…Fund III, existing schemes, others also post double-digit growth
The pension assets in Fund II increased by N810.67 billion in the first seven months of 2024, benefitting from higher prices of equities and positive sentiments in Nigeria’s fixed income market, the analysis of National Pension Commission’s July 2024 Portfolio report shows.
By default, Fund II is the fund for the management of pension contributions of registered Nigerian workers who are less than 50 years of age.
The value of the pension assets in Fund II rose to N8.61 trillion as of July 2024, when compared to the fund’s value as of December 31, 2023, when its assets were worth N7.8 trillion, representing an increase of 10.4 percent during the reference period.
By asset distribution, N5.41 trillion of Fund II, representing 62.9 percent, was invested in FGN securities in the money market. This market has benefitted from the hawkish stance of the Central Bank of Nigeria (CBN) which raised the benchmark interest rate, the Monetary Policy Rate (MPR), from 18.75 percent as of December 2023 to 26.25 percent as of end of July 2024.
Furthermore, N1.28 trillion of the Fund II assets, representing 14.9 percent, was invested in ordinary shares of equities listed on the Nigerian Exchange Group (NGX). According to NGX data, the market capitalisation of listed stocks rose from N40.92 trillion as of December 2023 to N55.51 trillion as of end of July 2024, amounting to a gain of N14.6 trillion in the value of equities.
Correspondingly, the All-Share Index of NGX increased from 74,773.77 points to 97,774.22 points during the same period, thus putting the market returns at 30.76 percent between December 2023 and July 2024.
The National Pension Commission (Pencom), in its first quarter 2024 report, pointed to the impact of the rising equity prices in the gains posted by the various pension asset classes.
“The relatively higher performances of the RSA Funds for I, II & VI Active in Q1 2024 were due to higher appreciation in the prices of equities and Marked to Market (MTM) bonds during the period. Funds I and II recorded the highest unrealized gains due to higher exposure to variable income securities,” Pencom said.
The Closed Pension Fund Administrators (CPFAs), which is a scheme for some selected companies in Nigeria, recorded the second highest gains during the period. Its asset value rose from N1.94 trillion as of December 2023 to N2.64 trillion as of July 2024, amounting to a gain of N693.76 billion representing an increase of 35.7 percent.
In terms of asset distribution, N1.15 trillion or 43.5 percent of CPFAs’ assets were invested in FGN securities while N789.38 billion or 29.9 percent was invested in corporate debts.
Fund III, which is for Nigerians who are 50 years and older, ranked as the third best performing asset group when measured by increase in asset value from December 2023 to July 2024.
Fund III assets rose from N4.94 trillion as of December 2023 to N5.49 trillion as of July 2024, amounting to a gain of N546.21 billion, representing 11.1 percent in market returns.
In terms of asset distribution, N3.99 trillion or 72.9 percent was invested in FGN securities; N674.31 billion or 12.3 percent in corporate debts, and N564.71 billion or 10.3 percent was invested in money market instruments.
Existing schemes gained N246.77 billion within the first seven months of 2024, from N2.10 trillion as of December 2023 to N2.35 trillion as of July 2024, representing 11.7 percent in market returns. Existing schemes are for the pension assets that predated the contributory pension scheme which is in operation now in Nigeria.
In terms of asset distribution, N1.39 trillion of existing schemes assets was invested in FGN securities; N153.52 billion in corporate debts, with N260.46 billion invested in money market instruments.
Fund IV, which is for retirees, gained N136.28 billion during the period, increasing from N1.36 trillion as of December 2023 to N1.49 trillion as of July 2024.
In terms of asset distribution, N1.07 trillion was invested in FGN securities; N152.76 billion invested in corporate debts, with N192.67 billion invested in money market instruments.
The other fund categories, Fund 1, V, VI and Fund IV retiree gained N80.5 billion, even as their market returns are highest during the period, ranging from 26.2 percent to 51.7 percent.
