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Funds Management
FG inaugurates 16 members to PENCOM board
16 members have been recently inaugurated to the National Pension Commission (PENCOM) board.
The Federal Government has announced the inauguration of 16 members of the National Pension Commission (PENCOM) board.
The Secretary to the Government of the Federation, Boss Mustapha, who represented the FG, launched the board at the inauguration on Thursday in Abuja and said their duties would be to implement innovative and feasible solutions to challenges in Nigeria’s pension sector.
READ: About 160,000 more Nigerians registered to participate in Pension Plans in Q1 2019
He disclosed that there were challenges in the pension sector, in spite of the constitutional and statutory provisions that guaranteed pension payment.
He stated that it was the challenges faced in the sector that had prompted the pension reform of 2004, which introduced a mandatory Contributory Pension Scheme (CPS) for employees of both public and private sectors, with few exceptions in the public service.
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However, he said the sector could not meet all the challenges faced, which was a catalyst for re-establishing the PENCOM board.
“As a government, we are always conscious of our responsibilities with regards to the payment of pensions to eligible retirees in the Federal Public Service.
“We are committed to discharging these responsibilities in spite of the perennial challenges, especially as caused by the global COVID-19 pandemic manifesting in dwindling revenue accruing to the nation,” he said.
READ: Nigeria’s alternative investment assets grow at a slower rate
The SGF urged that the board should develop new ideas towards general policy guidelines, which would be directed towards the Commission.
The board, chaired by Dr. Oyindasola Oni, includes Aisha Dahir-Umar, Clement Akintola, Mr. Anyim Nyerere, Mr. Charles Sylvester, Mr. Festus Dauda, Mrs. Anita Shitu, Comrade Ayuba Waba, Dr. Bobboi Kaigama, Dr. Abel Afolayan, and Dr. Timothy Olawale as members.
Others are Mr. Edward Adamu, Mr. Lamido Yuguda, Mr. Oscar Onyema, Mr. Olorundare Sunday, and Dr. Umaru Farouk Aminu, Executive Commissioner (Administration) representing the northwest geopolitical zone.
(READ MORE: FG commences payment of cash transfer to the vulnerable, as lockdown takes effect)
What you should know
- Nairametrics reported last month that contributors had injected N2.8 trillion into pension funds, although withdrawals stood at N1.64 trillion.
- For the first 8 months of 2020, the pension asset value increased by 11.06% from the N10.218 trillion that the industry ended 2019 with to the N11.347 trillion it reported in August 2020.
- PENCOM disclosed in September that it recovered N17.51 billion from employers that refused to remit deducted monthly pensions from their workers’ salaries to their Retirement Savings Accounts, with the respective Pension Fund Administrators.
READ: Lagos 2021 Appropriation Bill scales through second reading
National Pension Commission (PENCOM) on Monday, November 16, 2020, launched the Retirement Savings Account transfer system.
“Accordingly, RSA holders may transfer their accounts from one Pension Fund Administrator (PFA) to another once in a year, in line with section 13 of the Pension Reform Act 2014. The launch date for the RSA Transfer System is scheduled for Monday 16 November, 2020. This will signify the official opening of the RSA Transfer Window,” PENCOM said.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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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.
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
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
Maku olabode Thomas
December 4, 2020 at 9:18 am
Hope this will bring improvement to the activities of pencom well known for their in efficient and poor services. The response time to approve withdrawal takes months instead of a maximum of two weeks. Their services is a write off as it is extremely poor when it comes to approving the withdrawal of your Contribution after retirement.