GUIDELINES ON DIRECT REAL ESTATE INVESTMENTS BY CLOSED PENSION FUND ADMINISTRATORS AND APPROVED EXISTING SCHEMES
Guideline · Finance
Guidelines specify conditions and limits for closed pension fund administrators to invest directly in real estate. They target closed pension fund administrators, approved scheme trustees, and real estate developers. This promotes diversification while ensuring risk management and governance.
GUIDELINES ON DIRECT REAL ESTATE INVESTMENTS BY CLOSED PENSION FUND ADMINISTRATORS AND APPROVED EXISTING SCHEMES
What Is This Policy?
PenCom guidelines specifying the conditions, concentration limits, and governance requirements under which closed pension fund administrators and approved existing schemes may invest directly in real estate assets.
Who Does It Target?
Closed Pension Fund Administrators (CPFAs) Approved Existing Scheme trustees Real estate developers seeking pension fund investment PenCom investment monitoring officers
What Does It Aim to Achieve?
Allow closed pension fund administrators to diversify into real estate while ensuring adequate due diligence, governance, and risk management for real property investments.
Key Features
Permissible Real Estate: Specifies the types of real estate eligible for direct pension fund investment including commercial, residential, and mixed-use properties. Concentration Limits: Caps the percentage of scheme assets that may be invested in direct real estate to manage illiquidity risk. Independent Valuation: Requires independent professional valuation of real estate investments at acquisition and annually thereafter. Board Approval: Each direct real estate investment must receive prior board approval with documented investment rationale.
Current Status
Rollout Stage: Active Coverage: Closed pension fund administrators and approved existing schemes Beneficiaries: Pension scheme beneficiaries through diversified returns Funding: Pension fund assets
How to Access
Investment proposals must be submitted to PenCom for prior approval Quarterly reports on real estate portfolio performance must be filed Disposal of real estate assets requires PenCom notification Application method: Submit real estate investment proposals to PenCom.
Important Terms
Direct real estate is illiquid; administrators must manage liquidity to meet benefit payments Conflicts of interest in real estate transactions must be disclosed and managed Overvalued real estate assets must be written down in compliance with valuation standards
Official Resources
Website: https://www.pencom.gov.ng Contact: National Pension Commission (PenCom)
Legal Framework
Issued under the regulatory powers of the National Pension Commission (PenCom) pursuant to the Pension Reform Act 2014. Real estate investment restrictions draw on the Land Use Act 1978 (on property rights), the Mortgage Institutions Act, the Federal Housing Authority Act, and the Investment Regulations for Pension Fund Administrators. Aligns with IOPS Principles for Private Pension Supervision on investment regulation.