BY By FESTUS OKOROMADU, ABUJA
The total asset under the management of the regulated pension industry rose to N16.8 trillion in June 2023, translating into a 4.1 per cent growth compared to the month of May.
The growth rate showed a remarkable improvement relative to the 2.1per cent month-on-month increase recorded the previous month.
The year-on-year growth rate was higher as it came to 17.5 per cent.
The figures are contained in the PenCom monthly data report released by the National Pension Commission.
In terms of penetration rate, the industry’s total AUM is equivalent to 8.4 per cent of (2022) GDP.
This compares unfavourably with the global average of 29.4 per cent (in 2020), according to the World Bank data.
Reviewing the performance, financial analysts at Proshare Nigeria said apart from money market securities whose value share of pension fund assets decreased by N168bn m/m to N1.6trn, almost all the major asset categories accounted for the m/m increase of N654bn.
“Notably, FGN bonds which typically account for the largest share of PFAs AUM (c.62% Jun ‘23) increased markedly by N399m to N10.4trn.
“A major factor underscoring the rise in the value share of FGN Bonds is the increased supply of FGN paper due to the market this year, due to its higher domestic borrowing target of N7trn compared with around N4.4trn in 2022.
“PFAs’ investment in corporate bonds also increased by around N160bn to N1.9trn, taking its share of pension AUM to around 11.2 per cent.
“Investments in domestic equities also increased by almost N150bn to N1.3trn, implying a value share of 7.6 per cent.
“This notable rise in equity investments can be primarily attributed to investors’ positive response to market reforms implemented by the new administration after the President’s inauguration on May 29.
“Although the industry has continued to deliver steady growth, efforts are still required to address the relatively low penetration rate compared to global benchmarks,” experts stated.
