Treasury Bill and government bonds remains the most risk-free investment that the PFAs can do. If in the quest of cheaper foreign loans, the cbn decides to shut off PFAs, then ultimately the RoI for Nigerian pensioners will seriously be affected. My take is that the pencom law should be relaxed to enable the PFAs lend to farmers with interest in palm oil, sesame seed and cassava (and definitely not riice as our yield per hecter in rice production are among the lowest in the world) this loan has to be guaranteed by CBN or the borrowers asset.
I also think that the outcry over the over 5trillion already borrowed to fund budget was part of the basis for the CBN decision.

ednut1:
either they leave as it is to be graduadully wiped by inflation or they find alternatives like real estate, capital projects financing, farming etc

Their investments are strictly monitored to be as low risk as possible so that pensioners funds will not be lost in one fell swoop.

So even if they are to invest in these sectors you mentioned, I don't think they can invest more than 30%.

Insurance companies offering annuity to pensioners are also under investment scrutiny

Our value of Naira is strongly tied to our Power , Tax revenue and infrastructure.
No increase output,no increase in value of Naira.
Can someone tell or explain more about the topic.
Oya my Nairalanders ,i Know una know so much and will break this down for we that we know so little about the subjects topic.

post=83781187:

The right things must be done to move our nation forward.
Everybody should get their acts together.

What do you know about OMO AND TB?

post=83781299:

Can you tell us what is good about the development sir?!

Simply put...individuals should invest their funds in the real sector of the economy instead of idly tying down funds for high interest in the name of investment

Olodos full nairaand no bi small. No comment show understanding of the subject discussed. The few zombified monikers only give support because they thing it make buhari looks good.

ProsperChild:
CBN ban on OMO threatens N9.4tr pension investment returns

thenationonlineng.net

Nov 6, 2019 12:52 AM



The exercise of the discretionary power of the Central Bank of Nigeria (CBN) to regulate the economy may soon have a negative impact on the country’s N9.4 trillion pension funds.

The CBN had, in a circular signed by its Director, Financial Markets Department, Angela Sere-Ejembi, directed  banks to exclude individuals and local corporates from investing in Open Market Operations (OMO) auctions with effect from October 23, this year.

The development is expected to drive foreign inflows by restricting individuals and local corporates, leaving only the banks and foreign investors to participate at the auction.

Before now, pension fund operators had always invested 70 per cent of the total pension fund in treasury bills, an investment window that has now been shut by the CBN.

The operators are in a dilemma as to where to invest that could be considered as safe as investing in Federal Government securities.

Pension Fund Operators Association of Nigeria (PenOp) President, Mrs. Aderonke Adedeji, who spoke at the PenOp’s yearly media seminar in Lagos over the weekend, stated that the return on investments (RoI) would be affected even as investment risks become very obvious.

PenOp is the umbrella body for Pension Fund Administrators (PFAs).

She also expressed concern that it has become a challenge for the operators to continue to find investment channel.

She said before now, CBN had expanded its operation on the OMO issuance by allowing local corporates to participate in the market.

She said the PFAs found investment in treasury bills safe with fair yields and had invested heavily in the market.

Adedeji added: “Within the period that CBN had allowed us participate in the market, investment in treasury bills moved from about $2trillion to $17trillion, with local corporates accounting for between $5trillion and $7trillion while foreign investment accounted for $5trillion to $6 trillion.

“Overall issuance of OMO far outstrips what the Debt Management Office (DMO) issues in local treasury bills and we are heavily invested in the market. But with the new directive, it means that we are not able to participate in the market going forward and this has a number of limitations for PFAs.

“The first is when those monies mature over the next 12 months, where do we go to. The development will expose us to major investment risks as those treasury bills mature. We know that rates have come down significantly as a result of the new restriction which is what the CBN wants to achieve so that hopefully borrowing rates will drop as well and banks will then be forced to lend to local corporates and use that to stimulate the economy. But on the other hand, it puts us in a difficult position where we ultimately will learn how to in the absence of other windows, invest this money. Perhaps give the banks the money as deposit for them. It’s a difficult time that we as PFAs are in and we need to find other avenues to invest the money.

“Ultimately, it means sometime soon, we will see return figures for the PFAs on Retirement Savings Account holders (pension contributors) reflect this fact. The return will go down. It also means that investment risks become very obvious as we begin to feel the impact. We are hopeful that as CBN reduces the issuance of OMO bills than perhaps to DMOs then it will give us the opportunity to participate within the space again.”

She further stated that it had remained a challenge for them to continue to find investment channel.

“We have a situation where our economy is growing but in terms of investment instrument, the market is still not as deep as what we will like to see. So, our funds are growing but there isn’t enough diversification in terms of what we can do with the resources.

“It is something that we need to keep going to the drawing board. If we had a situation where the economy is growing a lot faster, I think we will see a lot more instrument and investment innovation,” she added.

