PenOp seeks profitable windows to invest over $25bn contributed funds

The Chairman, Pension Fund Operators Association of Nigeria (PenOp) Misbahu Yola, has canvassed the design and development of safe and workable system to ultimately channel the over $ 25 billion pension funds for real economic development.

He said this at the 2nd Nigerian Africonomie Forum in Lagos, stressing the need for the creation of an enabling environment to facilitate evolvement of quality investible products and alternative asset classes through which the pension assets can be invested safely, with high returns for the contributors. He noted that as at May 31, 2015, Nigeria’s contributory pension scheme had approximately 6.6 million contributors and assets in excess of $25 billion. He said the pension industry had only covered less than one tenth of the working population; with assets less than five per cent of Gross Domestic Product (GDP) and the effect on economic development is still at embryonic stage.

Yola maintained that to effect significant changes, it is imperative that the Regulator, Pension Operators and other key stakeholders work together to build a strong and sustainable pension system that works for our environment.

“An enabling environment that facilitates the creation of quality investible products and alternative asset classes through which the pension assets can be invested safely, but with relatively high returns for the contributors must be encouraged. Included in these areas of consideration are private equity, infrastructure bonds and funds, and real estate backed instruments.

“It is important to mention here that financial intermediaries have done some work in this regard. However a lot more needs to be done with regards to enlightenment, capacity building to give pension funds comfort in terms of risk and safety.  In addition, to make matters more challenging for the alternative asset class, plain vanilla asset classes have remained very attractive in terms of risk return profile,” he said.

He urged the National Pension Commission (PenCom) to remain focused and continue to be innovative in its guidelines, regulations codes and various other rules of operations, noting that the secret behind any solid structure is its foundation, and for the pension system in Nigeria, the foundation is the law and by extension the regulator that is custodian of this law.

He urged stakeholders in the industry to be committed to their resolutions, stressing that in spite the seminars; workshops, retreats and conferences been organised, implementation and execution remain a challenge.

Executive Secretary PenOp, Susan Oranye, said the contributory pension scheme remains one of the best measures taken to secure the future of workers. She called on employers who are yet to embrace the scheme to urgently do so in order for their employees to enjoy the enormous goodies in the scheme.

She reiterated the operators’ commitment to ensuring safety of funds, adding that the safety valves in the system guarantee security of the contributed funds.