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The Pension Fund Administrators (PFAs) can invest up to N2.4trillion in infrastructure funds and bonds if not for the non-availability of such eligible funds and bonds in the financial market.
This was disclosed in a document on the “Position of the National Pension Commission on Deployment of Pension Assets for Infrastructure Development.”
The commission said the Regulation on Investment of Pension Fund Assets had provided that PFAs could invest pension assets for infrastructure development through bonds and funds respectively, up to a maximum of 15 percent and 5 percent of assets under management.
Going by this regulation, PenCom revealed that given the valuation of the pension assets as at October 2020, which is N12.05trn, up to N2.4 trn could be invested by the PFAs in infrastructure funds and bonds.
“The main challenge inhibiting the PFAs from investing the pension assets for infrastructure development is the non-availability of eligible instruments (funds and bonds) in the financial market. The commission and the pension industry would support efforts at issuing eligible instruments for pension funds to support infrastructure development in Nigeria,” PenCom stated.
The commission, however, cautioned that this must be done in safe and well-structured vehicles that align with the provisions of the Pension Reform Act, 2014 (PRA 2014) and the Regulation of Investment of Pension Fund Assets.
It clarified that in order to qualify for pension fund investments, an instrument must be approved by the Securities and Exchange Commission (SEC) or the Central Bank of Nigeria (CBN).
“This establishes transparency and fair valuation, thus removing all ambiguity on the real market values and tradability of the assets. PFAs can then readily buy and sell at prevailing market prices. The eligibility requirement ensures that the assets are real, liquid and within tolerable risk levels, PenCom stated.
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