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Pension fund assets hit N10.22trn as FG borrows 71% of fund  

Nigeria’s pension fund assets hit N10.22 trillion as at December 31, 2019, an increase of 18.28 percent from N8.64 trillion at the end of December 2018.

From the total fund under management by the Pension Fund Administrators (PFAs), the Federal Government borrowed 71.87 percent, amounting to N7.344 trillion, through different kinds of bonds and Treasury Bills (securities).

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This is contained in the National Pension Commission (PenCom) monthly report released on Friday.

Breakdown of investment of the pension funds assets as at the end of December shows that Federal Government securities including FGN Bonds took N5.35 trillion, equal to 62.39 percent, Treasury Bills took N1.88 trillion, equal to 18.40 percent, Sukuk Bonds took 0.82 percent, Agency Bonds 0.11, and Green Bonds 0.15 percent.

From the analysis, money market securities received N1.172 trillion of the total funds under management, equal to 11.47 percent, with N1.055 trillion going into banks’ instruments, translating to 10.33 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 N55.89.51 billion, equal to 5.41 percent of the total invested funds.

Meanwhile, the total monthly pension contributions received from contributors from both the public and private sectors amounted to N5.45 trillion as at the end of 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.

The pension industry also 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 to stand at 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 from 8,569,037 as at first quarter 2019, 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 the PenCom to improve compliance and coverage, as well as marketing strategies of the PFAs.

The objectives of the pension reform of 2004 (amended in 2014) are to ensure that every person who worked in either the public service of the federation, Federal Capital Territory or private sector receives his retirement benefits as and when due, as well as to assist individuals by ensuring that they save to cater for their livelihood during old age, thereby reducing old age poverty. It was also meant to ensure that pensioners are not subjected to untold suffering due to inefficient and cumbersome process of pension payment. It further aims at establishing a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the public service of the federation, Federal Capital Territory and the private sector and stem growth of outstanding pension liabilities.

 

Modestus Anaesoronye

 

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