguard Homes & Property explained that housing is the best place to invest such funds because of the low risks associated with housing schemes.

A former Secretary of the Lagos State branch of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr Stephen Jagun was also of the opinion that part of the Pensions Funds should be ploughed into a more secure investment -real estate. Mr Jagun who recalled the statement credited to the boss of PENCOM that it did not invest massively on the crashed stock market, explained that the only plausible thing to do is to channel the long terms funds from pensions contributions into housing development. “It is unfortunate that one of the major problems we still have in this country, even with our banking industry, is that we are still used to getting cheap money; we want quick returns of six months. It might interest you to note that some of the big projects abroad were funded with money from the pensions fund because the man that is still 25 or 30 years today prays that he will still be in gainful employment for the next 30 years. That means that he will not really need the money he is contributing until about 25, 30 years. In other words, money from pensions contributions can be tied down for a longer time. Such funds are good for real estate,” he said. Mr Jagun who is the chairman of the Facility Management Committee of NIESV and immediate past president of the International Facility Management Association (IFMA), Nigeria chapter explained that housing does not need short term funding like what commercial banks in the country are presently doing.

Real estate, according to the Lagos-based realtor, needs a cheap and more stable source of funding. He described the pensions fund as one of the cheapest sources of financing real estate development. “Banks are not really interested in real estate; they are only interested to buy, sell and give us money so that we can go our way. Real estate needs a more stable source of funds. That’s why in USA or England, people can get mortgages that they would be repaying in the next 25 to 30 years. The man that is paying back the mortgages is not struggling because if those mortgages are available, what it means is that if I put a little money above my rent, I would be in my house. Every reasonable human being that has a good source of income would rather prefer that. So, if real estate can have such regular and good source of funding, it will be a very welcome development,” Mr Jagun said.

Vanguard Homes & Property recalls that during a reception organised last year by the alumni of Estate surveying Department, Obafemi Awolowo University, Ile-Ife in honour of Mr Adediji, the Director General of the Commission, Mr. Mohammed K. Ahmad called for the amendment of the Land Use Act before Pencom can put its funds into housing.

Ahmad who spoke Speaking on “Promoting housing delivery: The role of Pension fund investment,” at the forum said the pool of fund, which has been generated over a long term, was open to attractive investment opportunities that could help foster economic development in all ramifications.

“Pension funds are veritable sources of financing long term investments like housing and mortgages that could promote the social well-being of citizens,” he said, adding that the mortgage securities were veritable vehicles for attracting a broad variety of institutional investors to invest in mortgage markets, which were once dominated by thrift institutions and the government.

Ahmad who was represented at the event by Mr. Lanan Duyile said that amending the Act was necessary to ensure the availability of land for building and other developmental activities, just as there was the need to enact laws on securitisation and foreclosure to be able to attract institutional investors such as pension funds, which would act as catalyst for housing delivery in Nigeria.