The Nigerian alternative investment space represented by pension and mutual funds saw their assets increase at a slow rate. Analysis of data released by the National Pension Commission, PenCom, indicates that pension fund assets grew by N12.5 billion in September to take total pension assets to N8.35 trillion.
The industry witnessed some sort of asset rebalancing as our analysis indicates that fund managers moved assets away from Banks, Commercial papers and domestic equity securities to FGN Bonds. As a result of the movements, pension fund assets invested in FGN bonds and Treasury bills increased to 70%, from its prior month’s 68%. Currently about N5.8 trillion of the N8.4 trillion of pension assets is invested in FGN bonds and Treasury Bills.
Fund 2 still remains the largest sub-portfolio with the pension asset portfolio universe with 44.29% of the assets in Fund 2, while Fund 3 accommodates 23.67%. The newly introduced funds 1 and 4 have 0.08% and 7.64% respectively. It stands to be seen if the aim of the National pension commission in introducing the multi-fund structure is actually being realized as there seem to be no interest in the two new funds 1 and 4.
It is either that the pension fund investors do not yet understand the workings of the multi-fund structure or that they are too risk-averse to take advantage of the new system. If the former is the reason, the PenCom need to be a little more aggressive in their outreach by way of advertorials and investor education programs. It will be recalled that the National Pension Commission, PenCom, recently introduced a radio Programme, “Retirement Mata” which is a weekly 30 minutes pidgin English Programme that airs every Friday on Naija 102.7 FM Lagos at 5.00 pm.
By timely and accurately publishing the performances of the different funds, pension fund managers can help in motivating pension contributors into signing up for the new funds. Unfortunately, most of the pension fund management companies’ website are missing the daily prices of fund 1, making it difficult to measure and publish the performances of the affected funds.
Unimpressive Growth in Contributors: One noticeable trend in the growth of pension funds in Nigeria is that, on the average, about 55, 000 new contributors register to join one form of pension savings account or the other. However, that trend seems to be changing. In September, only 28,407 new contributors were registered, according to the Pension Assets Summary report from PenCom.
The report also reveals the effect of the aging process on the profile of pension contributors as about 5,369 people who previously fail into the 30-39 age bracket, were migrated to the 40 -49 age grade. All said and done, the total number of participants in various pension savings plans or accounts in Nigeria now stands at 8.271,948, giving a per capital pension asset value of a little over a million Naira.