Some investors, who have been unable to access part of the growing pension funds through operators of the Contributory Pension Scheme, are now lobbying the Federal Government to get guarantees for the funds, mediahas learnt.
As of the end of September, the industry had total pension funds of N5.96tn, currently the largest available pool of capital in the country.
It was found that the investors who could not access these funds due to the stringent measures introduced in the investment guidelines by the National Pension Commission have been seeking the Federal Government’s backing to get the pension operators to invest part of the funds in their projects.
According to the operators, the funds are safer for investments fully backed by the Federal Government securities.
In an interview with our correspondent, the Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarekhide Longe, noted that the operators had to comply with PenCom’s regulations on investment of pension funds.
While explaining the reason why some investors who approached the operators had not been able to gain access to the funds, he said that the operators needed to get certain clarifications on the status of the projects before pension funds could be invested in them.
“The promoters of the project have approached the pension industry and they also tried to get guarantees from the government and based on those guarantees, there is a better than before possibility that we can participate in a project,” he said.
He explained that this was necessary so that if anything should go wrong with the project, the government could intervene and give it its full support.
According to him, as long as the investors are able to get the government’s backing and come up with a disciplined business case, there is no reason why the operators should not participate in their projects.
He said that the PenCom’s regulations on investment of pension assets provided that the investment strategy committee, in addition to other functions specified in the Pension Act, would formulate internal investment strategies to enable compliance with the regulations, taking into cognisance the macro-economic environment as well as the investment objectives.
The internal investment strategies, he added, should be approved by the PFA in a formal board meeting at least once every year or as frequently as changes occurred in the macro-economic environment that might affect the pension fund assets.
The Head, Investment Supervision Department, PenCom, Ehimeme Ohioma, said the investment of the pension funds could be done through ownership (equity/shareholding) in the infrastructure company developing the project as well as co-investment with other institutional investors and project development firms.
According to him, where the investment is to be executed through a Public Private Partnership, it should have the due process requirements and endorsement and that the bid process for selection of concessionaire and other relevant parties in the project should be open and transparent.
“The project should a have well-structured financing model – infrastructure bonds, infrastructure funds or a combination of both,” he added.