Stanbic, VG Pensions, APT are top performing PFAs in investment returns year to July 2021

The Nigerian pension fund industry has grown more competitive in recent times, with PFAs now striving towards printing impressive numbers in their various fund categories, especially since individuals can now easily move from one PFA to another.

According to the National Pension Commission, 22,846 contributors switched PFAs between January and June 2021 as a result of their displeasure with their former administrators. In the same vein, they also transferred about N83.69 billion across PFAs in the same period.

In light of this, it is pertinent to assess the performance of the pension fund managers operating in Nigeria. Hence, Nairametrics considered the price change of the PFAs’ funds between December 31st 2020 and July 31st 2021.

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The information used for the analysis was sourced and computed by Nairametrics Research from the websites of the various Pension fund administrators. Meanwhile, Oak Pensions and Crusader Sterling Pensions were not included in this report, due to the unavailability of complete data on their fund prices.

Of all the 20 funds under consideration, 18 of them recorded positive gains in their average ROI in the 7 months period. The aggregate performance of the PFAs showed that Stanbic IBTC, Veritas Glanvills and APT Pension were top on the list, in that order.

In the same vein, 70% of the firms recorded positive growth across their four different retirement savings account (RSA I – RSA IV) while the industry managed a 2.36% average ROI for the review period.

The best performing fund category is the RSA fund IV with 2.96% growth, while the least was RSA Fund I, with a 1.51% gain on average.

Overall Best PFAs year-to-date

The three best performing pension fund administrators between January and July 2021, posted stellar growth in their respective RSA funds. The best performers were obtained by averaging the percentage change in the various fund prices as of 31st December 2020 compared with that of 31st July 2021.

First position: Stanbic IBTC Pension Managers

YTD July 2021 return – 5.04%

Second position: Veritas Glanvills Pensions

YTD July 2021 return – 4.77%

Third position: APT Pension Fund Manager

YTD July 2021 return – 4.26%

Best PFAs by fund category

RSA Fund I

This fund has the highest allocation of risky or variable income instruments and participation is strictly upon a formal request from a contributor but NOT accessible to Retirees and active contributors of 50 years and above.

The RSA Fund I is suitable for people who want to invest in high-risk instruments with higher rewards.

Out of the 20 funds, only two recorded negative growth in the review period as Stanbic IBTC led the pack with 6.39% growth.

First position: Stanbic IBTC Pension Managers

YTD July 2021 return – 6.39%

Second position: APT Pension Fund Managers

YTD July 2021 return – 6.00%

Third position: Veritas Glanvills Pensions

YTD July 2021 return – 4.05%

Others on the list include ARM Pension (+3.71%), NPF Pensions (+2.85%), First Guarantee Pensions (+2.6%), and PAL Pensions with 2.52% growth.

RSA Fund II

This is the default fund for RSA holders of 49 years and below. It is balanced and suitable for middle-aged contributors as well as those with a medium-risk appetite. It is designed to be less risky with reduced allocation to variable income instruments compared to Fund I.

Five fund managers posted negative returns in this category, in the period under review, while 15 of them recorded positive growth.

First position: APT Pension Fund Managers

YTD July 2021 return – 5.88%

Second position: Veritas Glanvills Pensions

YTD July 2021 return – 4.86%

Third position: Tangerine Pensions

YTD July 2021 return – 4.78%

Others that make up the list include ARM Pensions (+4.63%), Stanbic IBTC Pension (+4.58%), Sigma Pensions (4.56%), Trustfund Pensions (+3.98%), and FCMB Pensions (3.86%).

RSA Fund III

This is the default fund for RSA holders between the ages of 50 and 60 years. It is a conservative fund that is designed for contributors close to retirement and contributors with a low-risk appetite.

Although it is suited for contributors between the ages of 50 and 60 years, younger contributors may opt to participate in this fund category.

The fund category only recorded negative return from one fund manager, indicating that 19 of them posted positive returns on investments during the review period.

First position: Veritas Glanvills Pensions

YTD July 2021 return – 4.96%

Second position: ARM Pensions Managers

YTD July 2021 return – 4.70%

Third position: Stanbic IBTC Pension Managers

YTD July 2021 return – 4.58%

Others include, Trustfund Pensions (+4.19%), Radix Pension Fund Managers (+4.16%), PAL Pensions (3.97%), Sigma Pensions (+3.95%), and FCMB Pensions (3.76%).

RSA Fund IV

The RSA Fund IV is exclusively designed for retirees and members of Funds I, II, and III are not eligible to buy into Fund IV, except upon retirement. Also, members of this fund are not allowed to move out of the fund.

The RSA fund IV was the best performing fund category, in the review period as 17 of them printed positive returns on investment, while 3 traded bullish.

First position: Veritas Glanvills Pensions

YTD July 2021 return – 5.23%

Second position: Sigma Pensions Limited

YTD July 2021 return – 5.17%

Third position: Trustfund Pensions

YTD July 2021 return – 4.69%

Others include Tangerine Pensions (+4.69%), Stanbic IBTC Pension Managers (+4.61%), Leadway Pensure (+4.49%), PAL Pensions (+4.15%), and Premium Pension (+4.14%).

What you should know about the multi-fund structure

The multi-fund structure is a framework that is aimed to align the age and risk profile of the RSA holders to one of the four distinct funds.

RSA Fund I:  It is an aggressive fund meant for active contributors that are 49 years and below. The principal purpose of the fund is to maximise returns on investment. Notably, 20% to 75% of the funds would be invested in variable income instruments.

It is worth noting that clients are eligible to switch to Fund II or Fund III once they attain the age of 50 years.

RSA Fund II:  It is a balanced fund with the intention of capital preservation while pursuing fair returns in the long term. It is the default funds for active contributors who are 49 years and below.

About 10% to 55% of the pension funds can be invested in variable income instruments. Also, active contributors who are 49 years and below can switch to Fund I based on their request.

RSA Fund III:  This is more of a conservative fund, with the primary aim of capital preservation. About 5% to 20% of the funds would be invested in variable income instruments. It is the default fund for contributors who are 50 years and above.

Active contributors can switch to Fund II based on their requests.

RSA Fund IV:  This is a fund strictly for retirees and mostly conservatives. Up to 10% of the fund can be invested in variable income instruments.

Meanwhile, contributors under this fund category are not eligible to move to other fund types.

NOTE:  ROI – Returns on investment, RSA – Retirement Savings Account.