PenCom bars PFAs from collecting bond’s brokerages fee

The National Pension Commission (PenCom) has announced that Pension Fund Administrators are no longer required to negotiate or receive a portion of the brokerage commission from Primary Dealer Market Makers (PDMMs)/Issuing Houses/Receiving Agents.

What it means: It means that capital market operators, duly registered by the Securities and Exchange Commission shall not pay or offer a percentage of the commission earned from services provided in a transaction as an incentive for investment.

In a statement signed by Head, Investment Supervision Department, PenCom, Dr Farouk Aminu, the regulator explained that the directive is in line with SEC’s circular, which was issued on July 27, 2019, that directed that only capital market operators are eligible to be paid brokerage fee/receiving agents’ commission.

The statement read, “Any PFA that willfully negotiates or receives brokerage commission from PDMMs/Issuing House/Receiving Agents shall be sanctioned in line with the commission’s regime of sanctions and penalties.”  

Meanwhile, Nairametrics had reported that Pension Fund assets hit N9.32 trillion in June 2019.

According to a report obtained by Nairametrics, the Pension Fund Assets increased significantly in June when compared to the value reported in March 2019. Specifically, pension fund assets stood at N9.03 trillion in March, while the figure rose to N9.32 trillion in June. This represents an increase of N294.9 billion within the space of three months in absolute terms or a growth of 3.2%.

Pension fund breakdown: In recent times, more Nigerians have begun to take their retirement plans seriously and this has significantly improved the total pension fund assets in the country. A closer look into the PenCom report shows that pension funds grew by 13% within a year.

The latest report shows that between June 2018 and June 2019, pension fund assets rose by N1.09 trillion.

Nigeria’s total pension fund assets stood at N8.63 trillion as at the end of June 2018.  Analysts opined that the significant rise is largely traceable to the growing awareness campaigns.

Investment in FGN Securities: Over time, one factor that has not helped the increase in pension assets in Nigeria is the low return and low-interest-rate environment that the pension funds operate in.

Although most pension funds have consistently been making positive gains year in year out, the percentage returns are not high enough. This is largely blamed on the bulk of pension funds administrators investing in FGN securities.

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