Decent growth posted by the PFAs

The assets under management (AUM) of the regulated Nigerian pension industry increased by 21.1% y/y in April to N6.49trn (US$21.2bn). This is a decent annual increase when we allow for the arrears in pension (and salary) payments to employees of state governments and public agencies that emerged in the campaigning for the elections in 2015. It would appear that the FGN’s several initiatives to bolster state government finances have made an impact. Certainly the monthly distributions by the Federation Account Allocation Committee have not picked up.

Holdings of FGN paper amounted to N71.4% of AUM in April, compared with 67.5% one year earlier. We can see a sharper rise in positions in NTBs, to 15.7% from 8.6%. The pension funds have a particular interest in the long bonds for matching purposes. More generally, they may feel that they had been missing out in the NTBs market, where the CBN has been setting the stop rates at more than 22% since August at primary auction and open market operations (OMO).

The industry’s holdings of FGN bonds at end-March represented 45.7% of the stock of the paper.

The data does not capture the recent surge on the stock market, to which offshore investors have returned with new money (in addition to recycled dividends) and some domestic institutions have followed their lead. The share of domestic equities in AUM actually declined to 7.4% in April from 8.7% one year earlier.

We welcome the timely monthly data releases from PenCom. We would welcome even more independent industry analysis allowing investors to compare the performance of the pension funds.

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