With inflation rising and interest rates increasing, the outlook for some traditional fixed income markets remains poor. New research from Aeon Investments, the London based credit-focused investment company, reveals that because of this over the next 18 months 78% of pension funds and other institutional investors plan to reduce their exposure to traditional fixed income assets.
In a survey published today of pension funds and other institutional investors in Europe and the US who collectively have around $437 billion in assets under management, 19% said they expect to reduce their exposure to traditional fixed income assets by up to 10%. Some 46% said they would cut it by between 10% and 15%, and 13% said they would reduce it by more than this. Only one in five professional investors interviewed (20%) said they expect to increase their exposure.
In terms of where they will reallocate this capital, 73% of respondents said that at least 25% would go into equities. Some 55% said they would allocate this amount to private equity, and the same said this for real estate. Half (51%) said that at least 25% of the funds they plan to take out of traditional fixed income assets would be allocated to structured credit focused investments.
Oumar Diallo, Chief Executive Officer, Aeon Investments said:
“The traditional fixed income market has endured a difficult period and many investors clearly feel this is set to continue with rising inflation and interest rates set to increase.
“In the past 18 months, our research shows 88% of pension funds and other institutional investors cut their allocation to traditional fixed income assets, and our findings suggest the majority plan to make further cuts over the next year and a half.
“One investment area that has benefited from this is structured credit focusing on assets such as transportation, infrastructure, real estate and private debt. Investment vehicles here can deliver attractive returns on a risk-adjusted basis with lower levels of correlation to risk assets when compared to many traditional fixed income assets.”
Pension Fund Administrators Channel N130 Billion into Infrastructure Investments
Pension Fund Administrators (PFAs) have strategically invested N130.18 billion from the Contributory Pension Scheme into infrastructure projects by the end of September 2023.
The data from the National Pension Commission reveals the commitment of PFAs to diversifying their investment portfolio while maintaining compliance with the Pension Reform Act of 2014.
As of the reporting period, the total assets under the Contributory Pension Scheme amounted to N17.35 trillion.
In addition to infrastructure investments, PFAs directed funds into various avenues, including domestic and foreign ordinary shares, federal and state governments’ securities, and money market instruments.
The investment strategy aligns with the amended investment regulation introduced by the commission.
The regulation outlines stringent requirements to ensure prudent and compliant investment practices in line with the provisions of the Pension Reform Act.
It emphasizes that pension fund custodians should adhere to written instructions from licensed PFAs regarding the investment and management of pension fund assets.
The regulation also sets guidelines for allowable investments outside Nigeria, and PFAs are cautioned against contracting out the custody of pension fund assets to third parties without prior approval.
This strategic approach not only upholds regulatory standards but also serves the long-term interests of contributors, ensuring a balanced and diversified investment portfolio.
Federal Government Completes N1.02 Billion Payment to Power and Transport Pensioners
The Federal Government announced the successful disbursement of N1.02 billion to 7,091 pensioners from the Power and Transport Sectors of the Parastatals Pension Department.
This vital step to fulfill pension obligations was revealed by Olugbenga Ajayi, the Head of the Corporate Communications Unit at the Pension Transitional Arrangement Directorate (PTAD), in a statement released on Sunday.
The allocated sum accounts for 39% of the accrued pension arrears owed to retirees in these sectors for the period spanning from August 2015 to September 2023.
The process involved a meticulous calculation of each pensioner’s monthly pension based on their career details, salary structure, and applicable pension increments.
This commendable initiative stemmed from the realization that 7,091 pensioners in the power and transport sector were receiving inadequate pension payments due to discrepancies within the inherited payroll system managed by PTAD.
Dr. Chioma Ejikeme, the Executive Secretary of PTAD, reiterated the government’s commitment to upholding fairness, equity, and justice, ensuring that every pensioner receives their rightful pension under the Defined Benefit Scheme.
Dr. Ejikeme also assured federal pensioners that the payment of accrued pension arrears would continue until all obligations are satisfied, subject to the availability of government funding.
This announcement underscores the government’s unwavering dedication to the welfare of retirees and is a significant milestone in addressing outstanding pension liabilities in the country.
Nigeria’s Pension Industry Reaches New Milestone as 10 Million RSAs and N16.76 Trillion in Assets
The National Pension Commission (PenCom) announced that as of the end of the third quarter of 2023, the number of Retirement Savings Accounts (RSAs) under its Contributory Pension Scheme (CPS) has surged to 10 million.
What’s more, the pension assets under current management are now worth N16.76 trillion in today’s value.
During an interactive session held in Kano for the organized private sector, Dr. Umar Farouk Aminu, Commissioner of Administration at PenCom, delivered the news on behalf of Director General Aisha Dahir-Umar.
Aminu highlighted PenCom’s substantial strides in ensuring a seamless implementation of the CPS, emphasizing their focus on deploying the Enhanced Contributors Registration System (ECRS) within the pension industry.
Dahir-Umar acknowledged the rapid growth of Nigeria’s pension sector, underlining the introduction of the Data Recapture Exercise (DRE).
The DRE mandates all RSA holders who joined the CPS before July 1, 2019, to update their information with their respective Pension Fund Administrators (PFAs).
Furthermore, PenCom has successfully transferred contributions worth N10.20 billion to the RSAs of 142,486 NSITF Scheme contributors. They continue to prioritize the smooth transition of NSITF contributions into RSAs.
This milestone was celebrated at an interactive session in Lagos, where calls for collaboration among all stakeholders were reiterated.
The introduction of the RSA Transfer System (RTS) in 2020 was highlighted, showcasing its significant impact on improving service delivery by PFAs.
Adewale Smatt Oyerinde, the Director General of NECA, expressed optimism that these developments and deliberations would drive further advancements in Nigeria’s pension sector.
The achievements underscore the growing importance of prudent financial planning and management in the country.
Oppenheimer Acquires Full Control of Nigeria’s GZ Industries in Bet on Economic Revival
MicroStrategy Chairman Michael Saylor Bolsters Bitcoin Bet with $593.3 Million Purchase
Coinbase’s November Surge Sparks Investor Enthusiasm Amid Crypto Volatility
Finance4 weeks ago
Black Market Exchange Rate Today 6th November 2023
Business2 weeks ago
Nigeria’s Logistics Sector Holds Untapped N3tn Potential, Says Courier and Logistics Management Institute
Black Market Rate3 weeks ago
Black Market Exchange Rate Today 14th November 2023
News3 weeks ago
Millionaire Powerplay Limited Unveils Unprecedented Odds in American Lotto’s Instant Cashless Payout
News3 weeks ago
N-Power Batch C1 Programme Successfully Concluded, Investigation Ensures Eligible Beneficiaries Receive Payments
Black Market Rate3 weeks ago
Black Market Exchange Rate Today 9th November 2023
Forex2 weeks ago
Black Market Exchange Rate Today 16th November 2023
Forex3 weeks ago
Black Market Exchange Rate Today 10th November 2023