•Fund administrators allay investors’ fears •Only N33.02bn invested in shares - PenCom
The implication of the continued loss of value of investments at the stock market is that despite all the sacrifices I have made for a better future, there is still no hope for me and other Nigerian workers, at least for
now. I have lost millions to the market and going by the provisions of the commission, the loss can only be better imagined than described.”
With those words, Francis Amsalem, one of the millions of workers contributing to the pension scheme, described the anxiety and despondency currently enveloping Nigerian workers as the dwindling fortunes of the nation’s capital market intensifies. Other stakeholders such as Pension Fund Administrators (PFAs), stockbrokers, shareholders among others agreed yesterday that the attendant losses with capital market crisis particularly on retirees are colossal.
Such is the level of anxiety that some stakeholders have called for an enquiry in to the status of pension funds. Aderemi Oyepeju, an official of the Ibadan Zonal Shareholders Association, noted that government intervention in the nation’s economy has become inevitable even as he urged PenCom to carry out an audit of the PFAs to ascertain their level of exposure to the market.
He added that members of his association have been worried about their contributions to the PFAs in view of the developments in the capital market.
However, some of them have expressed confidence that given time, the market will rebound and workers that will be alive then may have the opportunity of getting something back.
Allaying the concern of workers, PenCom’s Eyimba T. Henshaw, commissioner technical, said: “What was invested in ordinary shares from the RSA fund was N33.02 billion representing seven percent of the fund. Though the Regulation on Investment of Pension Fund Assets has approved a portfolio limit of 25 percent of total pension fund assets under management for quoted ordinary shares, the actual average investment by Pension Fund Administrators (PFAs) has been less than 10 percent of RSA funds.
“It is important to note that investments by pension funds are long term in nature and evidence shown that in the event of shocks, stock markets all over the world always recovered over time. Similarly, the current perceived losses to investors in the capital market are unrealized. In addition, the current finance crisis is expected to be temporary/short term. RSA funds can be invested into this instrument especially for employees that have many years to retire since it is expected that the fluctuation in the market will eventually even out and the current down turn in the market will eventually swing in favour of the employee.”
But the managing director of Crusader Sterling Pensions Limited, Adeniyi Falade, said the PFAs lost money to the capital market like any other investor in the market, adding that the pension fund managers are only perceived to have lost so much in view of the fact that they are one of the major investors in the stock market. He, however, noted that the PFAs were very careful about how they played the market especially in the heat of the market downturn.
His words: “We are mindful of the fact that the money we keep belongs to pensioners, so it was necessary that we watch where we put the money. By law, we are allowed to invest 25 percent of our funds in the stock market and with the meltdown, you cannot really say that we have lost all the money. The loss is on paper and when the market recovers, we should be able to recoup part of the losses.” Falade disclosed that PFAs are now investing cautiously in growth areas of the market even as some companies have reduced the minimum investment to about 10 percent.
Sunny Nwosu, national coordinator of Independent Shareholders Association of Nigeria (ISAN), said the PFAs’ investments could not be isolated from the stock market downturn since they are major players in the market. Nwosu disclosed that members of his association who are mostly pensioners have been badly hit but noted that “they are sure of getting their contributions back because all the contributors will not ask for their money at the same time.
“We should also note that the market would not be down perpetually even as the law empowered the PFAs to spread their investments. We are sure that when the market recovers, the pensioners will get their money back. Besides, all of them cannot ask for their money at the same time.”
Nwosu however, said that the development should be a sign for the managers of the nation’s economy to brace up to the challenges.
Wale Kolawole, managing director/ chief executive officer, NLPC Pension Administrators, said although 25 percent is regulator’s ceiling for level of pension fund investment that will go to the capital market, some pension fund managers invest less than 25 percent. “On the average just about 10 percent is in the capital market. It also depends on the type of stock you invested in. Although, in the short term investors in the market lost money, it would rebound in the long term. Pension fund investment is not a short term investment. It doesn’t mean that all the pension fund investment in the capital market is lost,” he said.
Acknowledging that that there may be some hiccups in pension fund investments, Kolawole noted that for most PFAs, their unit prices are positive, “meaning that if you have 100 percent investment, 90 percent is giving you returns while the remaining 10 percent is going up and down, there is nothing to panic about.”
“One thing we should realise is that as institutional investors like pension fund mangers, when you have a portfolio, the way you look at it is not at short term value. It is not that you have lost money. Over time especially as pension funds investment being long term, the market will recover,” he stated.
