The Nigerian pension fund industry has grown more competitive in recent times since individuals can now easily move from one PFA to another. In the recent industry-based analysis, carried out by Nairametrics Research, the 22 PFAs printed a 2.65% average returns on investment in Q3 2021.
This is according to data tracked by Nairametrics Research on the fund performances of Nigerian Pension Fund Administrators. The data used for this analysis was sourced from the websites of the various PFAs.
Also, the price of the funds as of 30th September 2021 was compared with what was recorded as of 30th June 2021, to obtain the best performing funds in the Q3 period.
According to the analysis, Oak Pensions, Sigma Pensions, and First Guarantee Pension Limited were the best performing PFAs in the period under review, growing on average by 3.45%, 3.17%, and 3.14% respectively.
APT Pensions and IEI-Anchor Pension Managers were not included in this report, due to incomplete data, while all efforts to obtain it directly proved unsuccessful.
A closer look at the data revealed that the RSA Fund II performed the best in the third quarter of the year, having recorded a 2.91% return on investment followed by RSA Fund I.
Overall Best PFAs in Q3 2021
The three best-performing pension fund administrators for the third quarter of 2021 posted significant growth in their respective RSA funds.
The best performers were obtained by averaging the percentage change in the various fund prices as of 30th June 2021 compared with that of 30th September 2021.
Third Position: First Guarantee Pension Limited
Q3 2021 Return – 3.14%
Second Position: Sigma Pensions Limited
Q3 2021 Return – 3.17%
First Position: OAK Pensions Limited
Q3 2021 Return – 3.45%
Best PFAs by Fund Category
Below is a list of the best-performing pension funds in Nigeria as of Q3 2021.
RSA Fund I
First Position: OAK Pensions Limited
Q3 2021 Return – 5.22%
Second Position: APT Pension Fund Managers Limited
Q3 2021 Return – 4.62%
Third Position: FCMB Pensions Limited
Q3 2021 Return – 3.25%
Others on the list include NLPC Pension Fund (+3.24%), Sigma Pensions Limited (+3.12%), Investment One Pension Management Limited (+3.07%), and First Guarantee Pension Limited (+3.05%).
RSA Fund II
First Position: APT Pension Fund Managers Limited
Q3 2021 Return – 3.89%
Second Position: Investment One Pension Managers Limited
Q3 2021 Return – 3.68%
Third Position: First Guarantee Pensions Limited
Q3 2021 Return – 3.57%
Others on the list include Sigma Pensions Limited (+3.47%), Nigeria Police Force Pensions Limited (+3.26%), Premium Pension Limited (+3.15%), and Trustfund Pensions Plc (+3.08%).
RSA Fund III
First Position: First Guarantee Pensions Limited
Q3 2021 Return – 3.12%
Second Position: Sigma Pensions Limited
Q3 2021 Return – 3.06%
Third Position: APT Pension Fund Managers Limited
Q3 2021 Return – 3.06%
Others on the list include Pensions Alliance Limited (+2.96%), FCMB Pensions Limited (+2.89%), Nigeria Police Force Pensions Limited (+2.84%), and Oak Pensions (+2.74%).
RSA Fund IV
First Position: Sigma Pensions Limited
Q3 2021 Return – 3.03%
Second Position: Nigeria Police Force Pensions Limited
Q3 2021 Return – 3.01%
Third Position: First Guarantee Pension Limited
Q3 2021 Return – 2.84%
Others on the list include OAK Pensions Limited (+2.81%), Pensions Alliance Limited (+2.80%), and Fidelity Pension Managers Limited (+2.74%).
About Multi-Fund Structure
The Multi-Fund structure is a framework that is designed to align the age and risk profile of the RSA holders into 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 worthy of mention 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 fund 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 upon request.
RSA Fund IV
This is a fund strictly for retirees and most conservatives. About 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.
Why this matters
The increased competition, recorded in the pensions industry is a result of the transfer window, which allows pension contributors to switch from one PFAs to another if they choose to. This has intensified their efforts towards yielding competitive returns for their contributors. Meanwhile, Nairametrics had reported that Stanbic and VG Pensions led the performance chart of PFAs between January and July 2021.
Update: The table above was updated to reflect new information recently shared with Nairametrics