Ibekimi Oriamaja Reports
Total pension fund assets reached N14.4 trillion in the third quarter of 2022, Q3’22, representing a 6.0 percent increase over N13.6 trillion in the same period in 2021, Q3’21.
For the period under review, Federal Government securities accounted for 63.7 percent of total pension assets, a situation that is thought to have been triggered by the current high interest rate environment.
Pension Fund Administrators, or PFAs, invested N9.2 trillion in FG securities in Q3’22, a 10.1% increase v
FGN Bonds, Treasury Bills, Agency Bonds, Sukuk, and Green Bonds are examples of FG securities.
Analysts’ perspectives
Mr Victor Chiazor, analyst and Head of Investment and Research at Fidelity Securities Limited, FSL, commented on the data, saying, “The rise in PFAs’ investments in Federal Government securities over the last nine months was triggered by the high interest rate regime following the CBN’s increase of the Monetary Policy Rate, MPR, to time rising inflation.”
“We expect PFAs to continue to increase their investments in Federal Government securities in the fourth quarter, but investments in equities will be based on the yield environment, the performance of the equities market during the year, and the political dynamics in the year.”
Mallam Garba Kurfi, analyst and Managing Director/CEO of APT Securities and Funds Limited, stated, “Investment in FGN Bonds by PFAs is necessary because of its availability and risk-free when compared to other securities.” Most elderly people prefer to invest their money in less risky assets; in the Nigerian financial market, more than N7.9 trillion was invested in bonds. Bonds, for example, are not available for investment. There is a need for more financial products in the financial markets that can provide alternatives and high returns, such as Bonds, in order to attract pension fund investments.”
