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2022 PFA & RSA Pension funds audited annual accounts: Leadway Pensure
04 June 2023
2023 PFA Corporate and Pension Fund Accounts for the year ended December 2022 – Leadway Pensure
Analysis:
Leadway Pensure PFA Limited, known as Leadway Pensure was incorporated on the 25th of August 2004, applied for and was licensed as a Pension Fund Administrator (PFA) in accordance with the provisions of the Pension Reform Act 2004. The company was formed by a consortium of three (3) financial service companies – Leadway Assurance, Prestige Assurance and MBC Securities. As of 31 December 2022, the company had shareholders’ funds of N8.68 billion.
According to data compiled using PenCom periodic reports, Leadway Pensure ended the 2022 financial year with 688,557 RSA holders in the 7 publicly available funds, up from 660,825 RSA holders in 2021. Additionally, assets under management for Retirement Savings Accounts (RSAs) reached an N643,428 billion, up from N542,138 billion in 2021.
Performance Analysis: Company
For the year ended 31 December 2022 total income grew by 22.98% to N7.93 billion, compared to N6.45 billion in 2021. Costs of managing the business rose 26.58%, which lead to the cost to income ratio rising to 64.01% from 62.19% in 2021. This ratio was 57.79% in 2020. Over the last five years, this ratio has averaged 61.99%.
Profit After Tax (PAT) for 2022 rose 21.87% to N2.03 billion, compared to N1.67 billion in 2021. The company had seen a decline in PAT by 7.24% in 2021 after a rise in 2020 by 21.99%, showing the same level of inconsistency over the years. Return on equity (ROE) was 23.41%, up from 21.80% in 2021 but down from 25.45% in 2020. There was no need for Leadway Pensure to recapitalise during the last recapitalisation exercise. Shareholders' funds rose 13.49% to N8.68 billion from N7.65 billion in 2021.
Performance Analysis: RSA funds (audited)
For the year 2022 the Leadway Pensure Fund I appreciated in value by 9.99%, Fund II appreciated by 10.14%, Fund III 10.19%, Fund IV 11.53%, Fund V 8.16%, Fund VI – Non-Interest (Active) 6.37% and Fund VI Non – Interest (Retiree) 0.38%. The latter two funds were launched sometime in 2023 but as at the time of concluding this report we do not have the fund launch dates. Leadway Pensure now offers all 7 PenCom approved funds to the public.
Returns benchmarks are yet to be established for pension funds but for indirect comparisons it is worth noting that for the year 2022 the stock market appreciated by 19.98%, inflation was 21.47% and MPR closed the year at 16.50%, having risen steadily through the year.
The Leadway Pensure Fund I appreciated by 9.99% in 2022, greater than the 7.57% in 2021 but lower than the 18 95% appreciation in 2020. Income generated in the fund rose by 58.87%, reaching N223.17 million compared to N140.48 million in 2021. Net gains from investing activities grew from N110.1 million to N182.42 million, a 64.92% rise over 2021. The fund's expense ratio, which measures the annual cost of managing the fund, increased again to 1.90% from 1.82%. This cost has been increasing every single year of the last 5 years. Asset allocation is still predominantly fixed income instruments which rose from 59.98% in 2021 to 67.12% in 2022. Exposure to equities rose from 12.52% in 2021 to 16.93% in 2022 whilst investments in money market instruments dropped from 24.04% in 2021 to 8.78% in 2022. In terms of performance, this fund ranked 5th out of 19 in 2021. The ranking for 2022 will be out soon.
