In response to the ongoing Naira depreciation and exchange rate instability, Closed Pension Fund Administrators (CPFAs) affiliated with international oil companies are increasing their offshore investments in foreign money market instruments, seeking safer havens for their pension fund assets.
According to the National Pension Commission’s (PenCom) unaudited report, CPFAs invested N107.1 billion in foreign assets in May, a 10.2% increase from the previous month. Their stake in foreign ordinary shares also rose by 9.3% to N268.7 billion.
Total pension fund assets grew by 2.02% to N20.2 trillion in May, with Retirement Savings Account (RSA) registration increasing by 0.4% to 10,351,624.
The pension industry is advocating for an amendment to the Pension Reform Act to allow Pension Fund Administrators (PFAs) to invest offshore, hedging against inflation and Naira devaluation. Currently, only foreign-affiliated CPFAs are permitted to invest offshore.
Dave Uduanu, Managing Director of Access Pensions, emphasized the need to domesticate the economy and reduce reliance on dollars. He urged lawmakers to support the amendment, allowing PFAs to invest some pension funds offshore, ensuring sustainable savings and inflation management.
This development highlights the pension industry’s response to economic uncertainty, seeking to safeguard retirement funds amidst Naira depreciation and inflation concerns.
