May 13, 2019

Pension industry in need of new members

The assets under management (AUM) of the regulated pension industry increased by 14.4% y/y in February to N8.91trn (US$29.0bn) and by 1.9% m/m. They are growing at a decent rate yet, at just 7.0% of 2018 GDP, are running behind peer markets. The comparable regulator in Kenya, the Retirement Benefits Authority, has put AUM at end-2018 at KES1.17trn (US$11.4bn), equivalent to 15.0% of the most recent nominal GDP figure available. Nigeria was relatively late (2004) in the establishment of its regulated industry.


  • The Nigerian industry’s holdings of FGN paper amounted to 73.1% of their AUM in February, compared with 70.7% one year earlier.
  • The role of the PFAs in naira debt markets remains a core element of any assessment of direction. Their holdings of FGN bonds at end-February represented 48.1% of the stock of the instruments at end-year.
  • In the far smaller sukuk market, the PFAs held 47.9% of the Islamic bonds in issuance.
  • The share of AUM invested in domestic equities has declined over 12 months from 9.4% to 6.8%. By way of explanation, we note that the NSEASI fell by 26.8% over the same period.
  • The latest PenCom data show a total of 8.57 million scheme memberships, implying an average portfolio of N1.04m (a marginal increase on the month).


AUM of PFAs, Feb 2019 (% shares) Total: N8.91trn

Sources: National Pension Commission (PenCom); FBNQuest Capital Research


  • This average should decline now that the PFAs are able to market micro pensions for the self-employed and employees of small firms. In January the regulator suggested an increase in AUM over an unspecified timeframe of N3trn, and an additional 12 million contributors over five years.