The assets under management (AUM) of the Nigerian regulated pension industry increased by 20.5% y/y in June to N8.23trn (US$26.9bn). They are growing at a reasonable rate yet, at just 7.2% of 2017 GDP, are running well behind many emerging markets. Nigeria was relatively late (2004) in introducing legislation creating a sound structure for regulated pensions. If the industry is to come close to realizing its full potential, forward-looking leadership from the regulator and new products to extend coverage across the economy are required.
- The industry’s holdings of FGN paper amounted to 70.8% of their AUM in June, compared with 73.0% one year earlier. The beneficiary has been domestic money market securities, which gained a 1.9% share over the period.
- The role of the PFAs in local debt markets remains pivotal. Their holdings of FGN bonds at end-June represented 45.2% of the stock of the instruments at end-March.
- PenCom’s latest data do not point to a stampede into domestic equities. The NSEASI rose by 15.6% in the 12 months to end-June while AUM in the asset class increased by 21.6% over the same period.
- Revised Pencom regulations stipulate that retirement savings accountholders under the age of 49 must have at least 10% exposure to equities by end-2018. If we add foreign equities to domestic, we arrive at a total of 9.4% at end-June in aggregate (ie accountholders of all ages including those with a smaller or zero requirement to hold equities). Those aged 50 or above represented 25.8% of total accountholders.
AUM of PFAs, Jun 2018 (% shares)
Sources: National Pension Commission (PenCom); FBNQuest Capital Research
- PenCom data for end-June show a total of 8.14 million scheme memberships, implying an average portfolio of N1.01bn (unchanged from May).