Income earned in the Leadway Pensure Fund II was 36.14% higher than 2021, rising to N38.95 billion from N28.61 billion in 2021, with net gains from investing activities rising to N32.95 billion from N23.55 billion. The funds expense ratio increased slightly to 1.61% from 1.59%, stemming the fall that had begun in 2018. Whilst the ratio was 2.57% in 2018, with the falls before this 2022 rise, the ratio has averaged 1.82% over the last 5 years. The fund appreciated by 10.14% in 2022 compared to 8.26% in 2021. Asset allocation is still predominantly fixed income instruments with total investments rising from 68.98% in 2021 to 78.69% in 2022. Exposure to equities fell from 10.25% in 2021 to 9.17% in 2022 whilst investments in money market instruments also fell from 19.03% in 2021 to 8.7810.65% in 2022. The fund ranked 7th out of 19 in terms of performance in 2021. The ranking for 2022 will be revealed in our 2023 report later in the year.
Income earned in the Leadway Pensure Fund III grew 44.48% to N21.94 billion from N15.18 billion in 2021, stemming the slide of 2021, with net gains from investing activities rising to N18.84 billion from N12.61 billion. The funds expense ratio was slightly lower at 1.47% compared to 1.50% the year before. The 5-year average has been 1.38%. In terms of asset allocation, investments remain predominantly in fixed income instruments which rose from 72.44% in 2021 to 86.60% in 2022. Exposure to equities fell from 1.09% in 2021 to 0.76% in 2022 whilst investments in money market instruments dropped from 24.72% in 2021 to 10.38% in 2022. The fund appreciated 10.19% in 2022 compared to 8.05% in 2021. In 2021 the fund ranked 9th out of 19 in terms of performance. The ranking for 2022 will be revealed in our 2023 report later in the year.
The Leadway Pensure Fund IV appreciated by 11.53% compared to 9.14% in 2021. Income earned grew 43.57% to N6.53 billion from N4.55 billion in 2021, with net gains from investing activities rising to N6.01 billion from N4.18 billion. Expense ratio rose to 0.90% from 0.72% in 2021. The 5-year average has been 0.93%. Investments in fixed income instruments rose from 75.51% in 2021 to 90.43% in 2022, whilst allocation to money market instruments dropped from 23.58% in 2021 to 6.36% in 2022. In 2021 the fund ranked 5th out of 19 other funds in terms of performance. The ranking for 2022 will be revealed in our 2023 report later in the year.
Like all Micro Pension funds in the industry, the Leadway Pensure Fund V is still trying to find traction. As of 31 December 2022, the fund had 1,335 registered members compared to 950 members in 2021. Total Micro Pension member accounts totalled 89,237 in 2022, Leadway Pensure held a 1.49% market share. Total assets in the fund grew 121.15% to N5.025 million from N2,272 million in 2021. Income earned in the Fund grew 107.45% to N255 million from N123 million in 2021, with net gains from investing activities the same as fund managers cannot charge management fees until the fund reaches a certain threshold, meaning there were investment expenses. Performance of the fund was 8.16% in 2022 compared to 6.68% in 2021. In 2021 the fund ranked 10th out of 14 in terms of performance. The ranking for 2022 will be revealed in our 2023 report later in the year.
Leadway Pensure Fund VI – Non-Interest (Active)
Whilst we are yet to obtain the launch date, the Leadway Pensure Fund VI – Non-Interest Active presented its first audited accounts to members. Assets in the fund closed at N138.69 million. In the absence of the fund launch date, we could not pro-rata the returns of fund for the year. As such as all funds are mandated to have a starting price of N1.00 and the year-end price was N1.0637, the fund returned 6.37% to 31 December 2022. The fund was not ranked in 2021 but will be ranked in our 2023 report out later in the year.
Leadway Pensure Fund VI – Non-Interest (Retiree)
We could also not obtain the launch date of the Leadway Pensure Fund VI – Non-Interest Retiree. The fund also presented its first audited accounts to members. Assets in the fund closed at N11.87 million. In the absence of the fund launch date, we could not pro-rata the returns of fund for the year. As such as all funds are mandated to have a starting price of N1.00 and the year-end price was N1.0038, the fund returned 0.38% to 31 December 2022. The fund was not ranked in 2021 but will be ranked in our 2023 report out later in the year.
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