New Regulations set sights on increasing gains for Pension Assets

New Regulations set sights on increasing gains for Pension Assets

Quest for elevated yields boost the Pension Assets

Pension fund assets continued its steady growth with AUM rising 5.4% to N6.4 trillion between year-end 2016 to April 2017. As in prior years, the increase in AUM was driven by increased return on pension funds as fixed income instruments gained +5.43pps, reflecting the prevailing general risk averseness exhibited by PFAs but also tactical shift in asset allocation to take advantage of the elevated yields at the short-end of the yield curve.

Accordingly, T-bills holdings, rose 3.01pps to 15.66%, the quickest rate in 7 months while allocation to bonds fell for the fourth time over the review period. One surprise is the 24% (~N60 billion) increase in CPFA’s allocation to corporate bonds. Given that there were no sizeable corporate bond issues over the period, we suspect the development is likely a reclassification of some sort. Extending the decline of the last three years, variable income holdings fell marginally 0.81pps to 12.8% reflecting the dominance of equities within this asset group.

Specifically, while equities holdings which is 69% of variable income fell (-4%) alongside private equity (-8.36%) and real estate properties (-6.41%), allocation to infrastructure funds doubled to 106.75%. The jump in PFA exposure to infrastructure asset class suggests government’s thrust in channeling pension assets towards infrastructure might be yielding the desire outcomes. Nevertheless, at 0.07% of AUM, PFA investment in infrastructure is yet to scratch the surface.

 

Variable instruments champion new guidelines

On the 18th of April 2017, the National Pension Commission (PENCOM) released amended Regulation on Investment of Pension Fund Assets. Central to the amendment is the introduction of the multi-fund structure which splits the RSA active and Retiree into potentially four funds with varying risk appetite as captured by varying asset allocation via minimum allocation to variable income instruments1. Other notable changes include allowing Pension assets to be invested in companies evolving from a merger, acquisition or combination arrangement and would-be listed companies via IPO or private placement approved by SEC.

Furthermore, the new guideline permits investment of the pension funds in non-interest compliant funds, particularly sukuk bonds issued by either state or corporate entities and the global depository notes. Consequently, the impact of the changes is already being felt in the capital market as the lifting of the investment ban on companies formed from reorganization, in part, led to strong gains of 120%, 13.6%And 90% in Stanbic, FCMB and FBNH over H1 17. Similarly, with Sukuk now investable by PFA, the FGN recently unveiled plans to raise N100 billion Sukuk bond.

Elsewhere, the proposed amendments reviewed the number of ratings required for most qualifying investment to two, and in support of local content, mandates that at least one of the rating should be from a local rating agency. Also, in encouraging more Africa focused infrastructure funds to come to Nigeria, only 60% of the projects have to be in Nigeria vs 75% under the previous regulation.

 

View full July 20th Nigeria Strategy Report  report here

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Source: Blog

Malaria: A big deal and a killer

Malaria: A big deal and a killer

You feel feverish, cold and have lost appetite for food. You know you’re sick. But you must give a name to this sickness.

So, like a genius, the lightbulb comes up in your head and you conclude it must be Malaria. That disease is so easy to diagnose, you think. And so easy to treat. Without thinking, you take a quick trip to Oga Chinedu’s chemist and ask him for ‘malaria medicine’.

But wait a minute. What do you really know about Malaria?

Did you know that half of the world’s population is at risk of this disease? That’s how big a deal it is. In 2015, there were roughly 212 million Malaria cases and an estimated 429,000 resultant deaths.

Among those at high risk of this disease are pregnant women and children. As always, prevention is better than cure. It is necessary that you understand the risks of this illness and make adequate efforts to prevent it.

According to facts published by the World Health Organisation (WHO), Malaria is the cause of spontaneous abortion, premature delivery, stillbirth, and severe maternal anaemia. This fact sheet also reveals that children under five are particularly prone to infection, illness and death. Scary, right? But hey, facts don’t lie.

How well do you protect yourself and children from Malaria?

Now, don’t just move along believing that Malaria is ‘easy’ to cure. Stop and think about how it weakens your immune system and that of your child(ren). When your immune system is weak, your body is open to other types of infection like typhoid and the likes.

Diseases and death can be reduced by proper diagnosis and treatment of Malaria. Knowledge about these preventive, diagnostic and treatment measures is vital.

Tune in to the ARM Living benefits show this Wednesday on Smooth FM 98.1 from 6.40pm to 6.55pm for an in-depth talk on dealing with Malaria

You don’t want to miss it!

 

 

 

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Source: Blog