• Friday, March 29, 2024
businessday logo

BusinessDay

Pension assets hit N9.37trn as investments in FG securities make up 70%

Contributory Pension Scheme (CPS)

Nigeria’s pension fund assets have hit N9.37 trillion as at the end of July 2019, an increase of 0.45 percent from N9.33 trillion at the end of June 2019.

From the total fund under management by the Pension Fund Administrators (PFAs), the Federal Government has borrowed about 70.77 percent, amounting to N6.63 trillion, through different kinds of bonds and treasury bills (securities). This is according to the National Pension Commission (PenCom) monthly report released on Monday.

The growth in pension assets month on month was as result of new enrollees into the contributory pension scheme as well growth in investment made the PFAs, said Ronke Adedeji, president, Pension Fund Operators Association of Nigeria.

“You know that as people graduate from school and get into new employment, they join the scheme and that is adding to whatever the contributions are, both from the public and private sector,” Adedeji said.

A breakdown of investment of the pension funds assets as at the end of July shows that Federal Government securities, including FGN Bonds, took N4.4 trillion, equal to N47.93 percent, while Treasury Bills took N2.04 trillion, equal to 21.52 percent. Sukuk Bonds took 0.8 percent, while Agency Bonds took 0.11 percent and Green Bonds 0.11 percent.

From the analysis, money market securities received N1.138 trillion of the total funds under management, equal to 12.15 percent, with N1.033 trillion going into banks instruments, translating to 11.03 percent.

Domestic ordinary shares investment which has been dropping over time as result of poor state of the capital market during the period under review received N482.51 billion, equal to 5.15 percent of the total invested funds.

“On month-to-month basis, we keep growing the numbers of subscribers, that is, new subscribers keep joining and contributing. We also continue to grow in terms of overall assets under management, and let us remember that there is a solid base of existing contributors who keep contributing and whose earnings are expected to rise and as those earnings continue to grow their contributions will increase,” said Dapo Akisanya, managing director/CEO, AXA Mansard Pensions Limited.

He, however, noted that though economic growth is much slower than expected, it is still positive. “There is growth but it is marginal. But as long as we are growing, we expect that new jobs will be created, perhaps not at the extent we should see,” he said.

“But let us keep in mind that as stakeholders, from government to individuals on the street, people are not just folding their arms and looking at the state of things, there is effort to improve the trajectory in the economy, and hopefully we will also succeed in that line. You will definitely see the positive impacts on the industry,” he said.

Meanwhile, the total monthly pension contributions received from contributors from both the public and private sectors were N5.45 trillion as at the end of the second quarter 2019.
This shows an increase of N169.90 billion, representing 3.22 percent growth, over the total contributions as at the end of the previous quarter.

During the second quarter also, the total contributions received from the public sector amounted to N72.42 billion (42.63 percent) while the private sector contributed N97.48 billion (57.37 percent).

A review of the aggregate total contribution received shows that N2.73 trillion or 50.09 percent of the contributions came from the public sector, while the private sector contributed the remaining 49.91 percent (N2.72 trillion).

The aggregate total pension contributions of the private sector increased from N2.62 trillion as at first quarter of 2019 to N2.72 trillion as at the end of the reporting period, representing a growth of 3.72 percent.

The aggregate total pension contribution of the public sector increased by 2.72 percent from N2.66 trillion to N2.73 trillion over the same period.

Also, the pension industry recorded a 1.78 percent growth in the scheme membership during the second quarter of 2019, moving from 8.63 million contributors at the end of the preceding quarter to 8.79 million. The growth in the industry membership was driven by the Retirement Savings Account (RSA) Scheme, which had an increase of 153,572 contributors representing 1.79 percent. However, membership of the Closed Pension Fund Administration (CPFA) Scheme declined by 58 members (23,258) while the Approved Existing Scheme (AES) membership remained unchanged at 40,951.

The RSA registrations grew to 8,722,609 as at second quarter 2019, moving from 8,569,037 as at first quarter, representing a growth of 1.79 percent (153,572). The growth can be attributed to the increased level of compliance by the private sector as a result of the various steps taken by PenCom to improve compliance and coverage, as well as marketing strategies of the PFAs.

MODESTUS ANAESORONYE