- The Nigerian Stock Exchange has introduced the Pension Index.
- The Index values, which would be available as from January 2, 2013 (December 31, 2012 = 1000) was exposed to the investing public on Thursday, July 2, 2015.
- According to the Exchange, the creation of the NSE Pension Index will encourage the development of other products such as Exchange Traded Products (ETP’s) and Index Futures.
- Also, the Index, provide a tracking mechanism for PFAs, CPFA and others that follow the PENCOM guidelines.
- It can act as a benchmark for measuring performance and reporting performance to RSA Holders.
- The NSE Pension Index includes the top 40 companies in terms of market capitalisation and liquidity.
- Adjusted Market Capitalisation of a listed company is the number of its listed shares, multiplied by the closing price of that company, multiplied by a capping factor. Aside from the included stocks being 40, the NSE Pension index also possess the following features:
- The Stocks are picked based on their market capitalization from the most liquid sectors.
- Stocks and sectors were selected in line the Pension Reform guideline
- Companies to be included must have Free Float Factor of at least 5%. This is the first index on the NSE that gave consideration to Free Float
- Companies must have paid dividend/bonus at least once in the last five years
- It is a Total Return Index so that it can accurately measure equity portfolio performances, which capture returns from dividends, price changes and realized gain
- Total Return Index will only be available end of day. There will be no intra-day values
