ROI for Pension Fund Administrators in Nigeria average 4.68% as assets hit N20.2trn
The most recent monthly report from Nigeria’s Pension Commission (PENCOM) revealed that the assets under management (AUM) of the regulated pension industry grew by +25.6% year-on-year to N20.2 trillion. Notably, FGN debt securities made up 63% of the total AUM in May 2024. On the other hand, private equities, real estate, and infrastructure funds accounted for 0.5%, 1.4%, and 0.8% of the total AUM, respectively. It is important to note that the return on investment (ROI) for Pension Fund Administrators (PFAs) in Nigeria averaged 4.68% in the first quarter of 2024.
The total FGN debt securities held by PFAs increased by +22.5% year-on-year. Specifically, FGN bond instruments held by PFAs rose by +20.7% year-on-year and +3.2% month-on-month to N12.1 trillion, representing 59.7% of the total AUM in May 2024. The PENCOM report also indicated that NTBs held by PFAs increased by +86.7% year-on-year and +5.4% month-on-month to N370 billion in May 2024. The average NTB yield decreased by -50bps month-on-month by the end of May 2024. State government securities held by PFAs decreased by -4.9% year-on-year and -1.9% month-on-month to N264.4 billion in May 2024.
Domestic equity holdings saw a significant increase of +68.7% year-on-year and +3.9% month-on-month to N1.8 trillion, representing 9.4% of the total AUM in May 2024, compared to 9.2% in April 2024. The NGX-all-share index (NGX-ASI) also experienced a notable rise of +78.1% year-on-year and +1.1% month-on-month during the same period.
According to a recent report by PENCOM, the total pension contribution deposited into the Individual Retirement Savings Account (RSA) amounted to N10.2trn in Q1 ’24, compared to N8.6trn in Q1 ’23. Contributions from the public sector made up 52%, while the private sector contributed 48% of the total pension funds. The year-on-year increase can be partially attributed to the rise in RSA membership across various sectors.
In terms of reaching out to the informal sector, PENCOM revealed that 12,559 micro pension contributors (MPCs) were newly registered in Q1 ’24, bringing the total number of registered MPCs to 126,941 as of Q1 ’24, up from 93,225 in the same period of the previous year. Micro pension contributions saw a significant increase of +92% year-on-year, amounting to N791.5m in Q1 ’24, compared to N416.1m in Q1 ’23.
While this progress is noteworthy, it underscores the importance of continuous efforts to enhance public access to pension services. Sustained public awareness campaigns and greater involvement from financial institutions in offering pension-related services are essential for further development. SOURCE: Coronation Merchant Bank
