Nigeria’s pension fund assets rose by N842.7 billion in the first half of the year, hitting a record high of N14.27 trillion from N13.42 billion recorded at the beginning of the year. This is according to a report released by the National Pension Commission (PenCom).
On the other hand, a total of 27,157 RSA contributors switched their pension managers between January and June 2022, bringing the total number of RSA transfers processed by the Commission to 78,549 since the opening of the transfer window.
Since the launch of the PFA transfer window, which gives an opportunity for Retirement Savings Account (RSA) holders to switch from one pension fund administrator to another, Q1 2022 recorded the highest quarterly movements, increasing by 20.1% quarter-on-quarter, an indication of how competitive the industry has become.
Meanwhile, RSA registrations increased by 2.8% to stand at 9.79 million from 9.53 million recorded as of December 2021, which represents an increase of 266,830 new RSA registrations in six months.
Highlights
- Total pension funds increased by 6.28% from N13.42 trillion as of December 2021 to N14.27 trillion as of June 2022.
- Investments in corporate debt securities rose significantly by 26.11% to N1.19 trillion in the review period (year-to-date).
- PFAs increased their investments in real estate by 50.66% to N236.2 billion as of June 2022 from N156.8 billion recorded as of the beginning of the year.
- On the flip side, investments in private equity funds dipped slightly by 0.24% to stand at N38.87 billion from N38.96 billion.
- Meanwhile, PFA allocations to FGN securities stood at N9.01 trillion, a 2.67% increase from N8.77 trillion in December 2021. It is worth adding that investments in FGN securities accounted for about 63% of the total pension fund.
- This is likely to continue considering the growth in the interest rates of the FGN Bonds and BN Treasury Bills, which have been recording significant oversubscriptions. A major incentive is that FGN securities are safer than other variable assets, which most RSA funds are averse to.
The RSA fund II accounted for most of the fund contribution with N6.24 trillion, representing 43.7% of the total pension funds, followed by RSA Fund III with N3.86 trillion, which represents 27% of the total assets.
Meanwhile. existing schemes accounted for 10.1% of the total funds, increased by N85.78 billion to stand at N1.44 trillion, while the CPFAs accounted for 10.7% of the total funds, standing at N1.52 trillion as of the review period.
PFAs ramped up investment in local stocks
- Pension Fund Administrators increased their exposure in the Nigerian stock market in the first half of the year, with an additional N53.85 billion investment in the local bourse, bringing the total investments to N969.16 billion.
- This is following the impressive first six months of the year recorded by the Nigerian Exchange, printing a 21.3% gain in the All-Share Index between January and June 2022, largely attributed to bullish sentiments as many other investment portfolios dwindled in the period.
- For example, investment in foreign equities declined by 18.44% in the first half of 2022 to stand at N99.9 billion, the lowest level since March 2021, following the bearish performance of foreign stocks amidst high global inflationary pressure.
- Meanwhile, PFAs are beginning to reduce their investments in the local bourse, as investment allocated to the Nigerian stock market dropped to N969.2 billion from N1 trillion recorded in the previous month.
How industry performed in H1 2022
The Nigerian pension industry recorded an average return of 5.02% in the first half of 2022, as all the pension fund administrators printed positive returns in the period. The RSA II Fund recorded the highest returns of 5.18% in terms of fund category, followed by RSA Fund I.
The likes of PAL Pensions, Stanbic IBTC. Leadway Pensure PFA led the list of performing pensions administrators in the first half of the year based on average returns. Click here to read more.
