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The value of Nigerian Treasury Bills (NTBs) held by Pension Fund Administrators (PFAs) increased by 87% year-on-year (y/y) to N370 billion, latest data from the National Pension Commission (PENCOM) revealed.
This was even as the latest monthly report released by the Commission revealed further that the assets under management (AUM) of the regulated pension industry increased by +25.6% y/y to N20.2 trillion.
Notably, FGN debt securities accounted for 63% of the total AUM in May 2024. Meanwhile, other asset classes such as private equities, real estate, and infrastructure funds, accounted for 0.5%, 1.4%, and 0.8% of total AUM, respectively. It is worth highlighting that return on investment (ROI) for PFAs in Nigeria averaged 4.68% in Q1 2024.
Total FGN debt securities held by the Pension Fund Administrators (PFAs) increased by +22.5% y/y. Specifically, FGN bond instruments held by the PFAs increased by +20.7% y/y and +3.2% month-on-month (m/m) to N12.1 trillion, accounting for 59.7% of the total AUM in May 2024.
The PENCOM report revealed that NTBs held by PFAs increased by +86.7% y/y, and +5.4% m/m to N370 billion in May 2024.
This growth reflects the PFAs’ strategic allocation of assets to ensure the safety and returns on pension funds under their management.
The increase in NTB holdings is part of the broader portfolio diversification and risk management strategies employed by PFAs to protect and grow the pensions of Nigerian workers.
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According to the data, average NTB yield declined by -50bps m/m as at end-May ’24. This asset class accounted for just 1.8% of the total AUM in the same month. Meanwhile, state government securities held by the PFAs declined by -4.9% y/y and -1.9% m/m to N264.4 billion in the period under review.
Domestic equity holdings surged by +68.7% y/y and +3.9% m/m to N1.8trn, accounting for 9.4% of the total AUM in May 2024 compared with 9.2% recorded in April 24. The NGX-all-share index (NGX-ASI) rose sharply by +78.1% y/y and +1.1% m/m during the same period.
A separate report from PENCOM revealed that the total pension contribution remitted to the Individual Retirement Savings Account (RSA) reached N10.2 trillion in Q1 2024 compared with N8.6 trillion in Q1 2023.
Remittance from the public sector accounted for 52%, while private sector accounted for 48% of the total pension contributions. The y/y increase can be partly attributed to the increased RSA membership enrollment in different sectors.
Reacting to the development, Chief Economist at Coronation Merchant Bank, Chinwe Egwim, noted that the situation highlights significant progress.
She however emphasized the need for ongoing initiatives to improve public access to pension services.
“Continuous public education and increased commitment from financial institutions in providing pension-related services are crucial for further advancement”, Egwim said.
