NASSCORP: Poor-Pensioners’ Money Invested In Risky Portfolios?

By J. Yanqui Zaza

The Perspective
Atlanta, Georgia
March 21, 2017



The United Nations (UN) estimates that by 2050, there will be 2 billion people over 60 years old (i.e., would-be pension-benefits-recipients) worldwide, and 80% of the 2 billion will be living in developing countries, especially Africa. With such an increase in old age, coupled with the fact that one in five live on less than a dollar a day, Africans should not only institute social programs such as retirement fund, rather effective retirement funds that will help to alleviate poverty amongst the elderly, the UN advised.

Is Liberia’s National Social Security and Welfare Corporation (NASSCORP) up to the task, a country that is ranked as one of the 26 poorest African countries? This article will not focus on administrative cost versus pensioners’ benefits and, or timely payment of benefits, relevant issues. Rather, it focuses on whether NASSCORP invests a significant portion of money in less risky portfolios, even if returns on risky portfolios are attractive or tempting. More so, how can NASSCORP generate adequate investment income if Liberia is far from becoming a middle-income community, a country with reliable electricity, infrastructure, good-paying jobs, etc.?

Also, Liberia will not reach to the middle-income level by 2030 if it does not improve its economic growth from (5%) five percent to (9%) nine percent, according to the Liberia 2030 Vision. A middle-income level-society does not only create environment conducive for pension funds to earn high returns on investment. Retirees within such a community usually have other income (dividends, interest income, rental income, etc.) in addition to pension benefits.

Experts continue to advise against investing in risky portfolios since a pensioner benefits payment does not come from government revenue or budgetary allotment; rather it comes from investment income and the contributions from employees and employers. Massive loss, which is usually associated with risky portfolios, might wipe out investment, a nightmare for investors. So, let us look at the investment section of the 2014 Annual Report of the NASSCORP. I did not get the Audited Financial Report and management did not respond to a request to substantiate its investment numbers.








































ELWA Complex (ELWA); National Housing Authority (NHA); Former Investment; Total Investment ($39.5 Million)

From the first table above, management allocated $25 million (63%) to real estate out of the total investment portfolios of $39.5 million as per table two. NASSCORP did not include values for the properties located within the three counties as per table two. Also, without information from management, it is difficult to determine whether Liberia’s economic development agenda would finance new good-paying jobs, which will enable new tenants to occupy the new housing units? Or are new investors willing to relocate to Liberia, thereby increasing the possibility that new tenants will occupy the newly constructed units?

Real estate is a risky portfolio as experienced by some pension managers, recently. For instance, the Brazilian pension fund lost money it invested in real estate when building contractors sold only 240 luxurious apartments of the 3,600 apartments built in 2016 due to economic crisis (NY Times, 1/12/17); the Orange County of California did not pay retirees because it had limited funds (Stanford Institute for economy Research, 3/28/16); and American Pension funds lost $100 billion because of investment in risky portfolios. (NY Times, 2/28/17). In the Puerto Rico Pension crisis, where the fund owes $70 billion, the managers are not disclosing the investment portfolios and the method of actuaries, according to Michael Podgursky of the University of Missouri.

So, why did the Liberian Social Security and Welfare Agency (NASSCORP) invest 63% of pension money into real estate even though the Liberian Pension Law Section 4.2(b)
lists bonds, stocks, or tradable security as priority investment portfolios? On the contrary, why do other countries enact pension laws that limit the amount of pension fund that should be invested in real estate (volatile securities or “Alternative Investment?”)? How did management determine the $25 million investment in real estate since management did not assign monetary value to the housing complexes in Bong County, Lofa County, Margibi County and Bassa County? How is management accounting for the wear and tear of the housing units, if it is managing some of the real estate properties?

Here are some of the reasons why fiduciary entity such as pension fund does allocate a minuscule portion of investment money to “Alternative Investment” since management did not respond to our email request. For example, direct management of real estate portfolios requires cost, including the cost to establish a separate department. In addition, it is difficult to buy and sell real estate as compared to stocks. Let us say NASSCORP wants to sell the $11million-ELWA-Junction-Property during an Ebola-like crisis in order to pay pensioners. Well, potential buyers would not be willing to put cash in illiquid assets, only if sold below market value. Additionally, it would be difficult to sell the real estate since NASSCORP can not slice the $11million property into pieces for different investors, whereas, it can slice the stocks and bonds.

Further, investment in real estate invites corrupt activities such as excessive management fees, kickbacks or offering fire-sale prices, unlike stocks or bond, which are managed by third parties. Over the last 60 years, stock has yield 7% to 8% as compared to 2-4% for real estate. Most importantly, when housing price busts, it loss is twice as the loss of a stock bust. (IMF World Economic Outlook, 2003).

The massive loss incurred from a bust of real estate price and the need to protect poor-investors money, which is not extra-cash invested by wealthy-investors is part of the reason why economists, managers and government officials have and continue to discourage insurance and pension funds from investing in alternative investment such as real estate. Nonetheless, the search for huge profits is forcing pension managers to increase investment in real estate portfolios, especially since returns on conventional portfolios are minimal. Pension managers from Ghana, Sierra Leone, etc. have proposed to increase retirement money into real estate investment. However, these managers are cautious than their Liberian counterpart since the investment in real estate is around 20%, unlike Liberia’s 63%.

Well yes, although the return on real estate portfolios is attractive, many pension funds are not investing a significant portion of poor-investors money in real estate, but rather are buying stocks and bonds of real estate companies called Real Estate Investment Trust (REIT). ( For example, U.S. Pension funds invested 14.8% in mortgage-backed securities, 9.6% in mortgage loans, and just (0.6%) in real estate they owned and managed. However, if NASSCORP should continue to invest a significant amount of poor-pensioners’ money in risky portfolios such as real estate, it should include information summarizing why management has abandoned Liberian Pension Law Section 4.2(b). Additionally, management would be fulfilling the principles of accountability and transparency if it provides relevant information.

About the Author: J.Yanqui Zaza can be reached at:

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