Experts at FBNQuest have said that strong economic growth and the creation of jobs will be necessary for Nigeria’s anticipated pension sector penetration and growth.
According to BusinessDay, they stressed that while raising awareness of the advantages of retirement planning is important, strong economic growth is a vital driver of employment and pension increase.
They added that many reasons, such as Nigeria’s high incidence of informal employment, low levels of knowledge, and a high percentage of unemployment estimated at 33.3 per cent based on 2020 statistics from the Nigeria Bureau of Statistics, contribute to the country’s low level of pension coverage.
According to data from the National Pension Commission, the overall assets under the control of the regulated pension business rose by 12.2 per cent annually and 1.2 per cent monthly as of February 2023.
This reflects a respectable N1.7 trillion increase from 2022. The experts said that despite the respectable growth, Nigeria’s pension market is still underdeveloped, with pension assets making up just 7.8% of GDP in 2022.
“To put the ratio in perspective, Nigeria’s ratio compares unfavourably with the 29.4 per cent (2020) average for a group of 78 countries based on World Bank data.”
The low population membership rate to retirement savings accounts is another indicator of the industry’s underpenetrated position, according to FBNQuest.
As of the end of February, 9.9 million people were RSA members overall which is about 8.2 per cent of the working-age population. As a percentage of the labour force, the ratio is slightly higher at roughly 14 per cent.
However, the International Labour Organization reports that 49.6 per cent and 69.3 per cent, respectively, of the world’s working-age population and labour force are covered by mandated or voluntary programs.
