Pension Assets Grow 20% To N17.4trn

The pension industry has recorded a 20 per cent year-on-year growth to N17.4 trillion at the end of September 2023.

Recent updates from the National Pension Commission (PenCom), according to analysts from FBNQuest Capital Research highlight the positive trajectory in the regulated pension industry.

According to the latest monthly data, the industry’s asset under management (AUM) experienced robust growth of 20 per cent y/y to N17.4 trillion as at end-Sep 23.

This represents a notable increase of N2.9 trillion in absolute value terms, while on a month-to-month (m/m) basis, the industry’s total assets were modest at 0.3 percent m/m, compared with the nearly +1% m/m growth it recorded the previous month, the analysts said.

“The marked y/y growth was primarily driven by a 23 percent y/y increase in the value of N bonds to N10.9 trillion, accounting for 63 percent of the total AUM.

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FBN Quest further noted that unlike other markets such as Kenya and South Africa, where the asset allocation is more diverse, Nigerian PFAs allocate most of their assets to FGN bonds due to strict statutory requirements and limited market depth of other asset classes.

PFAs’ asset allocation to corporate debt has been gradually increasing, up by 25 per cent y/y, or N369 billion to almost N1.9 trillion.

The industry’s asset allocation to domestic equities is up 58 percent y/y to N1.4 trillion, thanks to the solid positive performance of the equity market this year, which has resulted in the Nigerian Stock Exchange All-Share-Index (NGX ASI) delivering a year-to-date return of a 38.8 percent.

In contrast, asset allocation to money market funds fell by -22 percent y/y, or N470 billion, to about N16 trillion.

Regarding the growth of the individual funds, the RSA Fund I grew the fastest with a y/y growth of 102 percent y/y growth to N133 billion.

However, the RSA Fund II delivered the most significant absolute performance of NGN1.2trn to take the Fund’s total AUM to N7.5 trillion.

Based on a total RSA of slightly over 10 million account holders, the total pension AUM translates to roughly N1.7m per account holder.