Pension investments in FG securities up 20.6% to N10.9trn

By Cynthia Ezekwe. 

Pension investments in federal government securities by Pension Fund Administrators (PFAs), rose to N10.8 trillion in the first half of the year, representing a 20.6 percent Year-on-Year increase from N9 trillion in the corresponding period of 2022 (HI ’22).

The National Pension Commission (PenCom), made the disclosure in a recent data which indicated that the relatively high interest rate pervading the financial market in the last six months triggered the higher investment in government  securities.

According to PenCom, the securities include FG bonds, treasury bills, agency bonds, and green bonds.

Further  analysis showed that the green bonds, which  are debt securities designated to finance environmentally friendly projects, recorded the highest growth at 40.3 percent  to N96.7 billion in H1’23 from N68.9 billion in H1’22. It was followed by FGN Bonds which surged  25.2 percent  to N10.4 billion in H1 ’23,  from N8.313 billion it recorded in H1’22, while agency bonds recorded 11.6  percent  growth to N152.338 billion in H1’23 from N136.5 billion in H1’22.

In contrast, treasury bills recorded a decline of 59 percent  to N192.429 billion in H1’23 from N475.636 billion in H1’22; while agency bonds depreciated  by 12.1 percent  to N12.1  billion from N13.8 billion in H1’22.

Reacting to the development, Victor Chiazor, analyst and head of investment and research at Fidelity Securities Limited (FSL), said the rise in PFAs’ investments in government securities was triggered by the interest friendly rate environment during the period under review.

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 trillion in the Nigerian financial market was invested into FGN bonds.

Kurfi called for more financial products that are less risky and  can give an alternative higher yield to bonds in the financial markets. This, he noted, is needed to attract pension funds investments.

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 Dahir-Umar, the maintenance of a consistent growth trajectory continues to justify the Commission’s overriding investment philosophy of ensuring the safety of pension fund assets.