• Monday, June 24, 2024
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Industry to see uniform reporting of PFAs’ performance

PFAs curb equity exposure in search of low-risk assets

In 2022, contributors and retirees would begin to see clearly the difference in performance of all the registered Pension Fund Administrators (PFAs).

The clarity in reporting will enable them to make informed decisions on their choice to remain with a particular PFA or pot to another where they find greater value in the ongoing transfer window rush.

This is coming on the heels of the decision of the Pension Fund Operators Association of Nigeria (PenOp) to adopt a uniform reporting standard for all operators in the industry.

Wale Odutola, president, PenOp, looking into plans of the industry in 2022, says the industry would adopt a uniform and standard metrics of performance reporting so that contributors can be better informed.

Read Also:10 PFAs have already met N5bn minimum share capital – PenCom

This development, according to industry watchers, will end the wrangling that usually comes up among PFAs whenever fund performance is reported by independent analysts, as hardly had all the PFAs agree to the correctness of such reports.

In the past, some who probably did not get favoured at a given time fault the performance index as not the right metrics to measure the PFAs since all of them did not start operations at the same time, while others felt there were other metrics to be considered.

This decision of the Association is hoped would rest the matter finally, and help contributors and retirees understand better where they should pitch their tent.

According to Odutola, another major project of the PFAs in 2022 would be improving the data quality of the pension industry.

Data-recapturing exercise has been contracted out to independent consultants that will ensure quality of the data is guaranteed, because it is key to sustainability of the industry, he says.

The industry would continue to find ways for greater inclusion, as many plans were in place to drive the micro-pension scheme, he states.

“We already have a joint committee made up of the operators and the National Pension Commission (PenCom) that are working out strategies to drive the micro pension scheme across the country,” Odutola says.

On investment, he says the operators are engaging with relevant stakeholders on how to invest in private equities and variable income assets, saying, “Conversations are ongoing in these areas with identified segments, and these will be deepened in the coming year.”

Meanwhile, the industry is anticipating increased competition in service delivery, returns on investment after the ongoing recapitalisation of the sector that started in April 2021.

Industry analysts see the recapitalisation fever being intensified in the first quarter of 2022, when the exercise would be ending.

At the last count, a new investor, Tangerine Group has come into the sector merging with APT Pensions, having acquired AXA Mansard Pensions earlier, while GTB Holdings has acquired Investment One Pensions, and FCMB has acquired AIICO Pensions, confirms Ehimeme Ohioma, head, surveillance at the PenCom.

This is as 11 PFAs out of 22 registered are said to have met the capital requirement ahead of next year’s deadline.

Ohioma, commenting on the ongoing recapitalisation exercise, says the ongoing capital phase in the industry has attracted new investors, which no doubt will make the sector highly competitive.

According to Ohioma, the success of the exercise will climax before the deadline in the first quarter next year, as more mergers and acquisitions are expected.

The present capital raise approved by the PenCom board in April 2021 is the third of such since the coming on board of the Contributory Pension Scheme (CPS) through the Pension Reform Act 2004, he states.

The first, according to him, was the N150 million capital base in the repealed Pension Reform Act 2004, followed by the second recapitalisation to N1 billion in 2011, and now, the third from N1 billion to N5 billion.

The objective of the recapitalisation is to improve the financial stability and operational efficiency in the industry, he says, noting that the directive was right, as it could not have come at a better time than now after the last exercise in 2011.

As of September 30, 2021, total pension assets under management rose to N13.001 trillion from N12.901 trillion at the end of August 2021, while registered contributors increased to 9.461 million within September.