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PenCom: PFAs make investment decisions on pension funds I We monitor regulatory compliance

PenCom: PFAs make investment decisions on pension funds I We monitor regulatory compliance
October 06
14:59 2023

The National Pension Commission (PenCom) says pension fund administrators (PFAs) are responsible for making investment decisions and ensuring safety and fair returns for the benefit of contributors.

In a statement on Thursday, PenCom said the contributory pension scheme (CPS) is often described as fully funded due to the individual retirement savings accounts (RSAs) where monthly pension contributions are remitted.

The commission said the individual RSAs opened with a pension fund administrator (PFA) are pooled into a fund and managed as investments in various allowable instruments.

“Pension fund investments seek to ensure timely payment of benefits to employees upon retirement,” the statement reads.


“Consequently, the overriding philosophy guiding investments is the maintenance of safety and fair returns.

“The National Pension Commission (PenCom) has issued the regulation on investment of Pension Fund Assets (the Investment Regulation) to regulate all pension fund investments.

“While the PFA is responsible for taking investment decisions and ensuring safety and fair returns for the benefit of contributors, the Pension Fund Custodian (PFC) ensures safe custody of the assets.”


Guided by the investment regulation, the commission said investment decisions are taken by the PFA on trust, as a fiduciary duty on behalf of pension contributors.

The organisation said the pension funds are also segregated from the assets of a PFA, and all incomes earned are exclusively for the benefit of pension contributors.

PenCom quoted section 86 of the Pension Reform Act, 2014, as outlining the allowable investment outlets for pension fund investments.

“These include bonds, treasury bills and other securities issued by the Federal Government and State Government Bonds,” the commission added.


“Pension funds are allowed to be invested in bonds, debentures, redeemable shares and other debt instruments issued by corporate entities and listed on a Stock Exchange under the Investment and Securities Act and ordinary shares of public limited companies listed on a Stock Exchange, under the Investment and Securities Act. 

“In addition, pension funds may also be invested in bank deposits and securities; real estate development investments; specialist investment funds and other financial instruments as enshrined in the Investment Regulation.”

PenCom said the PRA 2014, reinforced by the investment regulation, made provisions to guard against conflict of interest in the investment of pension funds. 

The organisation said the diligent implementation of the PRA 2014 has resulted in the continuous accumulation of pension fund assets to over N17.07 trillion as at July 31, 2023.


In line with the foregoing, PenCom said it “closely monitors the PFAs to ensure that all investments are in line with the Investment Regulation”. 

The commission said the PFAs are required to submit a daily valuation report on pension fund investments through which it ensures strict adherence to the investment regulation.


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