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Funds Management

Sacked workers cash in N2.56 billion in 25% early pension withdrawal

Sacked workers smiled to the bank as they were paid N2.56 billion from their pension contributions.

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NLPC, Investment One and OAK PFAs generate highest ROI in three RSA funds for 11 months, Sacked workers cash in N2.56 billion in 25% early pension withdrawal

Pension Fund contributors in Nigeria, who have lost their jobs and are still under the age of 50, cashed in a total of N2.56 billion from their pension fund contributions.

This is in line with the provisions of the Pension Reforms Act 2014, which allows pension fund contributors to withdraw 25% of their contributions if they lose their jobs and have not found any in 4 months.

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This was confirmed by the Pension Commission in its second quarter report published on its website. According to the data, about 4,688 Retirement Savings Account (RSA) holders were disengaged from work but unable to secure another job within 4 months of disengagement during the second quarter.

READ: Nigeria generates N1.29 trillion from taxes in Q2 2020, surpasses target

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The payment was made to former employees in the Public and Private sectors. The number of private-sector RSA holders was a whopping 4,263. A total of N4.31 billion was approved for payment to 8,221 RSA holders in the first quarter. The Pension Commission also reports that a total of 10,673 RSA holders were paid N5.28 billion for the same reasons in the second quarter of 2020.

Nigerians have suffered massive job losses due to a combination of an economic downturn and the Covid-19 pandemic. The economy has remained under severe pressure since 2019 when the world started experiencing declining oil prices.

READ: Pension contributions from Nigerians under 30 dwindling at an alarming rate

The 25% withdrawal from RSA represents a lifeline for job seekers who need money to survive whilst they continue seeking other sources of income. Following the 25% withdrawal, the balance is paid to them as pension on a monthly basis.

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Nigerian pension contributions were valued at N11 trillion in the second quarter of 2020, out of which over N7 trillion is invested in FGN Securities such as FGN Bonds and Treasury bills.

READ: Nigeria’s pension assets rise to N10.8 trillion in May 2020

What you should Know: The total value of pension fund assets based on unaudited valuation reports grew from N10.33 trillion as at March 2020 to N11.09 trillion as at June, 2020, representing a growth of 7.36%.

· The growth was mainly due to market valuation of quoted equities.

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· There are 9, 097, 803 contributors in Nigeria up 41,074 from the first quarter of 2020.

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· The growth in the industry membership was driven by the Retirement Savings Account (RSA) Scheme, which had an increase of 41,147.

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Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

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Debt Securities

Nigeria’s pension funds continue to divest from treasury bills

Since the beginning of 2020, pension fund managers have moved out about N1.112 trillion of treasury bills investments into mostly FGN Bonds.

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pension funds, Treasury Bill Investment: Ghana Vs Nigeria

As the low-interest regime that characterized most of 2020 continues with no immediate sign of an increase, pension fund managers have also continued to rid their portfolios of treasury bill investments.

Analysis of the recently released September 2020 edition of Pension Fund assets, by the Pension Commission of Nigeria, PenCom, shows that pension fund managers reallocated their assets away from treasury bills to FGN Bonds.

READ: Nigeria’s Micro Pension industry: A gold mine waiting to be tapped

In the month of September 2020, according to the latest report, pension fund managers closed out of treasury bill positions worth N0.224 trillion while loading up on FGN bonds worth N0.254 trillion. Since the beginning of 2020, pension fund managers have moved out about N1.112 trillion of treasury bills investments into mostly FGN Bonds.

READ: FG posts 27% revenue shortfall in 2020 as budget deficit hit N6.1 trillion

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At the beginning of 2020, total pension fund assets invested in treasury bills stood at N1.88 trillion, but that has fallen to N0.78 trillion as at the end of September 2020. Put in another way, as at the end of 2019, 18.4% of pension fund assets were invested in treasury bills but as at September 30, 2020, pension funds’ treasury bill investment stood at 6.7%

READ: Pension Fund Assets hits N9.3 trillion as investment in FGN securities drops

Implications for domestic borrowing and monetary policy

Treasury bills serve a whole lot of purposes for the government. They are used as a means for the government to borrow to cover short term budgetary deficits as well as a means for the Central Bank to manage the supply of money and its inflationary effects.

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READ: Worry for PFAs as pandemic-induced unemployment lowers new pension accounts

With the increasing and seeming lack of interest by pension fund managers, who, usually are big players in the treasury bill market, the government may find it a bit problematic raising the much-needed domestic borrowing from them.

READ: Nigeria’s Eurobond yield hit 12.8% as investors flee emerging markets

In like vein, the Central Bank’s ability to implement monetary policies through treasury bills and others, open market operation, may also suffer. May be, fiscal policy may become a more potent instrument of economic management, if that happens.

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Funds Management

Nigeria’s Mutual Fund asset value grew by 50% in 2020

2020 appears to be the year with the highest growth in the value of mutual fund assets in Nigeria.

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Nine Mutual funds that joined the league of mutual funds in 2019, Nigeria’s best performing mutual funds in 2019, SEC clarifies new rules for mutual funds, sets new deadline for compliance 

While the year 2020 will go down in the annals of history as one of the worst years in the history of mankind, it was not so bad for the Nigerian mutual fund industry.

Interestingly, 2020 appears to be the year with the highest growth in the value of mutual fund assets in Nigeria.

According to data from the Security and Exchange Commission, SEC, the total value of mutual funds in Nigeria stood at N1.042 trillion as at the end of 2019. The same data source now shows that as at the end of 2020, the net asset value, NAV of Nigerian mutual fund had risen to N1.572 trillion, representing an increase of 50.79%.

