NSIA to manage N3.4tr pension fund

THE Nigeria Sovereign Investment Authority
(NSIA) is to manage N3.4 trillion pension
savings, the Coordinating Minister for the
Economy and Minister of Finance, Dr. Ngozi
Okonjo-Iweala, has said.
She disclosed this yesterday in Abuja during a
visit to the NSIA office.
She restated the government’s commitment to
seeing that the Sovereign Wealth Fund (SWF)
and other funds available for investments were
prudently deployed in critical areas of needs
and efficiently managed in such a way that it
would impact positively on the economy and
improve the well-being of Nigerians.
To this end, she said arrangements were being
made to make the NSIA design appropriate
mechanisms that would help in deploying the
idle savings of about N3.4 trillion in core
investment areas that would add value to
ongoing national infrastructure development
programmes.
She added that the arrangement would ensure
that contributors don’t suffer before drawing
from their pension savings.
Okonjo-Iweala said:“The NSIA has the expertise
to work with the pension funds to design a
mechanism whereby they can also invest in
infrastructure whilst still being protected
because this is money that people have worked
for. So, it has to be done very carefully so that
they earn returns and then be able to carry on
with their pension activities.”
She promised that the fund would be protected
“because it is money people have worked for
but it will also work for the good of the
country. So, this is another benefit we didn’t
have before. We didn’t have the expertise and
now we have got it in this NSIA”.
On the financial implication of engaging
international funds managers to manage the
SWF, the finance minister said: “The investment
of the funds is designed to make some returns.
It is not that the $1billion is going into fees. It
is being invested to make returns; so out of
those returns, they (NSIA) have negotiated such
low fees.”
According to her, “very little of the additional
money from the SWF will go into paying these
fees; so the billion is intact; it is not out of
that money that we are paying these people”.
She said the funds are supposed to be managed
to generate more money. “Each fund has a risk
profile, so they have taken so much care with
the stabilisation, which has to be available and
liquid so that if we want to draw on it
anytime, it is readily available. But it is making
some money and they would be paid out of
that money. So if they don’t make money, they
don’t get paid,” she argued.
Speaking on the financial implication of
engaging JP Morgan, Citi Group, Credite Sussie
and other international funds managers, the
Chief Executive Officer of the NSIA, Mr Uche
Orji, said the body has Stanbic IBTC as its local
custodian, adding that it has worked with
United Bank for Africa (UBA) and Access Bank
as primary partners.
He said: “The stabilisation fund is the one by
its nature that intervenes. We have decided to
put that outside the country and that is where
we need international partners.
“You will be surprised how keen people are to
work with us, the fee negotiation was very
competitive, competition reduces fees.”
He said the fees negotiated with the
international funds managers were low for the
type of service they are rendering to the
country.
“They say it is for two reasons, one they have
faith in the NSIA.They also recognise that our
start up fund is not inconsequential. At
$1billion, there are only four SWFs out of 40
that have started with that. They also looked at
the future of the country and they believe that
these funds, over time, will grow,” the NSIA
chief said.
On the fees to be paid the funds managers, he
said: “Fifteens basis points which is 0.015 per
cent is what we are paying for the corporate
bond mandate, three basis points, 0.03 per
cent is what we are paying for the treasury
mandate. These are really low fees and we are
getting this because the board really
negotiated.”
The NSIA has appointed Mr Hanspeter
Ackerman as its Chief Investment Officer (CIO).