For those who see pension funds investment in Federal Government bonds and Treasury Bills as Federal Government’s borrowing, they may either be delighted or disillusioned to find out that the Federal Government borrowed additional N166 billion from the pension funds in October 2018. Figures from the National Pension Commission, PenCom, shows that pension funds investment in Federal Government issued securities, notably FGN bonds and Treasury bills, increased by N165.894 billion in the month of October compared to the total investment in those asset classes in the previous month. With that increase, total borrowings by the Federal Government from pension funds or total pension funds investments in FGN issued securities comes to N6 trillion. That number is comprised of investments in FGN bonds of N4.3 trillion and investments in Treasury bills of N1.7 trillion.
According to a report from PenCom, Pension fund assets stood at N8.45 Trillion at the end of October 2018, representing an increase of 1.28% when compared to the total asset value of N8.345 trillion recorded in September 2018.
Pension funds are still heavily overweighed in favour of fixed income securities as 79.8% of the assets are invested in bonds as a whole. While 51% of the pension assets are invested in FGN bonds, 19.6% are in Treasury bills and 6.2% in corporate bonds. Although Sukuk, bonds, Green bonds and Agency bonds all have some share of the assets, such investments range between 0.1% to 0.6% of the total pension assets.
October witness some asset reallocation in the pension fund space as funds reduced their holdings in bank deposits and cash by about 16.23% and 29.35% respectively. Investments in Real Estate Investment Trusts (REITS) were also reduced by 31.9%, while Green Bonds suffered a 17.11% divestment. Other asset classes that suffered reduction in their value include private equity funds, 18.6%, infrastructure funds, 9.1%, and foreign ordinary shares, 7.57%. It is not quite discernable from the PenCom report if the decrease in value in those asset classes was as a result of the performance or as a result of asset reallocation and rebalancing but suffices it to say that some asset classes witnessed a decrease in value in October.