The latest pension statistics have shown that the Nigerian Pension Fund asset crossed the N9 trillion mark in the first quarter of 2019. Most analysts have largely attributed this feat to the growing awareness campaigns which have influenced the willingness of Nigerians to take their retirement plan seriously.
Also, Pension data covering the first quarter of 2019 show that Pension Contributors in Nigeria rose to 8.57 million compared to 8.41 million contributors recorded in Q4 2018. From the foregoing, it can be seen that the number of pension account holders increased by 2% between Q4 2018 and Q1 2019.
However, even though the pension fund asset has reached the N9 trillion naira mark, the breakdown shows that it is largely dominated by total FGN Securities, which several analysts have flawed. Let’s take a look at the breakdown of Nigeria’s Q1 pension fund asset.
Pension contribution by age category
A closer look at the pension data shows that pension contributors within the age group 30-39 years are dominant with 36% (3.06 million) of total contributors in the first quarter of 2019. Between Q4 2018 and Q1 2019, contributors aged 30-39 years increased by 14,873.
- Also, pension contributors within the age group of 40-49 years old stood at 2.40 million (28% of total) in Q1 2019, rising by 60,341 when compared to what obtained in the previous quarter (Q4 2018)
- The total Pension contributors within the age bracket of 50-59 years ranked the third with 1.54 million (18% of total) as at Q1 2019. Comparing this to the contributors in the previous quarter (1.52 million), it implies the contributors within the age bracket rose by 60,341 in one quarter.
- Similarly, contributors aged 60-65 years recorded a 24,161 increase in one quarter, improving the total contributors with this age bracket to 494,826.
- A further breakdown shows that contributors within the age bracket 65 and above rose by 14,171 contributors in the first quarter to hit 494,826 contributors.
- Lastly, contributors under 30 grew the slowest with 12,761 contributors with the last quarter, with a total of 816,656 contributors.
Pension Fund Assets Distribution
While the pension statistics remain abysmally low in Nigeria, another critical aspect of pension that analysts have flawed is the investment’s structure of the Nigerian Pension Fund. Over the years, a larger chunk of the pension fund has been invested in FGN securities, which are regarded as safe with low investment returns.
In the first quarter of 2019, FGN Securities still accounted for 72% (N6.5 trillion) of the total pension fund in Nigeria. Items listed under FGN securities include FGN Bonds, Treasury Bills, Agency Bonds, Sukuk Bonds, Green Bonds and so on. Next to the FGN securities is real estate properties with 2.56% (N231.37 trillion) of the total pension fund.
What the future holds for Pension Fund in Nigeria
Analysis of the age distribution of Pension contributors shows that the future still looks bleak despite increasing awareness among Nigerians. Within the quarter under review, contributors under 30 years added only 14,171. A closer look at the data shows that contributors less than age 30 ranks 4th highest contributors in all the six groups.
Ideally, the way pensions are designed, the younger the contributors the better the pension funds asset in any nation. This is because younger people contribute for longer periods, ensuring that pension fund assets are robust enough for investments.
On the other hand, contributors within the age bracket 30-39 years are dominant with 36% (3.06 million). This suggests that the Pension scheme in Nigeria is laced with a high level of growth uncertainties.
- Again, despite the 8.57million mark contributors, this only represents 12% of the population of employed people in Nigeria.
- According to the National Bureau of Statistics (NBS) unemployment data for the fourth quarter of 2018, the total number of Nigerians employed in both full and part-time stood at 69.6million.
- It implies that 61 million employed Nigerians are not captured under the contributory pension scheme.
Fund Managers’ approach and way out
It has been generally argued that the “conservative” investment strategy of pension fund administrators (PFA) who invest almost exclusively in FGN securities, is the major reason for the low rate of return.
- While this is worrisome, analysts have also put forward that fund managers are not to blame so much for this, as the regulation requires them to allocate a sizable portion of their assets to fixed income securities.
- Also, the rationale of trying to preserve the pension fund has always been to invest in secured fixed income securities and this in the meantime is paying off.
- While one resonates that it is a risk management strategy for fund managers to invest in secured fixed securities, the government and the fund managers should review approaches to ensure that pension asset growth is not sacrificed under the guise of secured investments.
- Lastly, the dwindling rate of under 30 pension contributors requires urgent action, otherwise, the future of the Pension scheme in Nigeria would further remain bleak.
