LCCI DG, Muda Yusuf identifies odds against pension fund’s assets growth

The Director General of the Lagos Chambers of Commerce and Industry (LCCI), Dr. Muda Yusuf, has lamented that low yield on fixed-income securities like  treasury bills at around one to two per cent and rising inflation currently at 13.71 per cent have continued  threaten real growth of pension fund assets in the near to medium term.

Yusuf made the revelation while addressing pension and insurance correspondents in Lagos, recently.

The LCCI boss, who advocated the de-risking of the real sector to entice more investors, said given their low risk nature, a large chunk of pension fund assets were invested in Federal Government securities, majorly bonds.

He explained this was because in the Pencom guidelines, the Pension Fund Administrators (PFAs) were mandated to invest pension funds in low-risk securities, adding that fund managers have little exposure to volatile investment vehicles and that six percent of pension fund assets are locked in equities.

According to him, Fund managers’ exposure to investment vehicles in the real sector is extremely low due to the high level of risk involved.

He said that just 2 per cent of pension assets was invested in real estate, and less than 1 per cent in infrastructure fund because fund managers often complain that projects in the real economy are non-bankable.

On insurance industry investment portfolio, he said there was need to maintain a balance between liquidity and returns on investment on bank placements, treasury bills, commercial papers, bonds, equities and real estate.