PFAs Maintain Upward Trajectory In AUM Growth

BusinessTodayNGJuly 12, 20242 Mins read163

According to the latest monthly report released by Nigeria’s Pension Commission (PENCOM), the assets under management (AUM) of the regulated pension industry increased by +25.6% y/y to N20.2trn. Notably, FGN debt securities accounted for 63% of the total AUM in May ’24.

Meanwhile, other asset classes such as private equities, real estate, and infrastructure funds, accounted for 0.5%, 1.4%, and 0.8% of total AUM, respectively. It is worth highlighting that return on investment (ROI) for PFA’s in Nigeria averaged 4.68% in Q1 ’24.

Total FGN debt securities held by the Pension Fund Administrators (PFAs) increased by +22.5% y/y. Specifically, we note that the FGN bond instruments held by the PFAs increased by +20.7% y/y and +3.2% m/m to N12.1trn and accounted for 59.7% of the total AUM in May ’24.

The PENCOM report shows that NTBs held by PFAs increased by +86.7% y/y, and +5.4% m/m to N370bn in May ’24. We note that the average NTB yield declined by -50bps m/m as at end-May ’24. This asset class accounted for just 1.8% of the total AUM in the same month. Meanwhile, state government securities held by the PFAs declined by -4.9% y/y and -1.9% m/m to N264.4bn in May ‘24.

Domestic equity holdings surged by +68.7% y/y and +3.9% m/m to N1.8trn, accounting for 9.4% of the total AUM in May ‘24 compared with 9.2% recorded in April 24. The NGX-all-share index (NGX-ASI) rose sharply by +78.1% y/y and +1.1% m/m during the same period.

According to a separate report from PENCOM, the total pension contribution remitted to the Individual Retirement Savings Account (RSA) reached N10.2trn in Q1 ’24, vs N8.6trn in Q1 ’23.

Remittance from the public sector accounted for 52%, while private sector accounted for 48% of the total pension contributions. The y/y increase can be partly attributed to the increased RSA membership enrollment in different sectors.

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 +92% y/y to N791.5m in Q1 ’24 from N416.1m recorded in Q1 ’23.

This highlights significant progress, but also emphasizes 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.