Kunle Aderinokun
2 December 2008
Abuja — National Pension Commission (Pencom) said yesterday that its investment portfolio in the Nigerian capital market has not been significantly affected by the capital market crisis.
Director-General of Pencom, Mr. Muhammad Kabir Ahmad, who pointed this out during an interaction with journalists yesterday in Abuja, said the development only affacted returns on the investment but nothing significant to affect the portfolio.
"The returns were quite high in the equity market. They are compensating for the fixed income - whether money market instruments, Federal Government bonds and securities.
"The returns have been reducing, in view of the fact that, even the only 15 per cent of the portfolio that were invested but that 15 per cent, the returns were quite high compared with the fixed income, say treasury bills pegged at 10 per cent.
"So the impact has not been that significant on the portfolio but on the returns, of course, that has gone down," he said.
Ahmad also said at the meeting that the accumulation of funds for long-term needs was only a secondary objective of the pension reforms. Rather, he stated, that the primary objective was to have a free-funded scheme.
According to him, investing the pension funds in infrastructure was not part of the primary objective for which the pension reform was established, even though, in other climes, such may obtain.
"The primary objective of the pension reform is to have a free-funded scheme . However if through that process, we are able to accumulate these funds, then that will be the secondary of providing long-term funds.
"As far as we are concerned, long-term funds for investment in infrastructure is a secondary objective.
"You cannot use your RSA to grant loans or to place collateral in other countries, they do that. But we cannot do that in Nigeria because credit risk is the biggest risk," he said.
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