The Pension Fund Administrators (PFAs) have the responsibility to manage the financial health and stability of pension funds under their management.
They therefore shift between cash and bank deposits with investments at any given time to ensure that they are able to meet pension payouts as well as investment needs for quick returns.
Pension Fund Operators Association of Nigeria (PenOp) said the performance of PFAs in managing cash and bank deposits is crucial for the financial health and stability of the pension funds they oversee.
According to them, in the first half of 2024, PFAs had N320.27 billion in January cash and bank deposits, increasing to N396.30 billion by March. This rise indicates a cautious build-up of liquidity reserves, they said.
In April, deposits slightly declined to N373.19 billion, suggesting PFAs utilized some liquid assets for investments or payouts. A drop occurred in May, falling to N251.91 billion, and further decreased to N240.75 billion in June. This indicates substantial investments or large disbursements of pension benefits, Oguche Agudah, chief executive officer, PenOp said.
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According to him, the fluctuating deposits reflect PFAs’ strategies to balance liquidity for payouts with investment opportunities.
“The significant drop from April to June suggests a shift from cash reserves to higher-yielding investments. Variations in deposits also indicate the periodic payouts to retirees, requiring adequate liquidity maintenance.”
Agusto & Co, a Pan-African Credit Rating Agency in its latest report on the pension industry says total pension assets rose to N18.36 trillion in 2023, representing a 22.34 percent increase from the N14.99 trillion reported at the end of the prior year.
The growth in pension assets the agency noted was largely driven by the mandatory nature of pension contributions and positive investment returns during the year.
It also hinted in the report that the industry recorded over three hundred thousand new contributors in 2023, bringing the total CPS membership to 10.1 million Retirement Savings Account (RSA) enrollees, a 3 percent increase from the previous year’s count of 9.8 million.
“The upswing in enrollees was primarily due to improved compliance levels in both the private and public sectors and increased marketing efforts by PFAs, Agusto said.
At the end of May 2024, the number of registered pension contributors has risen to 10,280,956, while about N720,044 are retirees collecting payouts on a monthly basis.
The sum of N1.99 trillion has gone as a lump sum, being part of the retiree’s retirement savings Account balance, which they decided to take upfront, just the total assets under management stood at N20.45 trillion at the end of May.
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