Retirement Savings Account (RSA) holders, that is employees in active funds, have contributed N1.25 trillion to pension assets growth in the 2021 financial year.
The amount was 55 percent of contributions from active funds growth in 2021 amounting to N2.283 trillion, according to analysts at the Pension Fund Operators Association of Nigeria (PenOp).
A 37 percent, equal to N856 billion fund growth came from interest/coupons on fixed income securities.
This is as 5 percent, equal to N117 billion were attributed to unrealised gains on bonds in the funds market-to-market portfolio, while 3 percent, equal to N60 billion were attributed to unrealised gains on bonds on both in the funds market-to-market portfolio.
These employees are active RSA holders making pension contributions in Funds: 1, 11,111, V, V1 with licensed pension fund administrators (PFAs).
Analysts at PenOp attribute the continuous growth in employee contributions to the potential of the Contributory Pension Scheme (CPS) to continue to meet its key objective of giving Nigeria what to fall back on upon retirement.
As of the end of 2021, RSA holders in active funds have contributed a total of N9.47 trillion.
From this amount, N6.4 trillion is invested in government securities, N1.4 trillion in money market securities, while N764 million is invested in domestic ordinary shares.
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Nigeria’s pension industry operates a multi-fund structure, which is a framework that is designed to align the risk profile of RSA holders by dividing the RSA Fund into different fund types, while retaining the single retiree fund to cater for the risk appetite of the RSA holders.
Fund one is optional for contributors and has a total balance of N48 billion, while fund two is for contributors aged 49 and below, and has a total of N5.8 trillion naira.
Fund Three is for contributors aged 50 years and below, and has a total balance of N3.5 trillion, while Fund Four is the micro pension fund, and has a total balance of N221 million.
Fund Five is a non-interest fund for active and retirees, and has a total balance of N14 billion.
Meanwhile, during the first quarter of 2022, sources of portfolio growth/diminution for RSA active Funds shows that monthly contributions received a total N461.35 billion.
The amount was an increase compared to the total contributions of N296.17 billion recorded in the fourth quarter of 2021, according to the National Pension Commission (PenCom) first quarter report.
This is as interests/coupons received on investments in fixed income securities amounted to N228.11 billion in the first quarter of 2022. The amount indicated a 4.85 percent decrease compared to the sum of N239.72 billion recorded in four quarter of2021.
The decrease according to PenCom was attributed to lower yields on additional investments/reinvestments in short tenured fixed income securities during the period.
Furthermore, dividends of N23.03 billion were received in RSA active funds in first quarter 2022, which represented a N17.33 billion increase relative to the dividends of N5.70 billion received in fourth quarter 2021.
Total unrealised gains on the RSA ‘Active’ Funds in first quarter 2022 decreased by N13.18 billion to N13.59 billion on equities and equity funds compared to unrealized gains of N26.77 billion recorded in fourth quarter 2021. The decrease in unrealized gains was attributed to a relatively lower appreciation in the general prices of stocks in the equity portfolio of the RSA Funds during the period compared to fourth quarter 2021.
Total unrealised gains on bonds in the Funds Marked-to-Market (MTM) portfolio amounted to N7.11 billion during the period under review compared to a depreciation of N2.82 billion in fourth quarter 2021. On the other hand, the bond prices as measured by the S&P/FMDQ Nigeria Sovereign Bond Price Index decreased to 10.90 percent in the first quarter of 2022 relative to 11.77 percent in the fourth quarter, 2021.
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