The total assets under the Contributory Pension Scheme hit N18.36 trillion by the end of 2023, according to National Pension Commission data.
The PUNCH reported that PenCom’s unaudited report on pension funds sector portfolio for the period ended December 2023; Approved Existing Schemes, Closed Pension Fund Administrators and RSA funds (including unremitted contributions @CBN & Legacy Funds)’ indicated that the country’s pension funds increased by 22.43 per cent in 2023.
During this time, it was reported that the net asset increased to N18.36tn from N14.99tn in 2022.
Pension funds increased by 2.39 per cent month on month in December, reaching N18.36 trillion from N17.93 trillion the previous month.
According to the study, N11.92 trillion of assets were invested in Federal Government securities, accounting for 64.9% of total assets, with a 24% year-on-year increase in investment in FGN securities.
Corporate debt securities followed at 10.4%, with domestic ordinary shares accounting for 8.6% of total Assets Under Management.
Further review of PenCom’s data revealed that FGN securities dominated as the main asset class for pension funds.
FGN bonds, specifically, contribute 96 per cent of total FGN securities and more than 60 per cent of fund administrators’ overall asset mix.
Foreign transactions on the NGX surged in November 2023, showing optimistic investor sentiment; nonetheless, the domestic investor group surpassed foreign investors by nearly 52%.
While real estate and private equity experienced year-over-year increase, they remained a minor component of the overall portfolio.
Other alternative investment classes, such as foreign ordinary shares, infrastructure funds, mutual funds, and real estate, failed to gain substantial traction in Nigeria.
In terms of fund types, the report showed that Retirement Savings Account funds were steadily growing as more Nigerians joined the Contributory Pension Scheme.
However, the Retiree Fund has the greatest portion, accounting for 58.02 per cent of total AUM, followed by RSA Funds (30.59 percent) and Closed Pension Fund Administrators (1.39%).
Recall that following the depreciation of the naira, the value of pension funds fell by 45.18 per cent when evaluated in dollars.
According to data from the National Pension Commission’s website, the net asset value of pension funds was N17.35 trillion in September, or $19.83 billion when converted to dollars at the official exchange rate of 874.71/$ on November 10.
The Head of the Corporate Communications Department at PenCom, Abdulqadir Dahiru, stated that Nigeria’s devaluation hurt the entire economy, not only pension funds.
“Anybody who has money in the bank can tell you what inflation has done to his money. It reduces the value of the currency because then you need more of that currency to buy the same amount of the goods and services,” he said.