In accordance with knowledge from the Nationwide Pension Fee, whole belongings below the premium pension scheme stood at N18.36 trillion on the finish of 2023.
PenCom's 'unaudited pension fund portfolio report for the interval ending December 2023; Accepted current schemes, closed-end pension fund managers and RSA funds (together with unremitted contributions @CBN & Legacy Funds) confirmed that the nation's pension funds elevated in worth by 22.43 p.c in 2023.
Throughout this era, internet belongings stood at N18.36 trillion, in comparison with N14.99 trillion in 2022.
On a month-to-month foundation, pension funds grew by 2.39 p.c to N18.36 trillion in December, in comparison with N17.93 trillion within the earlier month.
In accordance with the report, N11.92 trillion of the belongings have been invested in Federal Authorities securities, representing 64.9 p.c of the entire belongings, and a 24 p.c year-on-year development within the investments in FGN securities.
Company bonds adopted at 10.4 p.c, whereas home frequent shares accounted for 8.6 p.c of whole belongings below administration.
Regardless of the rise, business observers view the sector as under-penetrated as whole belongings below administration amounted to only 9 p.c of Nigeria's gross home product in 2022, which was beneath the worldwide common of 29.4 p.c in 2020, in line with World Financial institution knowledge.
Additional evaluation of PenCom knowledge confirmed the dominance of FGN securities, that are the most important asset class for pension funds.
Notably, FGN bonds make up 96 p.c of whole FGN securities and greater than 60 p.c of fund managers' whole asset combine.
The rise was attributed to the elevated provide from the Debt Administration Workplace to fulfill the home financing targets of the Federal Authorities and tackle the fiscal deficit within the N23tn 2023 price range.
Throughout the yr, pension fund managers invested within the FGN securities, pushed by the comparatively secure and steady returns and the prevailing return surroundings.
This was regardless of a 2.25 p.c improve within the financial coverage price to 18.75 p.c by the Central Financial institution of Nigeria in 2023.
On the home entrance, investments in home equities witnessed a 70 p.c year-on-year improve to N1.57 trillion.
The rise was linked to the sturdy efficiency of the Nigerian Alternate in 2023, the place the All-Share Index reached an unprecedented 74,000 index factors – closing the yr at over 45 p.c.
The market's resilience was attributed to a number of components, together with sturdy company earnings, dividend declarations, government-led market reforms and elevated curiosity from each home and overseas buyers.
Overseas transactions on the NGX have elevated from November 2023, indicating optimistic investor sentiment, however the home investor section outperformed overseas buyers by about 52 p.c.
Though actual property and personal fairness grew year-on-year, they remained a small a part of the entire portfolio.
Different various asset courses comparable to overseas frequent shares, infrastructure funds, mutual funds and actual property failed to achieve vital traction within the Nigerian market.
When it comes to fund sorts, the report indicated regular development in funds in retirement financial savings accounts as extra Nigerians take part within the contributory pension scheme.
Nonetheless, the Pensioner Fund accounts for the most important share and represents 58.02 p.c of the entire belongings below administration, adopted by RSA Funds with 30.59 p.c and Closed Pension Fund Directors with 1.39 p.c.
Analysts at Cowry Asset Administration Restricted, of their weekly report, predicted that the optimistic development trajectory of the pension sector would play an important function in Nigeria's financial improvement within the medium to long term.
“The robust efficiency of the inventory market is predicted to contribute considerably to the expansion of whole belongings below administration. Moreover, expectations that the Central Financial institution of Nigeria would undertake an accommodative stance in 2024 and past might result in a tapering of rates of interest, which might encourage funding in authorities securities comparable to bonds and different cash market devices. This may particularly profit fund managers with an extended funding horizon.
“We additionally anticipate extra engaging alternatives for better penetration into the pension fund area, driving increased pension financial savings in Nigeria above present ranges,” the Cowry Asset report stated.
The PUNCH had earlier reported that the greenback worth of pension funds fell by 45.18 p.c, following the devaluation of the naira.
Information obtained from the Nationwide Pension Fee web site reveals that the online asset worth of pension funds in September was $17.35 trillion, equal to $19.83 billion in greenback phrases, primarily based on the official alternate price of 874.71/$ on November 10.
Talking to The PUNCH, the Head of Company Communications, PenCom, Abdulqadir Dahiru, stated Nigeria's devaluation had not solely affected pension funds however your entire financial system.
Talking on what the committee did to hedge towards the micro-economic headwinds, he stated: “The devaluation of Naira didn’t simply affect pension funds; it affected everybody, and it's a double factor. You might have inflation and you’ve got devaluation.
'So anybody who has cash within the financial institution can inform you what inflation has carried out to their cash. It reduces the worth of the foreign money since you then want extra of that foreign money to purchase the identical quantity of products and companies.”
