Pension Assets jumps 16.86% to N10.218 trillion in 2019

Pension assets pitched at N10.218 trillion, representing about 17% increase against N8.744 trillion at the beginning of the year, Pension Commission report shows.

The figure is based on unaudited valuation as at the year-end 2019.

However, the report shows that pension administrators made some adjustments made in assets allocation, most glaring among this was reduction in fund allocated for treasury bills purchase.

The commission cash position increase. At the year-end, cash and other assets increased to N63.44 billion. In a month earlier, cash and other assets was valued at N45. 140 billion.

In October, there was heavy bag of cash and other assets which accounted for about 1% or N95.308 billion.

Total funds allocated to Treasury Bills instrument closed the year at N1.18 trillion or 18.4% of the total pension assets.

This is a downward trend when compare with peak period when some 22% of the total assets were channeled to T-bills purchases. The adjustment align with optimal asset allocation to instrument that provides strong returns.

Average T-bills instrument has decline heavily, below average growth in headline inflation thus resulted to negative yield.

Further breakdown shows that on month of month basis, pension assets expanded by 2.26% from N9.992 trillion in November 2019 to N10.218 trillion in December.

Analysis of the numbers show that pension assets expanded strongly in December when compare with rate of growth in the past months.

The slowest month on month growth was recorded in July when pension assets grew by 0.44% from N9.325 trillion in June to N9.367 trillion.

Meanwhile, by statutory provision, significant chunk of the sum was allocated to government securities. Followed at distant was corporate bonds.

However, it has been observed that investment in corporate debt securities is picking, from N474.32 billion in April, to N476.265 billion in May, then N505.82 billion in June.

By July, it surged to N534.385 billion, and then to N556.264 billion in August before it hits N621.955 billion in September.

Of N10.218 trillion in December 2019, corporate securities which accounted for just 5.55% of the bulk was valued at N566.845 billion.

That was 11.40% lower than N639.811 billion recorded in November 2019, and N638.832 billion in October.

FG takes increased in absolute term in December to N7.344 trillion from N7.82 trillion in November, 2019.  Over all, FG proportion of the total pension assets surged to 71.87% as against 70.88% a month earlier.

The review of data shows that investment in foreign securities remains low, 0.7% of the assets were locked into foreign ordinary shares and 0.05% in foreign money market.

This suggests that pension funds managers have negative sentiment on off shore companies equities and money market instruments.

The breakdown of allocation into FG Securities show that investment in FG bond to the tune of N5.352 trillion, Treasury Bills N1.180 trillion and agency Bond of N11.729 billion.

In December, Sukuk bond gulped N85.516 billion, while Green Bond window was N15.455 billion.

At 5.41%, investment in domestic shares closed the period at N552.894 billion in the period while fund placement in corporate debt securities totaled N566.845 billion.

In relative term, corporate debt as proportion of total pension fund assets pitched at 5.55% in December.

Meanwhile, 6.4% of the total pension assets was allocated to corporate securities in November, 2019.

The breakdown however shows that N519.585 billion of the sum or 5.08% of the aggregate pension assets was invested in corporate bonds.

Also, corporate infrastructure bonds were valued at N17.709 billion while Green bonds were N29.548 billion.

Investment placement in local money market securities accounted for 11.47% of the pension fund asset in the period.

This translates to N1.172 trillion with the breakdown showing that significant chuck of this investment class were banks placements.

Specifically, investment in banks was N1.055 trillion in the period, thus accounts for 10.33% of the pension fund assets in the period.

Further to that, N116.836 billion was channeled into commercial papers.

In mutual fund class, investment value under this category settled at N27.113 billion, REITs however accounted for significant big part at N11.09 billion as against open/close end funds that attracted N16.02 billion.

As part of its assets allocation strategy, investment in real estate properties gulped 2.15% of the pension fund assets totaled N220.009 billion.

Private equity funds, infrastructure fund, cash and other assets took N37.51 billion, N37.987 billion and N63.44 billion respectively.

Pension Assets jumps 16.86% to N10.218 trillion in 2019 By Olu Anisere