Challenges of Investment of Pension Funds
Download
1 / 15

Outline - PowerPoint PPT Presentation


  • 180 Views
  • Uploaded on

Challenges of Investment of Pension Funds By Eyamba T. Henshaw Commissioner Technical National Pension Commission. Outline. Pension Funds Investment Pre-requisites for Pension Fund Investment Guidelines Portfolio of Pension Funds Pension Fund Investment Challenges Ways Forward.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Outline' - knox-craig


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Challenges of Investment of Pension FundsByEyamba T. HenshawCommissioner TechnicalNational Pension Commission


Outline
Outline

  • Pension Funds Investment

  • Pre-requisites for Pension Fund

  • Investment Guidelines

  • Portfolio of Pension Funds

  • Pension Fund Investment Challenges

  • Ways Forward


Pension fund investment

  • The main goals of pension investment are to:

    • Ensure adequate, affordable and sustainable benefits to contributors

    • Secure safety & security of funds

    • Ensure adequate liquidity to pay all pension benefits of contributors as and when due

    • Achieve an optimal trade-off of risk and return through strategic asset allocation

Pension Fund Investment


Pension fund investment cont d

  • The Pension Reform Act, 2004 stipulated the type of investments allowed

  • National Pension Commission

    • issues regulations and guidelines for the investment of pension funds:

      • Regulations on Investment of Pension Fund Assets

      • Regulations on Valuation of Pension Fund Assets

      • Regulations on Fees Structure

      • Guidelines and Format for Rendering Returns on Pension Fund Investment by Operators on Daily Basis

    • monitors pension fund investments on daily basis

Pension Fund Investment … cont’d


Pension fund investment cont d1

  • Role of Pension Fund Operators investments allowed

    • Pension Fund Administrators

      • manage pension fund assets

      • makes investment decisions

        • set investment objectives

        • formulate asset allocation strategies

        • tactically select assets for investment

        • analyse fund liabilities and future cash flow requirements

      • review investment performance and render daily valuation report on pension fund investments to PenCom

Pension Fund Investment … cont’d


Pension fund investment cont d2

  • Role of Pension Fund Operators .. Cont’d investments allowed

    • Closed Pension Fund Administrators

      • perform same role as PFAs on pension fund investments for their sponsoring organisations

      • render monthly reports to PenCom

    • Pension Fund Custodians

      • keep custody of pension fund assets on trust

      • execute investment transactions on behalf of PFAs

Pension Fund Investment … cont’d


Pre requisites for pension fund investments
Pre-requisites for Pension Fund Investments investments allowed

  • Authorised Markets for Trading

    • Floor of Recognised Stock Exchange

    • Money Market Trading Platform

  • Quality of Instruments

    • Instruments/Issuers must be rated

    • Records of past profitability and/or dividends payouts

    • Instruments must be readily marketable

  • Regulated investment limits (asset class/instruments) & performance benchmarks


Investment guidelines
Investment Guidelines investments allowed


Portfolio of pension funds
Portfolio of Pension Funds investments allowed

  • Pension Fund Assets:

    • Generated pool of long term investible funds for the first time in Nigeria

    • The industry has approximately N679.55 worth of assets as at 31 October, 2007

    • RSA assets – N159.05 billion

    • CFPA assets – N195.01 billion

    • AES assets – N325.50 billion


Portfolio of pension funds cont d
Portfolio of Pension Funds .. CONT’D investments allowed

Portfolio of Closed Pension Fund Administrators and Approved Existing Schemes as at 31 October, 2007

NOTE: weights are per scheme total


Pension fund investment challenges

  • Securing the safety and security of pension funds investments allowed

  • Ensuring that pension funds invested earn real returns

  • Underdeveloped capital market for equities and fixed income securities

  • Dearth of investments instruments

    • High costs for raising investments in the capital market

    • Investment in real estate

    • Clamour for use of fund balances as collateral

    • Introduction multi-fund portfolios

    • Fees

Pension Fund Investment Challenges


Pension fund investment challenges cont d

Pension Fund Investment Challenges …Cont’d


Pension fund investment challenges cont d1

  • Inadequate capacity in the pension industry Capital Market funding in order to facilitate economic development

    • Operators

    • Regulator

    • Contributing public

  • Limited number of Rating Agencies and poor rating culture

  • Coordination between all institutions concerned

    • CBN, SEC, NSE, DMO , CSCS, FIRS

Pension Fund Investment Challenges …Cont’d


The way forward

THE WAY FORWARD


Thank You! solicit risk rating

National Pension Commission

Plot 174, Adetokunbo Ademola Crescent

Wuse II, Abuja

09 – 4138736 – 40

[email protected]

www.pencom.gov.ng


ad