Apt Pension, Crusader Sterling, Investment One outshine other PFAs to generate higher returns

A cursory look at the Returns-On-Investments (ROIs) of twenty Pension Fund Administrators (PFAs) in Nigeria at the end of 2017 revealed how three PFAs –Apt Pension, Crusader Sterling Pensions, and Investment One Pension – respectively outperformed others.

These PFAs generated higher returns on their Retirement Savings Accounts (RSA) funds which recorded price increases compared to others in the review twelve month period.

Between December 31, 2016 and December 31, 2017 period, while the average ROI for the PFAs Retirement Savings Accounts funds is 16.23percent, eight Pension Fund Administrators made an ROI above the 16.55percent average inflation rate recorded in 2017. 

INVESTOR trend watch shows the first three PFAs in terms of ROI performance for the RSA fund in 2017 are: Apt Pension (22.20percent); Crusader Sterling Pensions (19.82percent); and Investment One Pension (18.72percent).

Other significant performers within the period under review include AXA MANSARD Pensions limited (17.86percent) and First Guarantee Pensions (17.71percent); and Leadway Pensure PFA Limited (17.63percent).

PenCom regulations allow PFAs to invest significant part of their funds in asset classes that have the capacity to both achieve best returns for pension contributors and at the same time ensure that the funds are protected.

Much as most pension funds administrators strive to comply with the regulations, disappointedly, most pension contributors rarely follow up on performances of their funds.

The performance report implies that not only did they secure contributors funds in low risk asset classes, but also invested wisely to ensure that the value of their RSA contributors outgrew the inflation rate thereby guaranteeing real growth of the funds.

Returns on savings and investments are often benchmarked against inflation within an ecosystem. It thus surmises that there is relationship between the value and performances of the funds in which contributors have contributed and inflation which determines the real value of their savings.

Protection of pension funds does not only entail ensuring that invested funds are secured by investing in asset classes with lower risks of default but also necessitates protection of the funds from erosion in value due to inflation. This is why it is important that the return on investment (ROI) of PFAs for a given year should be above the average inflation rate for that year.

As market indicators and economic activities unfold in the year 2018, it is expected that the PFAs will invest wisely to ensure they make significant higher ROI for their contributors.

Although interest rates are declining, indicating a likely decline in interest income, the PFAs are expected to adopt dynamic and efficient investment strategies within the regulatory framework to ensure that at the end of the year, their ROI is above the average inflation rate for the year. This is the only way they can boast of giving effective returns to contributors’ funds under their management.

While a few PFAs took advantage of the brief opportunities that the nation’s stock market presented last year (42 percent gain) to improve the performances of their funds, many did not but chose to be passive and such earned nothing from the stock market.

Iheanyi Nwachukwu