Big PFAs manage over N500 b pension funds, says PENOP boss

Chuks Udo Okonta

Large Pension Fund Administrators (PFAs) manage over N500 billion contributed pension funds, Chairman Pension Operators Association of Nigeria (PENOP) Dave Uduanu, has said.

  Uduanu told Inspen that  pension operators now rate second in the financial sector after the bankers. He noted that pension fund administrators are been reposition to play a better role in the larger economy, adding that most PFAs have recapitalised to N3 billion.

He said: “Pension fund administrators are been reposition to play a better role in the larger economy. By way of rivalry, the only financial institution that is bigger than the PFAs today are the banks. PFAs are now bigger insurance companies, because they manage bigger assets. So, the size of a company is not depended on its shareholders’ funds, but the assets it manages. The biggest PFAs manage about excess of N500 billion, while the biggest insurance firm may be N50 billion. This shows the role of PFAs in an economy.

“The industry’s shareholders’ fund is more that N18 billion, N1 billion is the minimum for a PFA, but some PFAs have N2 billion, while others N3 billion.”

He said the shareholders’ fund of PFAs is not what determines the impact of the pension in the larger economy, adding that it is the size of the pension fund which is about N2.6 trillion. He noted that it is this N2.6 trillion that are invested in the various instruments, such as the money market, bond, capital market, infrastructure and others that would impact the larger society.

He said pension fund administrators need capital to run their business, stressing that the operators need capital to rent offices, employ staff and do marketing and branding activities.

“It is not really the capital of the pension fund administrators that matter; it is the size of the pension assets. As the pension assets grows, the PFAs become stronger. This is because they would have more assets to look after technically. We are going to see better services from PFAs, we would also witness recruitment of quality staff, have good offices, move out side main areas of Lagos, Abuja and Port Harcourt to other area of the country. In Pension Alliance Pensions Limited, for instance, we would be opening offices in other part of the country,” he said.

He said there is a clamour for pension funds to be invested in very sector of the economy, adding that stockbrokers want the pension fund to pomp –up the equity market, the housing sector wants pension funds to be used to finance housing, the ministry of power want pension to be used for power.

He noted that the operators are very careful about investing funds at their deposal to forestall put retiree in pains at retirement. He urged the public to note that pension fund is not national savings, but funds meant for the security of retirees at old age.

He said the first job of very PFA is the security of the pension funds, adding that pension funds can only be invested in projects that have adequate guarantee.