READ: How to redeem your unclaimed dividends in Nigeria

A deeper analysis of the industry reveals that in 2020, mutual fund contributions amounted to about N0.903 trillion while redemptions amounted to about N0.42 trillion. The same analysis points to the fact that mutual funds gathered an estimated sum of N46.7 billion in gains.

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READ: Best Mutual Funds in Nigeria

Compared to 2019, the capital activities, comprising of subscriptions and redemptions were slightly far afield. In 2019, subscriptions stood at N0.52 trillion while redemptions came up to N0.14 trillion, resulting in a net inflow of N0.38 trillion. Net inflows for 2020 stands at N0.483 trillion. Unlike in 2019, when mutual funds made an estimated gain of N9.9 billion, the N46.7 billion made in 2020, makes Corona Virus a non-issue for the industry.

READ: Where to buy Real Estate in Lagos in 2021

Majority of the funds ended 2020 in the black, as 15, out of the 118 mutual funds on the SEC’s NAV Summary Report. The good thing about it is that no particular fund group dominated in making gains.

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READ: Nigeria’s Asset to GDP Ratio Is low despite rise in Mutual Fund value

Although most of the funds that recorded huge gains came from the Euro Dollar category, Bond and Fixed income funds were not left behind as a whole lot of them stood out with mouth-watering gains. Out of nowhere, Stanbic IBTC Nigeria Equity fund sneaked in with some sizable gains too.

READ: How risky is your Mutual Fund?

On the downside, the two funds that recorded the greatest losses came from the Real Estate Investment fund category. Apparently, the Real Estate Investment Trust funds have not been doing good. Be that as it may, it is laudable that the Nigerian mutual fund industry stood out in 2020.

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Funds Management

NLPC, Investment One and OAK PFAs generate highest ROI in three RSA funds for 11 months

The top PFAs with the highest return on investment (ROI) across three RSA funds, from January to November 2020.

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NLPC, Investment One and OAK PFAs generate highest ROI in three RSA funds for 11 months, Sacked workers cash in N2.56 billion in 25% early pension withdrawal

NLPC Pension Fund Administrators Limited, Investment One Pension Managers Limited and OAK Pensions Limited have emerged in the elite list (top five) of PFAs with the highest return on investment (ROI) across three RSA funds, from January to November 2020.

This is according to a disclosure by Pension Nigeria, seen by Nairametrics. According to the disclosure, the RSA funds in which the aforementioned firms made the elite list include; RSA Fund II, RSA Fund III and RSA Fund IV. Both Investment One and NLPC missed out of the top five in the RSA Fund I category.

READ: FCMB Group Announces N170bn Gross Revenue

RSA Fund I

The RSA Fund I is a special but optional fund in which RSA account holders who are below 50 years of age can opt-into. The top 5 PFAs with the highest rate of Returns on Investment (ROI) for the period under review are;

  • APT Pensions Fund Managers Limited led the chart with 40.59%
  • Followed by Veritas Glanvills Pensions Limited with 38.65%
  • AXA Mansard Pensions Limited recorded returns of 37.31%
  • Stanbic IBTC Pension Managers Limited recorded 34.10%
  • OAK Pensions Limited completed the elite list with 33.28%.

READ: Stanbic IBTC Pension Managers reveals breakdown of its massive N2.53 trillion AUM.

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RSA Fund II

The RSA Fund II is the default fund under the Multifund structure for RSA holders who are below 50 years old. The top 5 PFAs with the highest ROI in this category include are;

  • NLPC Pension Fund Administrators Limited recorded a 52.11% ROI in this category.
  • Followed closely by Investment One Pension Managers Limited with 29.90% ROI.
  • IEI-Anchor Pension Managers Limited recorded returns of 28.41%
  • OAK Pensions Limited recorded returns of 24.02%
  • Fidelity Pensions Managers Limited completed the top 5 with returns of 23.56%.

READ: Premium Pensions RSA Fund tops Nigerian RSA funds with 7.55% return

RSA Fund III

RSA Fund III is the default fund for RSA holders who are 50 years and above but have not retired. The top five in this category for the period under review are;

  • NLPC Pension Fund Administrators Limited also led the chart in this category, recording returns of 44.58%
  • Investment One Pensions Managers Limited followed closely with returns of 35.29%.
  • AXA Mansard Pension Limited recorded returns of 31.02%
  • Radix Pension Fund Managers Limited recorded returns of 29.97%
  • OAK Pensions Limited completed the top five in this category with returns of 27.75.

READ: PFAs earn N1.69 trillion as ROI

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RSA Fund IV

This is the Retiree Fund. All RSA holders that have retired are automatically moved to Fund IV. The top five in this category are;

  • NLPC Pension Fund Administrators Limited led with 37.71%
  • Investment One Pension Managers Limited followed closely with 35.14%
  • Fidelity Pension Managers Limited recorded returns of 23.85%
  • Radix Pension Fund Managers Limited recorded returns of 21.09%
  • Nigeria Police Force Pensions Limited completed the top five in this category with returns of 20.29%

READ: What to expect from Nigeria’s capital market in 2021

The chart below shows all PFAs based on the average returns on Investment for each PFA for January to December.

Source: computed from Pension Nigeria data.

What you should know

  • No PFA had a negative return on investment for the period under review.
  • The Industry Average for all the funds type is 19.83%. Fund I recorded an average ROI of 21.99%. Fund II recorded an average of 20.93%. Fund III posted an average of 20.14%. Fund IV posted an average of 16.13%.
  • No PFA was among the top 5 in all the four funds.
  • Recall that Nairametrics had earlier reported that TrustFund, Radix Pension Fund Managers Limited, and three others had emerged in the top 5 most profitable PFAs for RSA fund II in the month of November 2020.

READ: FCMB assures of enhanced performance as shareholders approve results at AGM

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