PFAs invest 63.3% of assets in government securities

Pension Fund Administrators in Nigeria have invested approximately 63.3% of the total assets under the Contributory Pension Scheme in Federal Government securities in the first half of 2024. This significant allocation reflects the confidence in government securities as a safe investment option. To shed light on the trajectory for the remainder of the year, Oguche Agudah, CEO of Pension Fund Operators of Nigeria, shared insights on the growth trends and future prospects for the industry. With a notable 11.5% growth in pension assets witnessed in the first half of the year, Agudah expressed optimism for continued growth driven by contributions and investment activities in the second half. The CEO highlighted the expected impact of salary increases in the public sector on asset growth and emphasized the role of both equities and fixed income markets in driving future returns. While acknowledging the challenges posed by a higher interest rate environment in the corporate market, Agudah underscored the benefits for pension funds investing in federal government securities. This strategic decision is poised to deliver favorable returns for contributors and retirees. Agudah also elaborated on efforts to expand pension coverage in the informal sector, recognizing the importance of micro pensions in reaching this segment of the population. Despite mixed feedback, particularly regarding incentives for informal sector workers, initiatives like product refinement and enhanced engagement with the ecosystem are driving progress. Turning to the real estate sector, Agudah explained the limitations faced by Pension Fund Administrators in directly investing in real estate. However, he highlighted the growing trend of mortgage-backed loans which facilitate home ownership for individuals. Meanwhile, the increase in infrastructure funds, from zero ten years ago to approximately 170 billion currently, demonstrates the evolving landscape of investment opportunities for pension funds. Agudah expressed confidence in the continued growth of infrastructure investments, underpinned by ongoing engagements and partnerships within the industry. As Nigeria's pension sector navigates evolving market dynamics and explores diverse investment avenues, the outlook remains positive for sustained growth and value creation. With a focus on innovation, inclusivity, and strategic partnerships, Pension Fund Administrators are well-positioned to seize opportunities and drive economic development in the country.