Nigeria’s total pension fund assets rose to unprecedented levels, increasing by N156.2 billion to hit a record N13.76 trillion in February 2022 compared to N13.61 billion recorded as of the previous month.
This is according to the unaudited report on the pension funds industry portfolio for the month of February 2022.
According to the report, Pension administrators increased their exposure to corporate debt securities in the review month, particularly in corporate bonds. Notably, investment in corporate debt securities increased by N7.35 billion in February 2022 to stand at N1 trillion.
In the same vein, RSA registrations increased by 37,225 in the review month, standing at 9.59 million as of the end of February 2022.
- The RSA fund II accounted for most of the fund contribution with N6.01 trillion, representing 43.7% of the total pension funds.
- The RSA Fund III followed with N3.7 trillion, accounting for 26.6% of the total assets. Also, the fund III category increased by N53.36 billion in the review month.
- Existing schemes accounted for 10.3% of the total funds, increasing by N14.79 billion to stand at N1.42 trillion.
- Also, the CPFAs accounted for 11.1% of the total funds, standing at N1.53 trillion as of the review period.
In terms of real estate investment, PFAs’ investment in real estate dropped by N1.78 billion in February 2022 to stand at N156.1 billion from N57.84 billion recorded as of January 2022.
Local equities investment jumps by N16.96 billion
- Pension fund administrators in the period under review increased their investments in the local equities market, with over N16.96 billion new investments in the bourse, bringing its total investments in the local market to N977.39 billion.
- The improved interest in the local equities market by the PFAs follows the positive performance of the market as the All-Share index gained 2.57% in February 2022 to close at 47,394.53 points.
- Similarly, the NGX pension index increased by 2.86% in the review month, outperforming the market benchmark index.
- On the flip side, the PFAs reduced their exposure in the foreign equities market for the second consecutive month as their investments declined by N514.75 million to stand at N109.97 billion.
The pension administrators have been trying to improve their returns by diversifying their investment portfolios ensure they give value to their numerous contributors, especially with the transfer window still in play which allows contributors to switch PFAs if they are not satisfied with their services.
Recall that Nairametrics ranked the best performing PFA for 2021, which revealed that the industry recorded a 6.42% average returns on investment in the year, with Stanbic IBTC, Veritas Glanvills Pensions, and Sigma Pensions, printing average returns of 9.7%, 8.73%, and 8.67% respectively.
Why this matters
The Nigerian pension industry continues to grow in value and in adoption, albeit very low compared to other economies. The total number of pension contributors at 9.56 million only represents a pension penetration rate of 14% compared to the over 19% in South Africa and 77% rate for the United Kingdom.