The assets under management (AUM) of the regulated pension industry increased by 14.8% y/y in November to N8.50trn (US$27.7bn) although by just 0.6% m/m. They are growing at a healthy rate yet, at just 7.5% of 2017 GDP, are running well behind many emerging markets. Nigeria was relatively slow (2004) with its legislation creating a sound structure for regulated pensions. The South African industry dates from 1996, and its AUM represents more than 70% of comparable GDP. The industry in Nigeria is in need of new products and leadership.
- The industry’s holdings of FGN paper amounted to 72.5% of their AUM in November, compared with 70.7% one year earlier.
- The stake of the PFAs in naira debt markets remains pivotal. Their holdings of FGN bonds at end-November represented 48.3% of the stock of the instruments at end-September.
- The share of AUM invested in domestic equities has declined over 12 months from 9.0% to 6.9%. The NSEASI fell by 18.6% over the same period. The PFAs, therefore, may have had some ground to cover to meet revised Pencom regulations stipulating that retirement savings account holders under the age of 49 must have at least 10% exposure to equities by end-2018. We understand that holdings in mutual funds are allowable to meet this new threshold.
- The latest PenCom data show a total of 8.38 million scheme memberships, implying an average portfolio of N1.01m (slightly higher than October).
AUM of PFAs, Nov 2018 (% shares) Total: N8.50trn
Sources: National Pension Commission (PenCom); FBNQuest Capital Research
- From 01 January the PFAs have been able to market micro pensions for the self-employed and employees of small firms. The regulator has suggested an increase in AUM over an unspecified time of N3trn.