In an effort to boost long term returns of contributors, as Nigeria still suffers from lack of domestic investment options, the National Pension Commission (PenCom) has increased options available for the investment of pension funds and extended regulatory forbearance to Pension Fund Administrators (PFAs).
In a circular released to all PFAs, PenCom said the new approach would allow for greater operational flexibility of PFAs in managing the pension assets, while ensuring risk management is upheld, thus protect retirement savings of contributors.
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According to the circular issued by the regulator of pension in the country, the regulatory reforms in the sector by the commission respond to market dynamism, with a view to facilitate investment of assets beyond conventional options.
“The extended regulatory forbearance to PFAs will enable them more flexibility to manage their existing investment and rebalance their portfolios in line with market dynamics without compromising regulatory compliance,” PenCom added in a statement.
The regulator stressed that it believes this approach would strengthen the robustness of pension fund administration, while also supporting improved investment performance in the long term.
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“However, the Commission considers it important that adequate investment opportunities that are of quality and capable of providing competitive long-term return be available to PFAs. Nigeria’s pension industry faces the constraint of insufficient quantity of investible domestic assets, while its assets grow consistently,” PenCom said.
The regulator further maintained that the investments of pension funds will continue to be guided by applicable risk management standards and relevant provisions of the Pension Reform Act 2014.
PenCom restated that its primary responsibility in the industry is to ensure the security of assets held on behalf of contributors.
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The regulator stated that it is actively engaging with stakeholders to deepen the domestic capital market, provide access to more investment options, and maintain the stability, transparency and long-term financial sustainability of Nigeria’s pension industry.