But the pension regulatory body, the National Pension Commission (PenCom), thinks differently.

For PenCom, the development puts to test the professional investement capacity of the PFAs.

PenCom Head, Corporate Communication, Peter Aghahowa said the Commission believes the PFAs are professionals in terms of investment.

“So, if one outlet closes, there are other outlets in line with the pension investment guideline. This is where professionalism comes to play. Yes, one area that has high yields by the regulation of CBN has been affected.

“But from our point of view, we don’t think it is much of a problem. It only calls to test now, the professionalism investment department of the PFAs. We believe that there is capacity to ensure that we get fair returns from the investments. The whole idea for CBN is about liquidity management,” he added.

Source:
https://thenationonlineng.net/cbn-ban-on-omo-threatens-n9-4tr-pension-investment-returns/

Tbills is the safest product in the Open Market operations bourse.The PFAs will need to be very careful when divesting in other products like stocks.This will certainly affect the income figures of both the PFAs and also the pensioners.Infact some PFAs may want to downsize in order to adjust their GAP indexes.

They should find other avenues to invest the money. maybe in Agriculture sector. it must not be in Open Market Operation Auction. OMO. I think it will seriously help boost our economy.

I don't understand this pension stuff,its a complete rip off on the contributors,by the time you get your money after much brouhaha it becomes useless because of inflation and some people made trillions on your money without giving you a farthing,and they will scatter your money in piece meal making it more useless,i think this pension na scam

DEXTROVERT:
OMO
DETERGENT

Lol.. It's a FG borrowing instrument that serves as a credible investment outlet for potential investors. The FG through the CBN can also use it to mop up excess liquidity from the system to avoid inflation.

chineduemmao:
Abeg who wan buy data? @ 600 naira for 1GB check my signature... wetin concern me concern OMO?

1GB for 600naira. Haba, that's too much naa. When you can easily get same 1GB for only 200naira.

DameB:


Their investments are strictly monitored to be as low risk as possible so that pensioners funds will not be lost in one fell swoop.

So even if they are to invest in these sectors you mentioned, I don't think they can invest more than 30%.

Insurance companies offering annuity to pensioners are also under investment scrutiny

they would have to review the mandate

ednut1:
they would have to review the mandate

I hope so. But they should still be allowed a seat at the OMO table

cbngov01:


Simply put...individuals should invest their funds in the real sector of the economy instead of idly tying down funds for high interest in the name of investment

People are afraid to put funds into the real sector due to the stubborn issue of corruption, fiscal irresponsibility.

fireback:
1GB for 600naira. Haba, that's too much naa. When you can easily get same 1GB for only 200naira.

Na monthly sub baba not daily sub

Monthly sub...

MTN

1 GB>> ₦600
2 GB>> ₦1100
3 GB>> ₦2500

oshiiteoku:
I don't understand this pension stuff,its a complete rip off on the contributors,by the time you get your money after much brouhaha it becomes useless because of inflation and some people made trillions on your money without giving you a farthing,and they will scatter your money in piece meal making it more useless,i think this pension na scam

This is one of the reason America adopted the credit card system whereby individuals borrow from the future and it is working for them, naija should adopt this system.
That is one reason people take loan to execute personal life projects such as house instead of waiting forever.

post=83781187:

The right things must be done to move our nation forward.
Everybody should get their acts together.

Please do you do you understand what this post said or you just wrote this comment because you are a supporter of Buhari?

Ok, I am starting to believe that someone is using his head in Aso Rock. Exciting times for Nigeria.

We have finally woken up.

Nice move from the FG/ CBN

These financial institutions just mop out money from the economy and Make huge profits from it.

They must also revive and revamp the economy by investing back into it...

I just love the recent FG/ CBN policies, it gives me a lot of hope that Nigeria would be great again.

chachanga:
Zombies say it's positive, how?

When Government directly turns around to undermine the investment market for the same Pension funds it formerly borrowed into, is that a good development?

PFA’s are supposed to be professional investment companies or atleast know how to invest their funds by working with investment companies not just using treasury bills only like they don’t know any better ways. Same way Insurance companies also invest their funds in different sectors. I think

The government has a point.

VeeVeeMyLuv:

People are afraid to put funds into the real sector due to the stubborn issue of corruption, fiscal irresponsibility.

If you put pension money into the real sector in a society like Nigeria with badly enforced laws and pathologically greedy citizens, everything will end up stolen.

PFAs will become like the banks where loan officers and executives collude with utilizers of funds to game the system and get rich in the process. Look at the banks, the few healthy banks are the owner-managed banks, all the others are rotten to the core because CBN inspectors would rather take bribe-money than do their jobs properly. Even at that, some owner-managed banks with profligate owners are/were living corpses e.g. Diamond Bank.

