The International Finance Corporation (IFC) has unfolded its plans to work with the National Pensions Commission (PENCOM) to ensure that the potential of the pension reforms is fully tapped.

The IFC, in an e-mail, said its planned collaboration with the commission stemmed from the need to allow the pension industry to invest in new asset classes other than listed securities.

Under Nigeria's Pension Fund Reform Act of 2004, pension funds can only be invested in listed securities.
The IFC, however, said the situation posed a great challenge to the growth of the Nigerian pension sector.
Nigeria's pension industry currently has more than three million registered participants remitting more than $1 billion yearly.

"The proposed reforms aim to provide clear investment guidelines and address the likely
challenges of introducing new investment classes in the pension fund portfolio," said Muhammad Ahmad, Director-General of PENCOM.

Some industry players had earlier called on government to relax existing restrictions and allow them to invest in alternative assets.

They listed the alternative assets to include real estate investment trusts, private equity, infrastructure bonds and mortgage back securities.

According to Solomon Quaynor, IFC Country Manager, allowing the pension funds to go into other areas such as infrastructure bonds will further deepen Nigeria's Capital Market and support domestic companies.
He said this would also support infrastructure investments that needed long-term local currency financing.

The News Agency of Nigeria (NAN) recalls that the IFC and PENCOM had between March 5 and 6 hosted a seminar in Abuja to consider various proposals on investing pension funds in alternative assets.