The Nigerian University Pension Management Company Limited, referred to as NUPEMCO was incorporated on 5 February 2013 and set up as an entity to exclusively manage pensions for employees in the Nigerian University system.
The company is licenced as Pension Fund Administrator (PFA) under the provisions of the Pension Reform Act 2014.
As of 31 December 2021, the company had shareholders’ funds of N1.45 billion, and as such needed to recapitalise before the deadline of the last regulator-induced recapitalisation exercise. As of December 31, 2022, the company had increased its shareholders’ funds to N5.75 billion.
In comparison to its competitors in the pension industry, NUPEMCO is a relatively new and smaller PFA. It has a limited customer base due to its catchment which leads to a smaller pool of RSA holders and prospective new registrations.
Analysis:
NUPEMCO ended the 2022 financial year with 26,715 RSA holders in the 5 available RSA funds, an increase of 1,619 RSA holders from 25,096 in 2021.
Additionally, assets under management for the 5 audited Retirement Savings Accounts (RSAs) funds published was N121.83 billion, up almost 22% from N99.96 billion in 2021.
Performance Analysis: Company
Company revenue for the year ended December 31, 2022, was up 65% to N1.77 billion, compared to N1.07 billion in 2021.
- Total expenses moderated to rise by 7.8% to just over N1 billion, from just circa N930 million in 2021, which brought its cost-to-income ratio down substantially from 87% in 2021 to 57%, 2022 has fallen from 92% in 2020.
- Profit After Tax (PAT) for 2022 increased almost 428% to N769.12 million, compared to N140.34 million in 2021 and shareholders’ funds grew to N5.75 billion from N1.45 billion in 2021.
- Return on equity was up to 12.46% continuing the rise, compared to 9.37% in 2021 and 5.04% in 2020.
Performance Highlights: RSA Funds (audited)
For the year ended 31 December 2022, NUPEMCO’s Fund I appreciated by 5.05%, Fund II appreciated by 7.78%, Fund III by 8.56%, Fund IV by 9.09% and Fund VI – Non-Interest (Active) by 6.35%. The company offers only 5 of the 7 PenCom-approved funds.
- The pension industry does not currently benchmark the performance of any fund to any performance index.
- In the absence of any benchmark index to measure/compare fund performances for the year 2022, and to aid readers’ indirect comparison, the NGX All-Share Index (a measure of performance of the Nigerian stock market) appreciated by 19.98%, the NGX Pension Index appreciated by 16.96%, inflation was 21.47% and MPR closed the year at 16.50%, having risen steadily through the year.
NUPEMCO Fund I highlights:
- Fund performance: 2022 was the funds’ second full year of operations, and it appreciated by 5.05%, down from 5.71% in 2021.
- Fund income was N17 million, up 309% from N0.78 million in 2021.
- Net gains from investing activities rose 282% to N68 million in 2022, from N0.44 million in 2021.
- Fund size: the size of the fund, measured by net assets, grew almost 176% to N04 million from N19.23 million in 2021.
- The fund expense ratio (cost of managing the fund) rose to 2.82% in 2022 from 1.75% in 2021. The higher this ratio goes the less returns are accruing to RSA holders.
- Asset Allocation as of 31-12-2022: DNA.
- Performance ranking: The fund performance for 2021 was ranked 12 out of 19 in our 2022 annual report on pensions.
NUPEMCO Fund II highlights:
- Fund performance: up 7.78% in 2022, compared to 3.23% in 2021 and 14.77% in 2020.
- Fund income was up almost 131% to N68 billion in 2022 from N1.16 billion in 2021. 2020 was N1.82 billion.
- Net gains from investing activities were N13 billion in 2022, up 195% from N0.72 billion in 2021. 2020 was N1.57 billion.
- Fund size: Fund II grew 12% to N92 billion from N26.65 billion in 2021, having declined by 1.09% in 2021.
- Fund expense ratio: The cost of managing the fund was up, rising to 1.82% in 2022 from 1.64% in 2021 and from 0.92% in 2020.
- Asset Allocation as of 31-12-2022: DNA.
- Performance ranking: The fund performance for 2021 was ranked 15 out of 19 in our 2022 annual report on pensions.
NUPEMCO Fund III highlights:
- Fund performance: was 8.56% in 2022, compared to 4.13% in 2021 and 19.14% in 2020.
- Fund income was up almost 103% to N90 billion in 2022 from N3.90 billion in 2021 and from N4.58 billion in 2020.
- Net gains from investing activities in 2022 were N30 billion, up 136% from N2.67 billion in 2021. 2020 was N4.14 billion.
- Fund size: Fund III grew almost 24% to N99 billion from N68.78 billion in 2021.
- Fund expense ratio: Up to 1.88% in 2022, from 1.79% in 2021 and 0.94% in 2020. The higher this ratio goes the less returns are accruing to RSA holders.
- Asset Allocation as of 31-12-2022: DNA.
- Performance ranking: The fund performance for 2021 was ranked 17 out of 19 in our 2022 annual report on pensions.
NUPEMCO Fund IV highlights:
- Fund performance: up 9.09% in 2022, compared to 7.50% in 2021. 2020 was a partial year.
- Fund income: N65 million in 2022, up 104% from N294.70 million in 2021.
- Net gains from investing activities: N94 million in 2022, up 116% from N240.37 million in 2021.
- Fund size: Fund IV grew 53% to N27 billion, from N4.09 billion in 2021.
- The fund expense ratio was 1.33% in 2022, the same as in 2021.
- Asset Allocation as of 31-12-2022: DNA.
- Performance ranking: The fund performance for 2021 was ranked 13 out of 19 in our 2022 annual report on pensions.
NUPEMCO Fund VI – Non-Interest (Active) highlights:
- Income improved by over 600% to N21 million in 2022 from N6.72 million in 2021 as did net gains from investing activities, which came in at N32.47 million, up 882% from N3.31 million.
- Fund size: The fund grew almost 44% to N69 million in 2022 from N410.73 million in 2021.
- Fund performance: The fund appreciated by 6.35% in 2022 compared to just 2% the year before.
- Performance ranking: The fund performance for 2021 was ranked 5 out of 11 in our 2022 annual report on pensions.
Watch out for our 2023 report detailing all fund rankings for 2022 in the 2023 Money Counsellors Annual Report on Pensions (MCARP 2023). Download the 2022 report here.
This article was written by Michael Oyebola. For more information and analysis, visit moneycounsellors.com