Nigeria is set to increase the proportion of funds that its $17 billion pension industry can invest in infrastructure and private equity in a bid to boost returns on retirement savings.
Currently, the National Pension Commission (PenCom) is said to be in the final stages of reviewing the limit on savings that pension fund managers can put in infrastructure and private equity from the current five per cent.
PenCom spokesman, Ibrahim Buwai, who spoke with Bloomberg on phone, however didn’t give details on the new limits being considered but added that they could be released before the close of this quarter. “The review will also “significantly” cut a requirement that pension fund administrators can only invest in infrastructure funds that devote at least 60 per cent of their portfolio to projects domiciled in Nigeria,” he said.
The new regulations will boost the amount of money available to invest in infrastructure and private equity funds and offer fund managers a new outlet to increase returns on retirement accounts in Africa’s most-populous nation where inflation has stayed above 20 per cent for the past two years and the naira depreciated by about 70 per cent against the US dollar.
Nigerian pension fund managers had asked the industry regulator to grant them greater flexibility to invest beyond fixed-income securities, which account for 62 per cent of their assets. “We are not really okay with returns the way they are because inflation is having a significant negative impact,” Buwai said. “We really want to see traction in those alternative assets to complement returns from the fixed income and the traditional assets.”