PENCOM, Pension Funds

Data from the recently released May 2018 Pension Fund Assets and Registration report indicates that additional 55,038 members enrolled into various pension programs in Nigeria in the month of May. This is representing a 7% increase over the new additions recorded in April.

The trend follows previous months’ pattern where most of the new registrants are from the 30-49 age bracket. In April, 25,513 new applicants were registered for that age bracket but in May, it increased to 27,630.

While more of those within the age bracket of 50 to 59, (10,999) registered anew in April, only 8,726 additional registrants were added to that group in May. It appears that younger working Nigerians are waking up to the need to start saving for retirement early as about 9,200 of then registered newly in May compared to about 5,000 that joined in April. Once again, twice as more men registered afresh in May than women.

To be exact, of the 55,000 new comers, about 36, 800 are male while about 18,200 are female. This could be explained by the gender bias in the Nigerian work force as well as the fact that most women look up to the men for their retirement. All said and done, 8,082,466 of Nigerians are reported to be enrolled in one type of pension or the other as at May 31 compared to the 8,027,428 reported in April.

In the same vain, Nigerian pension asset value increased by 2.51% or about N199 billion to bring the total asset value to N8.143 trillion as at May ending. Sector by sector analysis reveals that AES funds AUM increased by 5.12% while Retiree Funds assets increased by 4.23% with Closed Pension Fund Administrators (CPFAs) and Retirement Savings Account (RSA) AUM increasing by 2.42% and 1.92% respectively, crystalizing into an average overall increase of 2,51%.

Pension fund asset has made good progress since this year, growing from N7.51 trillion as at December 31, 2017 to N8.14 as at May 31, 2018, an increase of N627 billion. Irrespective of this encouraging growth, pension asset per capita still remains very low in Nigeria compared with other developed and developing countries

Asset allocation witnessed some surprising changes as allocation to Private Equity funds increased by 35% wile allocation to Agency Bonds and Infrastructure funds also increased by 12.82% and 11.99%. For no clear or apparent reason, pension funds increased their cash and other assets holdings by 31.41%, probably in anticipation of withdrawals.

Domestic ordinary shares saw reduced allocation of 6.7% which is understandable given the prevailing circumstances in the stock market. Allocation to Commercial Papers, Sukuk Bonds, and State Government securities, all suffered some reductions. This marks the second straight month that allocation to Sukuk bonds is being decreased. It is believed that there would be more shifting of asset allocations in the months to come as pension administrators implement the multi fund structure that took effect on July 1st.

Coronation Research
Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. and (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.


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