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Pension assets grow 12% to N13.8trn in February

Pension Assets Under Management (AUM) has grown by 12 percent year-on-year to N13.8 trillion as of February 2022. This is as the overall AUM climbed marginally by one percent month-on-month, from January’s level of N13.6trn.

According to analysts at FBNQuest, the latest report from the National Pension Commission (PenCom) also shows that total pension accounts increased by over 324,000 to 9.6 million relative to the comparable period of 2021.

It also noted that the Federal Government debt securities climbed 2 percent m/m to N8.5 trillion, accounting for 62 percent of total pension assets.

“The PFAs’ exposure to FGN bonds alone accounted for around 59 percent of their total AUM.”

The analysts said although the industry’s total holding of domestic equities increased by N17 billion m/m to N977 billion, the share of asset allocation was unchanged at 7.1 percent.

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“The allocation to fixed income assets largely reflects the asset class’s relative depth and higher activity levels compared with equities.”

“Due to a surge in liquidity from maturing securities and coupon payments totalling over N3trn in Q1, yields compressed by roughly c.-120bps across the curve during the quarter.”

It further stated that FGN bonds saw a mixed performance across the curve in Q1 ’22, with activities majorly in the mid-to-short end of the curve, due to broad expectations of a pick-up in yields.

“Using our universe of coverage as a read-across, we see that FGN bond yields have increased by almost c.50bps on average over the last month. While we continue to expect to see some more yield expansion through Q2, due to the lower value of maturing securities during the quarter (estimated at over N1trn) relative to Q1, and the DMO’s expected increase in the supply of FGN paper to the market, the agency said.

The Contributory Pension Scheme (CPS) is a mandatory scheme, backed by the Pension Reform Act 2014, which allows employees and employers in the public and private sectors to contribute a minimum of 18 percent of an employee’s monthly emolument into his or her Retirement Savings Account (RSA).

These contributions are then invested by the PFAs with the objectives of safety and maintenance of fair returns under strict regulation by PenCom.

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