Nigeria’s pension fund assets increased significantly by N843 billion in the first half of the current year, from N13.42 trillion in December 2021 to N14.27 trillion at the end of June 2022, the first half of the year, LEADERSHIP learned.
This is despite the fact that 266,830 new public and private sector workers joined the Contributory Pension Scheme (CPS) in the first half of this year.
In the latest data from the National Pension Commission (PenCom), total pension funds increased by 6.28 percent from N13.42 trillion in December 2021 to N14.27 trillion in June 2022.
Similarly, investments in corporate debt increased by 26.11 percent to N1.19 trillion for the period (year-to-date) while PFAs increased their investments in real estate by 50.66 percent to N236.2 billion as of June 2022 from 156.8 billion N recorded earlier in the year.
The report said investments in private equity funds fell slightly by 0.24 percent to N38.87 billion from N38.96 billion. Also, PFA allocations to FGN securities were N9.01 trillion, up 2.67 percent from N8.77 trillion in December 2021, and investments in FGN securities accounted for approximately 63 percent of the total pension fund.
RSA Fund II accounted for the largest portion of the fund contribution at N6.24 trillion, representing 43.7 percent of the total pension funds, followed by RSA Fund III at N3.86 trillion, representing 27 percent of the total assets and the Existing schemes accounted for 10.1 percent of the total funding, which increased by N85.78 billion to N1.44 trillion, while CPFAs accounted for 10.7 percent of the total funding, totaling N1.52 trillion for the period.
4 states only, FCT remits employee pension under CPS – PenCom
The pension fund managers increased their exposure to the Nigerian equity market in the first half of the year with an additional investment of N53.85 billion in the local stock exchange, bringing total investments to N969.16 billion.
According to the LEADERSHIP study, investment returns were a key driver of this increase in pension fund assets, even as governments, mostly at the state level, fail to pay their employees’ monthly pension contributions on time.
Similarly, the huge increase was found to be attributed to new pension contributions received, interest on fixed income securities and net realizations on stock and mutual fund investments.
Meanwhile, enrollments in the Retirement Savings Account (RSA) rose 2.8 percent to 9.79 million, up from 9.53 million in December 2021, an increase of 266,830 new workers entering the first six months of the year system were recorded.
ARM Pensions’ Managing Director/CEO, Mr. Wale Odutola, recently said in an exclusive interview with LEADERSHIP that pension fund operators make the majority of their investments in Treasuries because it is the safest investment vehicle that consistently yields good returns on this investment.
Although, he said, each PFA has its investment model that works best for it, he added that despite the fall in bond yields, it’s still the safest
According to him, “So each PFA has different investment strategies, and they always invest in opportunities that fit their investment strategies. So the capital market is an investment opportunity that we look at, as well as fixed income, government bonds, money market instruments and so on.”
He said the safety of pension fund assets is important to operators, however, they are also concerned about investment returns for retirees, adding that the growth in pension assets in recent years has been driven by investment returns rather than contributions.
He said this shows that operators are investing wisely by adhering to the investment guidelines of the pension industry as set out in the Pension Reforms Act (PRA) 2014 and explained that PFAs continue to play an active role in capital market transactions in the current time will play year.