December 20, 2023/FBNQuest Research
According to the most recent data from the National Pension Commission, the total asset under the management (AUM) of the regulated pension industry increased by a modest 2% m/m to NGN17.7trn in October ’23. This growth rate outpaced the 0.3 m/m growth recorded the previous month. On a y/y basis, the growth rate of the industry’s assets was up by 21% y/y or NGN3.1trn. Nigeria’s pension industry has continued to deliver impressive growth in recent years following the implementation of several regulatory pension reforms.
Regarding AUM composition, the allocation of the industry’s assets in recent years has mostly been channelled to government bonds.
Notably, FGN bonds, which constituted 62% of PFAs AUM in Oct ‘23, increased markedly by 24% y/y to NGN10.4trn.
PFA’s exposure to treasury bills also increased by 10% y/y to NGN207bn, thanks to improvement in the instrument yields.
Pension fund holdings in corporate debt also increased by NGN369bn or 24% y/y to NGN1.9trn in Oct ’23.
Conversely, PFA’s investment in money market instruments saw a marked decline of -22% y/y to NGN1.7trn.
The share of pension funds’ AUM invested in domestic equities increased significantly by 73% y/y or NGN602bn to NGN1.4trn.
The substantial y/y rise in PFA’s investment in the equity market reflects the impressive performance of the Nigeria Stock Exchange (NGX) this year.
The solid performance of the NGX in 2023 can be attributed to a combination of factors, including positive investor sentiments to new policies and reforms by President Tinubu’s administration and impressive quarterly earnings results delivered by banks.
According to the data, the total number of pension account owners increased by 3% y/y to over 10 million. This implies an average value of 1.74m per RSA account holder, higher than the NGN1.48m in the year-earlier period.
