The Nation Newspaper

Tag: pension fund

  • Axa secures $4.3b longevity swap with pension fund

    Axa U.K. Group Pension Scheme, London,has completed a £2.8 billion ($4.4 billion) longevity swap with Reinsurance Group of America for the defined benefit section of its retirement plans.

    The swap covers about half of the pension fund’s liabilities, said a news release from Axa U.K. The total asset size was not immediately available.

    The deal covers 11,000 members. The swap will form part of the pension fund’s investment portfolio, providing income in the event that members live longer than is currently expected.

    “By significantly derisking the scheme, this will benefit all our DB scheme members and will not affect any payments to members as they will continue to receive their pension as normal,” said Stephen Yandle, chairman, Axa U.K. Pension Trustees Ltd., in the release.

    Towers Watson Co. and Linklaters L.L.P. were lead advisers to the trustees and company.

    A spokeswoman for Axa was not available to comment.

    • Culled from Business Insurance.

  • Pension fund drops by N7.79 b in October

    Pension fund drops by N7.79 b in October

    Investigations by The Nation has revealed a dip of N7.79 billion in the Pension Fund. The drop, which occurred in the October 2014  valuation of  pension fund assets, represents a 0.17 per cent decline when compared to the figure in the preceeding  month of September 2014.

    Checks on the fund showed that from the N4,582,735.14trillion recorded by the pension industry in September, it fell to N4,574,939.36 trillion in October.

    Before now, the sector had witnessed steady growth up to the tune of N4, 501, 753.39 trillion funds recorded in August and N4, 454, 953.57 trillion recorded in July.

    When The Nation contacted PenCom Head of Investment Elumeme Ohioma, the decrease in the pension fund is a normal occurrence and not a strange phenomenon.

    PenCom Head of Investment, Ehimeme Ohioma said the decrease in the pension fund is a normal occurrence and not a strange phenomenon.

    He explained that the decline resulted from recent fluctuations and depreciation in the market prices of quoted ordinary shares on the Nigerian Stock Exchange (NSE), which inevitably affected pension fund investments in ordinary shares.

    Moreover, he said, the reduced market prices present good investment opportunities for pension fund investments in the ordinary shares of blue-chip and sector leaders.

    He said this is because current market prices are below the intrinsic values of such companies’ stocks.

    Meanwhile, a report titled “summary of Pension Fund Assets as at October 31,2014 showed that total investment made by the Pension Fund Administrator (PFA) in Federal Government Securities in October totalled N2.827 trillion, accounting for 61.81 per cent of the total pension assets under management.

    This was broken down into FGN Bonds of N2.28 trillion accounting for 49.96 per cent and Treasury Bills of N541.98 billion accounting for 11.85 per cent.

    A further analysis of the report showed that pension fund investments in local money market instruments in October was N57.49 billion, bringing the total pension fund invested so far to N561.64 billion out of the total N4.57 trillion fund recorded in the pension industry.

    However, only N992 million has been invested in the Foreign Money Market securities by the PFA with no investment in September and October.

    Also, funds invested in Domestic Ordinary Shares is N592.54 billion, accounting for 12.95 per cent, Foreign Ordinary Shares N54.977.75, State Govt. Securities N179.53 billion, accounting for 3.92 per cent, Corporate Debt Securities N91.61 billion accounting for two per cent, Supra-National Bonds N12.14 billion accounting for 0.27 per cent, Open/Close-End Funds N20.3 billion.

    In the Real Estate and Properties sector, N204.32 billion accounting for 4.47 per cent was invested, Private Equity Fund N9.45 billion accounting for 0.21 per cent while Cash & Other Assets N19.68 billion accounting for 0.43 per cent.

    In another report by the regulator titled: ”2014 Second Quarter Report”, detailing developments in the Money Market, the stance of monetary policy remained restrictive.

    In the second quarter, the Central Bank of Nigeria (CBN) maintained the Monetary Policy Rate (MPR) at 12.00 per cent and in pursuit of restrictive monetary policy, the Cash Reserve Ratio (CRR) on both public and private sector deposits were maintained at 75.0 and 15.0 percent, respectively in the quarter.

    It read: “The Liquidity Ratio and net open position were similarly maintained at 30.00 and 1.00 percent respectively as in the first quarter. Similarly, open market operations were conducted in ways that further contained inflationary pressure on the economy.

    “Interest rate developments in the money market, however, showed mixed results especially on banks’ deposits and lending rates. Apart from the three months deposit rates that declined from 9.41 in the first quarter to 9.37 in the second quarter, every other rate on deposits of different maturity increased from a range of 3.30–9.92 per cent in the first quarter to a range of 3.42–10.06 per cent. The average term deposit rate increased marginally from 8.60 per cent to 8.65 per cent. Similarly, the maximum lending rate increased marginally from 25.72 per cent to 25.82 per cent while the prime lending rate actually fell from 17.19 per cent to close at 16.86 per cent.

