Nigeria’s Pension Fund Administrators (PFAs) holdings in domestic equities rose by 68.7 percent year-on-year (YoY) and 3.9percent month-on-month (m/m) to N1.8trillion, according to Coronation research analysts in their July 11 economic note.
They noted that the PFAs equity holdings accounted for 9.4percent of the total assets under management (AUM) in May 2024 compared with 9.2perent recorded in April 2024, adding that PFAs maintained upward trajectory in AUM growth in May.
The analysts further noted that same period, the Nigerian Exchange Limited (NGX) All Share Index (ASI) increased year-on-year (YoY) by 78.1 percent and +1.1 percent m/m during the same period.
The latest monthly report released by Nigeria’s Pension Commission (PENCOM) shows that the assets under management (AUM) of the regulated pension industry increased by +25.6 percent YoY to N20.2trillion. Notably, FGN debt securities accounted for 63percent of the total AUM in May 2024.
Other asset classes such as private equities, real estate, and infrastructure funds, accounted for 0.5percent, 1.4percent, and 0.8percent of total AUM, respectively. It is worth highlighting that return on investment (ROI) for PFA’s in Nigeria averaged 4.68percent in Q1’2024.
Total FGN debt securities held by the Pension Fund Administrators (PFAs) increased by 22.5percent YoY. Specifically, we note that the FGN bond instruments held by the PFAs increased by 20.7percent YoY and 3.2percent m/m to N12.1trn and accounted for 59.7percent of the total AUM in May 2024.
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The PENCOM report shows that NTBs held by PFAs increased by 86.7percent y/y, and 5.4percent m/m to N370billion in May 2024. We note that the average NTB yield declined by -50bps m/m as at end-May 2024. This asset class accounted for just 1.8percent of the total AUM in the same month. Meanwhile, state government securities held by the PFAs decreased by 4.9percent YoY and 1.9 percent m/m to N264.4billion in May 2024.
“According to a separate report from PENCOM, the total pension contribution remitted to the Individual Retirement Savings Account (RSA) reached N10.2trillion in Q1 2024, versus N8.6trillion in Q1 2023. Remittance from the public sector accounted for 52percent, while private sector accounted for 48percent of the total pension contributions. The y/y increase can be partly attributed to the increased RSA membership enrolment in different sectors,” Coronation analysts said.
“Regarding penetration into the informal sector, PENCOM disclosed that a total of 12,559 micro pension contributors (MPCs) were added in Q1 ’24, bringing the total number of registered MPCs to 126,941 as at Q1 ’24 from 93,225 in the corresponding period of the previous year.
“The micro pension contributions increased by +92percent y/y to N791.5million in Q1 ’24 from N416.1million recorded in Q1’23. This highlights significant progress, but also emphasises the need for ongoing initiatives to improve public access to pension services. Continuous public education and increased commitment from financial institutions in providing pension-related services are crucial for further advancement,” they analysts further stated.
