By Cynthia Ezekwe.
Pension investments in the federal government securities by Pension Fund Administrators (PFAs),rose to N10.858 trillion in the first half of the year,representing a 20.6 per cent Year-on-Year increase from N9.007 trillion in the corresponding period of 2022 (HI ’22).
This is according to a recent data presented by the National Pension Commission (PenCom), which indicated that the relatively high interest rate pervading the financial market in the last six months triggered the higher investment in the FG securities.
According to PenCom, the securities include, FG Bonds, Treasury Bills, Agency Bonds, and Green Bonds.
Meanwhile, analysis showed that the Green Bonds, which are debt securities designated to finance environmentally friendly projects, recorded the highest growth at 40.3 per cent to N96.722 billion in H1’23 from N68.949 billion in H1’22.
It was followed by FGN Bonds which surged by 25.2 per cent to N10.404 billion in H1 ’23, from N8.313 billion it recorded in H1’22. Agency Bonds came third, recording 11.6 per cent growth to N152.338 billion in H1’23 from N136.506 billion in H1’22.
However, Treasury Bills recorded a decline of 59 per cent to N192.429 billion in H1’23 from N475.636 billion in H1’22; while Agency Bonds depreciated by 12.1 per cent to N12154 billion from N13.825 billion in H1’22.
Reacting to this development, Victor Chiazor, analyst and head of investment and research at Fidelity Securities Limited (FSL), said: “The rise in PFAs’ investments in Government Securities is triggered by the interest friendly rate environment during this period.’’
Garba Kurfi, analyst and managing director/CEO of APT Securities and Funds Limited, noted that the investment in FGN Bonds by PFAs is necessary because of its low risk and availability when compared with the other investment, adding that more than N10.0 trillion in the Nigerian financial market were invested into FGN Bonds.
While calling for more financial products that are less risky and can give alternative higher yield to Bonds in the financial markets, this, he added, is needed to attract pension funds investments.
On her part, Aisha Dahir-Umar,director general, PenCom,, attributed the growth in the pension fund assets under the new pension scheme, as an indication of prudent and sincere management of the pension fund by the pension operators and the regulator.
According to her, “the maintenance of a consistent growth trajectory continues to justify the Commission’s overriding investment philosophy of ensuring the safety of pension fund assets.”