Roads, power to benefit from N4.9tn pension funds

By 09:25 Sun, 27 Sep 2015 Comments

Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu

The Contributory Pension Scheme operators are considering investing part of the growing pension funds in long-term projects because most of the contributors are young workers who may not need their money very soon, investigation has revealed.

The total pension funds being managed under the CPS stood at N4.9tn at the end of May this year.

Statistics on the Retirement Savings Account registration by age and sector obtained from the National Pension Commission revealed that most contributors to the CPS were less than 40 years old.

According to the Pension Reform Act, 2014, only workers who have retired and are up to the age of 50 years can access the retirement funds under the pension scheme.

“An age distributional analysis of the RSA holders revealed that the largest proportion of the RSA holders is very young as almost 80 per cent of the members are below 50 years, and 51 per cent of the members are below the age of 40 years,” PenCom stated.

The commission said the demography of the scheme favoured putting pension funds in long-term investible instruments like infrastructure products, which could be used to bridge the yawning gaps in the nation’s infrastructural development.

In its report on the CPS, PenCom disclosed that 761,436 workers, or 11. 69 per cent of the contributors were less than 30 years.

It also revealed that 39.41 per cent or 2.5 million contributors were within the age bracket of 30 and 39 years.

According to the PenCom data, 1.7 million contributors (26.4 per cent) are between the ages of 40 and 49, while 1.2 million contributors (17.2 per cent) are between the ages of 50 and 59.

The data also showed that about 264,839 contributors (four per cent) were between the age bracket of 60 and 65, while 72,937 contributors (1.2 per cent) fell into the category of 65 years and above.

Under the guideline on investment, PenCom stated that pension fund assets could be invested in infrastructure through infrastructure bonds or infrastructure funds. It added that both outlets must meet the conditions for the investment of pension funds in infrastructure before the Pension Fund Administators could channel pension fund assets into such investments.

The commission noted that section 5.2.3 of the draft regulation on investment of pension fund assets provided that pension assets could be invested in infrastructure projects through eligible bonds, subject to two major conditions.

“The infrastructure project shall be not less than N5bn in value and awarded to a concessionaire with good track record through an open and transparent bidding process in accordance with the due process requirements set out in the Infrastructure Concession and Regulatory Commission Act and any regulation made pursuant thereto, and certified by the Infrastructure Concession and Regulatory Commission and approved by the Federal Executive Council,” it stated.



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