    “The inter-bank segment of the money market recorded some increases in the rates of some financial instruments. For example, the weighted average inter-bank call rate, which stood at 10.33 per cent at the end of the first quarter increased by 0.26 per cent to close at 10.59 per cent, reflecting the liquidity condition in the banking system.

    “However, the Nigeria Interbank Offer Rate (NIBOR) for the seven-day and 30-day tenors decreased from 11.88 and 12.22 per cent to 10.91 and 12.41 per cent respectively.”

    The report further stated that the primary market segment of the money market was quite active during the quarter under review as the Nigerian Treasury Bills of 91-day, 182-day and 364-day tenors, amounting to over N1 trillion, N3.56 trillion and over N1 trillion were offered, subscribed to and allotted respectively.

    This shows that the level of oversubscription to the NTBs was 238.86 per cent in the quarter, which indicates continuous investors’ confidence in FGN securities.

    The bid rates for the 91-day tenor ranged from 8.50 to 15.00 per cent, while the stop rates were from 9.95–11.71 per cent. The bid rates for the 182-day tenor ranged between 9.20 and 13.69 per  cent, while the stop rates ranged between 10.02–12.84 percent. For the 364-day tenor, the bid rates ranged between 9.00 and 15.00 percent, while the stop rates ranged from 10.12 –13.04 percent.

  • Over N4tr pension fund ready for investment, says BPE

    Over N4tr pension fund ready for investment, says BPE

    The Director General, Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki has said over N4trillion workers pension fund in stable deposits is now ready for investment in developing the economy.

    Dikki said the major reason governments all over the world are saddled with the responsibility of developing  their nations was “because they are custodians of the collective resources of the people and these resources are held in trust. Therefore, the various governments ought to give account to the people to justify the confidence reposed on them.”

    Dikki who presented a lecture on Accountability in Governance and National Development to Course 23 of the National Defence College (NDC), in Abuja urged transparency in the disbursement of funds held in trust for the people.

    He said: “Governments ought to owe the ultimate owners of the resources an explanation on how the resources have been used in developing the people.”

    In relation to the Nigeria, Dikki said the articulated development objectives of the state were unambiguously spelt out in Sections 15, 16, 17, 18, 19, 20, 21, 22 and 24 of the 1999 Constitution of the Federal Republic of Nigeria, as amended. These include: that for development to take place, the state must guarantee the security of life and property; that the state must guarantee education to the people; that the state must provide healthcare to the people; that the state must preserve and sustain the environment; that the state must preserve the culture of the people; that the state must ensure consistent improvements in the resources of the people; and that the State should strive to ensure respect for life and well being of the people.

    Others are: that the state must guarantee the rights of the people; that the people must respect the constitution, laws and policies of the state; and the people must carry out their civic duties to the state.

    The BPE boss believes the role of accountability in governance was to build confidence and trust between the government and the governed and ensure optimisation in the use of resources through dialogue and consultation and meeting of the actual needs of the people.

    Others he said, was to encourage the practice and culture of financial system checks and balances that ensure consistent good behaviour of those entrusted with the nation’s collective resources from one generation to another and to also ensure public understanding of government policies and support for them.

    Dikki further pointed out the critical role the BPE had played in enthroning accountability and good governance in the country.

    He said these include the formation of the national Pension Commission (Pencom) which ensured accountability of workers’ pension deductions which he said has accumulated over N4 trillion in stable deposits now ready for development investment.

    Another is formation of the Debt Management Office (DMO)  which resulted in the continued determination of the country’s total external borrowings and made a concrete case for debt cancellation and rescheduling

    He said the setting up of the Economic and Financial Crimes Commission (EFCC)  has increased accountability and has  assisted in reducing theft of government fundsadding that the deregulation of the telecom sector and the participation of private telecom companies such as MTN, Glo, Airtel, Etisalat, Visafone has alo given the economy a big boost.

    “Today Nigeria is enjoying over 123 million active telephone lines compared to 450,000 lines before the reform. The sector now employs over one  million Nigerians and has attracted over $40billion in investments,” Dikki said.

    The unbundling of Power Holding Company of Nigeria (PHCN) into 18 successor companies and the successful privatisation of the Electric Power Sector has taken the sector out of government budget, adding that  the revenue shortfalls in the power market could easily be calulated.

    He said: “The concession of the various sea ports had taken them off government budget and the private sector has made massive investments that government could not have contemplated. Today, the quantum of cargo has increased tremendously due to the comparative improvement in processing time.”

    He however insisted that the country needed to do more in the areas of ideological articulation of development concepts, sustenance of value re-orientation, envrionmental conservation,  improvement in security and development of entrepreneurship.