Covid-19: Governors to discuss distribution of vaccines today
Governors of the 36 states of the federation will today meet to discuss the sharing formula for the recently delivered Covid-19 vaccine.
The Nigerian Governors Forum has announced that all 36 Governors will meet today to discuss the distribution of the recently arrived 3.9 million Covid-19 vaccines through the COVAX programme.
This was disclosed by the NGF in a statement issued in Abuja on Wednesday by Mr Abdulrazaque Bello-Barkindo, the Head, Media and Public Affairs of the NGF Secretariat.
The NGF disclosed that the meeting, which would be held virtually, will commence by 5 pm.
“The meeting is of a single-item agenda, which will discuss the delivery of the COVID-19 vaccines and their distribution in the country,” he said.
What you should know
- Nairametrics reported on Monday that 3.94 million doses of the AstraZeneca/Oxford vaccine, manufactured by the Serum Institute of India arrived at the Nnamdi Azikiwe Airport.
- The National Primary Health Care Development Agency (NPHCDA) also released guidelines on registering for Covid-19 vaccination in Nigeria.
Royal Academy of Engineering invests over £3.5 million in Nigeria, others
The academy has awarded over £3.5 million in 37 projects in Nigeria and across 13 African countries.
The Royal Academy of Engineering has awarded over £3.5 million to 37 projects in Nigeria and across 13 African countries to promote better training and sustainability and diversify economies.
This was disclosed by the Academy via a statement issued and seen by Nairametrics on Thursday to mark the UNESCO World Engineering Day 2021.
It stated that the Academy’s interest in partnering with partner academic institutions’ projects focused on realizing sustainable development goals.
One of such projects, according to the statement, is the renewable energy project recently embarked on by Engineering students in the University of Abuja, Nigeria.
It stated, “A new awardee of the HEPSSA programme, the University of Abuja, in a project titled “Renewable energy utilization: Accelerating diffusion of solar power systems”, seeks to address the problem of access to affordable and clean energy with a view to enable accelerated diffusion solar power systems.”
Commenting on the progress achieved in Africa, Nigerian born Engineer in the UK, Yewande Akinola MBE, who is also a member of the Royal Academy of Engineering GCRF Africa Catalyst Committee, said:
“While we see immediate improvements in skills and innovation through these programmes, the real win is establishing a framework for lasting change. This will equip communities in Africa to anticipate and plan for the challenges posed by climate change, urbanisation and economic development. The continent is transforming rapidly, and those engineering its future need the skills to think on their feet.”
Stressing the need for strategic partnerships and buy-in of stakeholders, she said, “By developing strong alliances between local partners in sub-Saharan Africa and the UK, we can enable learning, collaboration and sharing of best practice, which in turn will build skills to boost innovation. But there is much more to be done, which needs the continued support of investors and partners.”
She added that the Academy aimed to support the development of a diverse and future fit workforce across the continent.
“It is estimated that fewer than 10% of engineering posts in Africa are currently occupied by women. GCRF Africa Catalyst has worked with Women in Engineering (WomEng) to promote gender diversity across a wide spectrum of professional experience.
“WomEng’s work with Eswatini’s Registration Council for Architects, Engineers, Surveyors and Allied Professionals has resulted in seven registered female members where they initially had none. A HEP SSA project with the Institute of Engineers Rwanda also helped to increase the number of female internship applicants from 5% to 2018 to 25% in 2019,” she said.
Highlights of achievements of the Africa grants:
- Over 2000 professionals trained by Professional Engineering Institutions across sub-Saharan Africa.
- Over 530 student industry placements since 2013. Number of students obtaining industry internships increased from 40% to 90% over the course of one project in Zambia
- Diversity & Inclusion initiatives have driven equal gender participation in programmes. A project from the Institute of Engineers Rwanda helped to increase the number of female internship applicants from 5% in 2018 to 25% in 2019.
- 50 individual course curricula reviewed and improved as a result of industry-academia partnerships.
- Almost 50 UK organisations and 400 in-country bodies involved as project partners so far.
What you should know
- Launched in 2016, with support from the UK government’s Global Challenges Research Fund (GCRF), the Africa Catalyst initiative allows Engineers to focus on issues of specific importance to their relevant jurisdictions while facilitating good governance practices.
- The Royal Academy of Engineering is showcasing its impact on enhancing collaboration, education, and diversity in engineering in sub-Saharan Africa, delivered through its Africa grants programmes ahead of the second UNESCO World Engineering Day for Sustainable Development on the 4th of March 2021.
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