PFAs Invest 63% of Pension Assets in FG Securities
Pension Fund Administrators (PFAs) parked 63% of pension assets in federal government debt securities as assets under management climbed to N20.2 trillion in May.
In its latest monthly report, the National Pension Commission (PENCOM) said total assets under management (AUM) of the regulated pension industry increased by +25.6% year on year to N20.2 trillion.
The figure suggests that pension asset has increased by more than N1.8 trillion in five months. Total pension assets rose to ₦18.36 trillion at the end of 2023, a 22.34% increase from the ₦14.99 trillion reported in 2022.
The growth in pension assets was largely driven by the mandatory nature of pension contributions and positive investment returns during the year, Agusto Ratings said in a report.
In absolute term, pension assets grew by more than N440 billion between April and May as pension fund administrator increased interest in government securities, according to unaudited report on pension fund industry report.
Analysts said other asset classes, such as private equities, real estate, and infrastructure funds, accounted for 0.5%, 1.4%, and 0.8% of total assets under management (AUM) respectively.
The Pension Commission report shows that Nigerian Treasury bills held by PFAs increased by +86.7% year on year, and +5.4% month on month to N370 billion in the month.
However, due to buying momentum, the average yield on Nigerian Treasury bills declined by -50 basis points as of the end of May 2024. This asset class accounted for just 1.8% of the total assets under management in the same month, Coronation Research said in a note.
Meanwhile, state government securities held by the PFAs declined by -4.9% year on year and -1.9% m/m to N264.4 billion, the investment firm said in a commentary note. A review of the report showed that domestic equity holdings grew by +68.7% year on year and +3.9% month on month in May to N1.8 trillion.
The breakdown revealed that equity invested portion accounted for 9.4% of the total asset under management in May, which was an increase of 20 basis points compared with 9.2% recorded in April 2024.
According to a separate report from the Pension Commission, the total pension contribution remitted to the Individual Retirement Savings Account (RSA) reached N10.2 trillion in Q1-2024, versus N8.6 trillion in Q1 -2023. Analysts stated that remittance from the public sector accounted for 52%, while private sector accounted for 48% of the total pension contributions.
Agusto Ratings said in a note that the Industry recorded over three hundred thousand new contributors in 2023, bringing the total contribution pension scheme membership to 10.1 million RSA enrollees – a 3% increase from the previous year’s count of 9.8 million.
PFAs Invest 63% of Pension Assets in FG Securities Reforms: Fitch Revises Nigeria’s Outlook to Positive
