Pension AuM up 1.8%, tops N17trn as PFAs bet most on FGN securities 

Cynthia Ezekwe

Nigeria’s pension fund assets reached a new high of N17.658 trillion by the end of October 2023, representing an increase of 1.78 percent from the N17.349 trillion recorded in the previous month.

As per the details in PenCom’s monthly report for October 2023, the pension fund assets were mainly allocated by pension administrators to Federal Government of Nigeria (FGN) securities, which accounted for 64.67 percent of the total NAV at about N11.419 trillion. This is a common investment strategy for pension funds managers, as FGN securities are considered to be relatively safe and low-risk investments.

It is worth noting that pension funds also increased their investments in corporate debt securities and money market instruments, which is indicative of a growing trend towards diversification. Investments in local companies’ ordinary shares also saw an increase of 3.17 percent to N1.430 trillion from N1.386 trillion in September, signalling a more optimistic outlook for the Nigerian stock market.

The analysis of the allocation of the various funds under the multi-fund structure revealed some interesting trends. Fund II, which is the default RSA Fund, accounted for 43 percent of the total fund NAV with a value of N7.581 trillion. Fund III, which is designated for younger contributors, saw a 1.62 percent increase, reaching N4.831 trillion. The other funds, such as the retirement savings account fund for retirees (Fund IV) and the voluntary contribution fund (Fund VI), also saw healthy increases in their respective NAVs.

According to analysts, the growth in the number of retirement savings account (RSA) members, from 10,025,314 in July 2023 to 10,140,929 in October 2023, is a key driver of the increase in pension fund assets. The growth of N2.8 trillion in just 10 months, from N14.9 trillion in December 2022 to N17.7 trillion in October 2023, is also considered a significant achievement that reflects the increasing importance of the pension sector in Nigeria.

Adeola Johnson,  the spokesperson for PenCom, said the growth of pension fund assets signifies a steady trajectory of strong investment across various sectors of the Nigerian economy. This, she explained, is indicative of a solid foundation for financial stability and a secure retirement for Nigerians.