All those fools calling it a great development should get ready to lose their pension stashes, ditto their parents and other relatives. The whole pension money will be completely stolen.

GidiWoodsMan:


If you put pension money into the real sector in a society like Nigeria with badly enforced laws and pathologically greedy citizens, everything will end up stolen.

PFAs will become like the banks where loan officers and executives collude with utilizers of funds to game the system and get rich in the process. Look at the banks, the few healthy banks are the owner-managed banks, all the others are rotten to the core because CBN inspectors would rather take bribe-money than do their jobs properly. Even at that, some owner-managed banks with profligate owners are/were living corpses e.g. Diamond Bank.

All those fools calling it a great development should get ready to lose their pension stashes, ditto their parents and other relatives. The whole pension money will be completely stolen.

exactly, u have said it all.

PFA's are very good business investors. They will always find a way.

post=83781187:

The right things must be done to move our nation forward.
Everybody should get their acts together.

It will not because PFA'S invest like this
Govt Bond-70%
NT-Bills- 30%
Sukukbond-1%
Greenbond-1%

Ucheamani:
Treasury Bill and government bonds remains the most risk-free investment that the PFAs can do. If in the quest of cheaper foreign loans, the cbn decides to shut off PFAs, then ultimately the RoI for Nigerian pensioners will seriously be affected. My take is that the pencom law should be relaxed to enable the PFAs lend to farmers with interest in palm oil, sesame seed and cassava (and definitely not riice as our yield per hecter in rice production are among the lowest in the world) this loan has to be guaranteed by CBN or the borrowers asset.
I also think that the outcry over the over 5trillion already borrowed to fund budget was part of the basis for the CBN decision.

so, 30% is what will go to other equity market.

Stalwert:
They are clueless on safe investment to make outside T bills. They simply just wanted free money from workers and not even apply their common sense in making the money generate income.

So what happens when they invest in a venture and the venture collapses what do you tell people who have worked for 35 years of their lives?

Introvertedmarc:


It is a good development because the PFA use mandatory collective pensions from individuals while investing it into Treasury Bill's and using the proceeds to bolster their companies...

What the CBN wants, is for them to take active roles in the economy, be directly involved in businesses through partnering with companies and making profit from a running system rather than just saving peoples money and making profit, likewise what they have done to the banks on compulsory lending with fines of not meeting thresholds of give out loans..

Good one from Buhari/CBN.

These things sound good when they say it, but in reality, its not that simply.

Pension funds cannot afford to lose money as a result, they must invest in low risk businesses. TBs and other low risk instruments are the best for them . Taking a high risks with peoples pensions isn't a joke.

Where do you want them to invest, Real Estates? Mortgage? Shares?

I can assure you that if there were better alternatives, the PFAs would have exploited them long ago.

Even in more developed economies with more robust investment alternatives, most of their investments are in government securities and shares of blue chip companies. Infact, it was restricted to these investments for a long time before they started diversifying into other areas albeit not as much as they invest in the traditional "sure bankers".

Let CBN not joke with Pensions. You can bail out banks when they go burst, but Nigeria cannot bail out PFAs when yawa gas.

DameB:
So what happens to the pension funds?

If they are not allowed to invest in such low risk options?

How are PFAs going to cope?

There will always be other better alternatives. They are just crying to protect their personal interest.

GidiWoodsMan:


If you put pension money into the real sector in a society like Nigeria with badly enforced laws and pathologically greedy citizens, everything will end up stolen.

PFAs will become like the banks where loan officers and executives collude with utilizers of funds to game the system and get rich in the process. Look at the banks, the few healthy banks are the owner-managed banks, all the others are rotten to the core because CBN inspectors would rather take bribe-money than do their jobs properly. Even at that, some owner-managed banks with profligate owners are/were living corpses e.g. Diamond Bank.

All those fools calling it a great development should get ready to lose their pension stashes, ditto their parents and other relatives. The whole pension money will be completely stolen.

You know some people are programmed to shout " sai baba" whether they understand a policy or not. It is until we start eating ourselves like the israelites did at some point that things will get clearer.

Even in well developed economies, PFAs invest circumspectly. Now, CBN want's to kick them out of OMO.

For those who do not know, CBN cannot bail out PFAs if they run into trouble. They can't afford it.

fabre4:


So what happens when they invest in a venture and the venture collapses what do you tell people who have worked for 35 years of their lives?

They should apply their common sense in investing, if there is govt stop issuing T bills, you mean that's it? There are other safe investment like fixed deposits etc

adeoba2008:


It will encourage foreign investors to come in and increase dollar inflow into the economy. We need more dollars not more naira from the PFA.

what will happen to the account holders with the pension companies?

alizma:

There will always be other better alternatives. They are just crying to protect their personal interest.

which better alternatives. Enlighten us

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